How Paypal Works

Basic Concept
PayPal uses encryption software to allow financial transactions to take place securely online. Both individuals and businesses transfer money electronically. PayPal can be used with online auction sites (such as eBay), to purchase goods or services, and to make donations. More than 100 million PayPal accounts are in existence, and PayPal is one of the world's most popular methods of Internet payments.
Infrastructure
PayPal acts as the middleman between merchants and banks/credit card companies. Both buyer and seller provide their bank or credit card information to PayPal, rather than directly to each other. In this way, PayPal serves as an extra security feature, because all account information is held securely by PayPal. There are fees called an interchange, which are charged by banks and credit card companies when a merchant accepts a credit card charge. The interchange is typically around 10 cents plus approximately 2 percent of the charge. PayPal handles these fees for the merchant or payment recipient, and makes the money back by deducting a small fee from the payment before depositing it in the recipient's account. PayPal also makes money on the interest from money left in PayPal accounts before funds are withdrawn.
Creating an Account
Setting up a PayPal account is quick and free and can be done from the site's homepage, www.PayPal.com. You will need to enter your name, address, phone number and email address, then choose a log-in name, password and security questions. Adding a credit card number to your account is optional but will allow PayPal to confirm your home address for added buying and selling confidence. You can also add a bank account to serve as a back-up source when sending funds and/or as an account to electronically deposit funds. After signing up for an account, you will receive a confirmation email from PayPal with further instructions and information about the creation of your account.
Sending Funds
You can send money via PayPal to any person or business with an email address, regardless of whether the recipient has a PayPal account. This can be done by logging into the PayPal account and clicking on 'Send Funds.' The recipient will get an email about the payment, and can then set up an account to access the funds. When purchasing from an online merchant or through eBay, click on the payment option that reads 'Pay Online Securely with PayPal' or a similar PayPal option. You will then be taken automatically to a PayPal page in which you will enter your PayPal log in and password. This information is not shared with the merchant. The money will be transferred from your PayPal account (which withdraws from your bank account, or makes a charge to the credit card you put on file with PayPal, depending on your arrangement).
Receiving Funds
After the buyer sends funds via PayPal, the money is deposited automatically in the receiver's PayPal account (or is held by PayPal until the recipient creates an account). PayPal deducts a small amount in fees according to the predetermined fee structure outlined on its website in the user agreement. The money received remains in the recipient's PayPal account until the recipient chooses to withdraw it.
Withdrawing Funds
There are several options for withdrawing funds from a PayPal account. Money can be transferred to a verified bank account, a check can be issued or the funds can be transferred to a PayPal debit card for online shopping. Other options may be available, depending on the type of user account; simply log in to PayPal and click 'Withdraw Funds' to find out more.

How Do I Deposit a Check Into a PayPal Account?

1. Log into your PayPal Mobile account on your iPhone using your password or PIN number. This will bring up the 'Welcome' screen once you have successfully logged in.
2. Tap the 'Tools' button at the bottom of the screen.
3. Tap 'Add a Check' in the 'Tools' menu.
4. Take a picture of the front and back of the check you wish to deposit. Submit the check for processing.
5. Wait for the screen to show the check was accepted. You will receive a transaction number and an 'In Process' date. Tap 'Continue' to return to the 'Tools' menu.
6. Keep the check for at least 15 days to ensure it properly appears and stays in your account. Once you are certain the process was successful and there are no problems, you may then dispose of the check.

How to Check PayPal Account History

1. Log in to your PayPal account. On your computer, go to the PayPal home page (see Resources section). Click 'Log In' and you will be transferred to the sign in page. Enter your email address and password. You will be directed to your account page.
2. Note the information available on the 'My Account Overview' page. A snapshot of your recent PayPal activity is provided. You can also choose to see a record of either 'Payments Sent' or 'Payments Received.'
3. Review the tabs at the top of 'My Account Overview' page. Click on the tab labeled 'History.' A new page will open providing specific options for your account history search.
4. Determine the parameters of your account history search where it indicates 'Show.' The default selection is 'All Activity - Simple View.' Click on the drop down box to choose the history of a specific type of transaction.
5. Specify the time frame of your account history report. After selecting the type of transaction you want reported, examine the choices offered by the 'Within' drop down box. Chooses are for the past day, week, month or year. If a specific account history date is desired, us the 'From' and 'To' date option.

How to Change the Color of PayPal Buttons

1. Open your browser and navigate to Cool Text, a graphic generator website. Scroll down on the home page to the section titled 'Choose a Button Design.'
2. Click on the style of button you want. This will bring up a customizing page; change the font color by clicking on the color box next to the 'Text' field. Change the button colors by clicking on the color boxes in the 'Fill' section under 'Button.'
3. Make any other changes to the button, such as clicking in the 'Text' field to change the text displayed on your button or picking an effect in the 'Other' section.
4. Check the 'Live Preview' image at the top, and click 'Render Button' when finished. Save the image by clicking 'Download Image' or right click on the button and scroll to 'Save Image As.' Click 'Save' to save the image in your downloads folder.
5. Create an account at a free photo hosting site, such as Flickr or Photobucket. Upload your button image and then copy the URL address. For Photobucket, copy the URL by mousing over the photo and clicking on 'Direct Link.' For Flikr, click on the arrow next to the Twitter icon in the upper left-hand corner and click 'Grab The Link.'
6. Log into PayPal, and click on the 'Merchant Services' tab. Look under 'Create Buttons' and click on one of the available button types. In the 'Customize Button' field, click 'Customize Text Or Appearance,' then select 'Use Your Own Button Image.'
7. Click in the field, and then paste in your image's URL address. Enter in the rest of the button's information, such as item name, price, shipping and tax, then click 'Create Button.'

How to Add Funds to a PayPal Account

Adding Bank Account Funds
1. Set up your bank account. Add your bank name, routing number and account number information into PayPal. Your routing and account number can be found at the bottom of your check. The first set of numbers on the far left is the routing number; the second set of numbers separated by a colon, the account number.
2. Verify your account. Once you establish the account, PayPal makes two small deposits into your bank account, usually within a few days. If you use online banking, check your statement--you'll see two deposits with PayPal as the payee. You must enter the amounts into PayPal to verify that you own the account.
3. Transfer your funds. After verification, enter the amount of funds you want to transfer. Go to the section labeled 'Add funds.' Choose your bank account then add the amount to transfer. Be sure the transfer details are correct before submitting. Within three to four business days, PayPal adds the funds to your account via an Electronic Funds Transfer (EFT).
Adding Credit Card Funds
4. Add your credit card to the PayPal system. Enter your name, the card type and number, expiration date and the card verification number (these are the last three digits on the back of your card).
5. Enter your billing address. PayPal confirms your card number as well as the billing address on your credit card statements. Click 'Add card.'
6. Transfer your funds and you're ready to shop.

How to Transfer Money to an International Bank Account Number

Send Money Through a Bank
1. Visit your bank's local branch and tell a representative you want to send a wire transfer to another country. You will be given a form to fill out for sending an international wire transfer.
2. Fill out the form. The form will chiefly ask for the recipient's bank account number, international bank account number (iBAN) and bank name and branch address. Apart from that, you will have to enter details for the bank account you want to transfer the money from. Also enter the amount to be transferred.
3. Pay the fee for making the transfer and keep the receipt safe. It will take about two to three weeks for the money to reach the recipient's bank account.
Send Money Without Going to a Bank
4. Compare the fees at Western Union, PayPal and Xoom by entering the transfer amount and selecting the country on each company's website (see Resources). Select the company that you find has the lowest cost.
5. Visit the website of the company you have decided to use for transferring money internationally. When you open the page, click the 'Sign Up'/'Register' button.
6. Provide your personal and contact details, including name, email address, address, city, ZIP code and country. Also enter your bank account details or credit card information for sending the money.
7. Click on 'Send Money'/'Transfer Money' after registering.
8. Enter the recipient's bank account number and bank name along with the amount you want to transfer. If you choose PayPal, you will have to enter the recipient's email address instead of a bank account number. The recipient will then receive an email notifying him about the funds. If the person doesn't have a PayPal account, he will have to create one to access his funds.

How to Use PayPal for Gift Credit Cards

1. Establish a PayPal account. You can do this by visiting PayPal.com, and clicking on the 'Sign Up' button near the search engine in the upper right hand corner of the home page. You'll be prompted for the type of account you want to set up, your name and bank account information. You'll be required to set a password and provide an email address. Once you're done, PayPal will wire two small transactions to your bank account. You must know what these amounts are to activate an account.
2. Set up a 'Student Account.' This program is designed for parents of teenagers who want to give their children spending money while still monitoring where that money is spent. You will again be prompted for your child's email address. Access the Student Account section (see Resources). When the process is complete, PayPal will send you a debit card that you control, then you can give it to your teen.
3. Set up an eBay Gift Card. PayPal does not administer gift cards directly except for those designed for Student Accounts. However, you can send a friend an eBay gift card, and fund it via PayPal. Your friend may use her eBay gift card for nearly anything available on eBay.com. To set up an account, visit the eBay gift card section (see Resources) and select whether you wish to create your own personalized card or select a stock card from the eBay inventory. Follow the directions. You will need an active PayPal account to create a gift card.