Effectiveness of PayPal

Account Types
PayPal offers several account types. Personal accounts are available to everyone and offer the ability to send and receive funds, use Ebay tools, 24-hour fraud surveillance and limited merchant services. PayPal also offers special student accounts 'that give teens the experience of being responsible for their own spending' according to the PayPal website. These accounts have the same features of personal accounts with the addition of the PayPal Debit Card. Personal account owners can upgrade to a Premier PayPal account to gain access to the PayPal Debit Card as well. Lastly, business users can create a PayPal account that includes the previous features as well as the ability to add multiple users.
Features
Business owners can send invoices to customers for products or services. PayPal can also aid online retailing because it allows a website owner to set up shop and use PayPal for the transactions. In addition, people can use PayPal to automatically send money, whether for products or services rendered or simply as a gift. Account holders can keep money in their PayPal accounts or transfer them to bank accounts connected to the account. Consumers can also use credit cards or bank accounts as backup payment methods if there are no funds in their PayPal accounts.
Benefits
Business owners need not process credit card numbers or accept checks for products or services. Instead, PayPal provides a secure method for a customer to exchange payment without either party having to reveal sensitive personal or financial information. Furthermore, PayPal enables instant transfer of funds between parties and does not require time for money to clear as with checks.Many websites or businesses accept PayPal payments. It also works closely with online auction site Ebay, and sellers can choose to accept payment from bidders solely via PayPal. It also offers protection to its users when buying or selling. Users can file disputes for fraudulent transactions.
Fees
PayPal charges fees for product purchases and funds transfers to all account holders. When someone makes a purchase, the seller will pay 1.9 to 2.9 percent of the purchase price, plus 30 cents. Essentially, the larger the purchase price, the lower the fee the seller must pay. Buyers do not have to pay a fee when purchasing via PayPal.When transferring money, neither party must pay a fee because the funds originate from a PayPal or bank account. However, either party is subject to a 2.9 percent fee plus 30 cents, if the money originates from a credit or debit card, including the PayPal credit card. The sender determines who will pay this fee.
Potential
Because PayPal does not require users to have a credit card to create an account, businesses and online retailers can potentially reach a greater market than using a shopping cart system that requires a credit card. Retailers will also attract consumers wary of online transactions because PayPal is a trusted name and offers consumer protection.