What is PayPal and what is it for?

PayPal is an online payment system, which is used to make money transfers between users and/or companies, without the need to share financial information from either party.

It is an alternative to traditional methods, such as money orders or checks, and was born as a result of the suspicion that existed a few years ago in relation to making purchases and other economic operations through the Internet.

In other words, PayPal is a kind of virtual wallet through which it is possible to carry out all kinds of monetary operations without the need to provide personal or bank details on each of the platforms with which these transactions are carried out.

This payment processor saves and protects the data of its users and acts as an intermediary between both parties, taking a small commission in return.

What were the origins of the PayPal company?

The multinational is of American origin, is called Paypal Holdings, Inc. and is headquartered in San José (California). It was founded in 1998 under the name of Confinity, and in 2000 it merged with X.com to, a year later, adopt the name with which it has spread throughout the world and is still known today.

It must abide by the rules of the United States Department of the Treasury and the European Union Financial Services Authority, although the latter, which was acquired by eBay in its early days (2002) and which since 2015 is already an independent company It doesn't work like a bank.

This payment system with which the US company operates, which at the beginning of 2017 exceeded 200 million active users, offers great security to those who use it, not only because of the rigid data protection policy that it implements.

Also because it looks after the interests of buyers by offering up to US$2,500 as compensation in the event of certain setbacks, perfectly described in its conditions of use.

At this point, if you do not have an eCommerce, you may have a question:

Can I create a personal PayPal account for my online transactions as a private user?

Of course. In fact, this platform is the most used to open these types of accounts. If you are wondering why, I encourage you to keep reading until the end and see how many advantages it has.

However, now that you know what this service is and what it is for, you may not know how it works in detail. For this reason, I like to tell you all the secrets of this fantastic online platform for sending and receiving money on the Internet.

So before I explain how to create an account, I'll start by looking at how this tool works.

How does PayPal work exactly?

Through an automatic encryption system, and advanced anti-fraud systems that the company periodically renews and reinforces, the personal information of the users who use it is perfectly protected and safe from possible risks.

These, however, with the advances in computer security that have occurred in recent years, are less and less. It is important to emphasize again that this platform does not work like a traditional bank, although it is governed by some common rules.

At present, its services are exclusively dedicated to paying for purchases and sending or receiving money safely and not saving capital like most banks.

Does PayPal charge any commission for transactions made?

For each transaction made, this platform charges the recipient of the money a commission that ranges from approximately 1.9% to 3.4% in addition to an extra 35 cents.

Likewise, it also charges for applying currency conversion in international operations. It is a variable fee that responds to currency market conditions and is usually between 2.5% and 4%.

However, this platform allows the currency exchange to be provided by the credit card entity in the event that the payment is to be made in a currency other than the main one.

In summary, PayPal only charges a commission to the seller for using its platform as a collection system. All actions carried out by a user with a buyer profile are completely free.

This American company leads the market for online payment systems and its turnover is increasing progressively. In fact, the latest data is that the company already exceeds 1,300 million euros.

A fact that has helped its value grow enormously on the stock market until it recently surpassed that of a giant like American Express.

What are the advantages of using the PayPal platform?

Creating a PayPal account has many advantages. In fact, I would dare to affirm that having an account on this online platform only has advantages and practically no disadvantages.

Therefore, I will break down all of them, step by step:

1. Accepted in most online stores

This online payment method, contrary to what happens with other payment methods that you will also know, such as cash on delivery, debit card payment, transfer or online banking, is accepted by most online stores.

It is therefore much more convenient to have an account with which to be able to pay in all of them than several accounts of other online payment systems, only valid for a few eCommerce.

2. Easy to share with others

When it comes to having to share your bank account information to receive income from a gift, customer invoices, etc., it is much easier to do so by providing your email account associated with this platform.

3. It does not lead to errors in the numbering of the account number

Here comes to mind the classic mistake when, a few years ago, we spelled out all the figures in our bank account one by one, when having to receive a payment from another person or entity.

4. Creating a PayPal account is totally free

It is mainly one of the reasons that push most people to open an account on this platform.

Although in case you had to pay a certain amount to create it, I think it could be very profitable to do it only at the beginning, to later be able to enjoy all its advantages.

In short, whether you need a personal or business account, so far this is completely free.

5. Compatible with most currencies

Receiving or sending money with it no longer implies the barrier that existed a few years ago when you wanted to send money (or receive it) to another person or entity in another country, in which there was another currency other than yours.

6. Security for your banking privacy

This is another of the most popular advantages among users who are more suspicious of their personal and bank details, concerned about preserving them and not sharing them with other people.

Having an account on this platform, only by sharing the email address will we be able to carry out the transaction.

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