A Few Things You Need to Know About PayPal

If you use any of the money making ideas that require online transactions e.g., eBay selling, freelancing, blogging, etc., then you need to have a means to accept payment online. And you need to be able to do this in a secure and easy-to-use fashion. Before you run off to invent your secure payment system, stop. That wheel has already been invented. And it has become a household name for people who buy or sell online. Yes, we are talking about Paypal.

PayPal has taken international business money exchange by storm. If you’ve purchased anything online in the past few years, chances are that you were offered the option to pay for your purchase using your PayPal account. If you want to make money online, you should consider creating a PayPal account so you can offer your customers the option to buy your products or services without ever touching a check or credit card.

Here are a few things you should know about this online payment juggernaut –


PayPal offers users the choice of three different accounts: Personal, Premier, and Business. For most beginners, a Personal account is more than enough – it lets your send and receive payment using PayPal funds. The Premier account is for individuals who want to offer the option of payment through credit card or debit card (through PayPal — see image above). The Business account is for groups who do business through a business or group name.


Using PayPal for sending and receiving payment is very secure. Because PayPal is used by hundreds of millions of people a year (in 2010 alone, the total value of transactions though PayPal was $92 billion, yes with a “b”), ensuring the security of online transactions is a must. Because people provide their credit card information, bank information, personal address and phone numbers, high tech security measures are in place to protect buyers and sellers from fraud and identity theft.

PayPal requires credit card and bank account verification in order to buy or sell using your PayPal account. Also, your bank account or credit card can only be registered with one PayPal account. That means that you can only have one PayPal account per bank account or credit card. This keeps people from creating multiple accounts in order to scam people using different names.

PayPal Outside of eBay

While PayPal is currently owned by eBay, its use isn’t exclusive to eBay. Millions of people use PayPal to send and receive payments for transactions outside of eBay. Freelancers and large and small businesses use PayPal for monetary transactions, because PayPal is secure and it’s easy to keep track of the money coming and going from the PayPal account. If you plan to make money online, using PayPal as your online payment transaction site would be a great idea.


Using PayPal for your online money making ideas has many benefits. The first benefit is that you don’t have to give anyone your personal banking information in order to send/receive payment. The second benefit is that you can keep track of all the money coming in and all the money going out at a glance. PayPal keeps track of everything for you and even offers you the ability download your transaction information as a printable spreadsheet. The third benefit is that you can buy with one single click.


Despite all the benefits of using PayPal for your online money making ideas, there are some warnings you should heed before jumping in with both feet. If you read the Terms and Conditions closely, you’ll realize that PayPal does not offer seller protection for people who offers services and not products. That means that if your money making idea involves your providing freelance writing, freelance web design, or freelance anything- if you don’t provide something that can be mailed to your customer, then you aren’t covered under the seller protection program.

If you provide a service and get paid (say via an e-Check), there is nothing to stop the buyer from taking their money back. You can complain all you want, but because you aren’t covered with seller protection you can’t do a whole lot.


The means by which PayPal can offer you all these great benefits is of course by charging you some “fees” for each transaction. These fees are quite reasonable considering the convenience offered by PayPal. PayPal does not charge any monthly fees, or setup fees – most fees are charged as a percentage of each transaction + a flat rate fee per transaction, charged to the recipient of the money.

If you are a seller, those fees do add up and could impact your bottom line. Here are a few tips to minimize the fees you get charged  –

  • Offer only instant paypal payment or eCheck services. If you offer credit card transactions through paypal, you will end up paying much higher fees.
  • If you have multiple transactions with the same customer, then try to combine it in one paypal transfer to avoid the per transaction flat-fees (as of writing this document, it is $0.30 USD for each transaction – check here for latest info)
  • If you receive more than $3,000 per month, then apply for a merchant rate account for lower percentage of transaction fees. While the fee schedule shows that transactions more than $3,000 have lower rate of fees, this is not automatic – you need to apply for it.
  • When you withdraw the money, do an electronic transfer to your bank, since receiving check by mail will cost you an additional fee. Electronic transfers do take 3 business days to complete.
  • Alternately you can apply for a PayPal debit card to have instant access to your money. And when you use this card for transactions, you can earn 1% cashback rewards.

Now that you know a little more about using PayPal, you can make an informed decision about whether or not you want to use PayPal as the online payment transaction source for your online money making idea. Get online, get paid, and use PayPal confidently.

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  1. i use paypal alot, but it is so easy to transfer cash that i tend to treat it like monopoly money 😉
    I have alot of subscriptions to different websites and web tools, that i kinda forget about them. I just had to clean it all up and get rid of some stuff that i didn’t really need.

    Also, they are pretty expensive.The 3% fees can really add up if you transfer alot. Unfortunately there isn’t a very good alternative, that can compete with them to lower their rates.

    • Sam Baker says:

      Hmmm…. I should have mentioned that in my original article. Even I used to feel it was very “unreal” money when I started using PayPal. Fortunately, I used it only to “receive” and not “send”. These days, I have started using it for subscribing to some resources, so I will keep your warning in mind!

  2. Thanks for this article…its very informative,,,,

  3. Hi, recently I was setting up a paypal account and among other information, it asked me to give any of my existing bank account’s debit or credit card information. Is it a must to give such personal card information for setting up an account with paypal? Also i need to mention that i did not furnish this cardinformation and i am waiting to confirm this with some one as to whether this is absolutely necessary to receive internet income.
    In the sense if i do some work online that pays, how wil i get the money from it? Where will the money get deposited and where can i withdraw it? without giving my bank details, is withdrawal possible through paypal account alone..? and if i happen to give my bank details, can i transfer the amount in paypal to my debit card?

    • @Chetan: You can receive a check or transfer the money to your bank account electronically. Once you are verified user, you can request the money at any time and won’t have much restrictions. If you are not a verified user, I think they impose a restriction of the amount and number of transfers. They change their rules often, so check out the latest information here – http://bit.ly/psVbyD

  4. @sam : hey thanks for replying. One more thing that i need to ask is after i give my debit card details to the paypal, will the same account be used for transferring the money from paypal account?

  5. Hi
    PayPal has had a meteoric rise really when you think about it there is probably no one who hasn’t used it one way or another. You mentioned their fees they are starting to get excessive in my eyes probably because they are part of ebay whose fees are also getting high in my opinion they haven’t really got any competition so they can charge what they like and we have to lump it. I hope soon a viable alternative gives them some stiff competition to drive the fees lower not higher.

    Very informative thanks lee

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