PayPal account being used for payment
Spend & Save

The PayPal account: how it works

We all like to make our lives a little easier and personal finance is no exception! PayPal has been revolutionising our everyday spending since it was founded in 1998. So, how does it work?

Shopping online with a PayPal account

As any of the major money blogs would tell you, the main benefit of a PayPal account is that it allows you to shop online using PayPal to process your payment details. The first step is to sign up for an account, which requires some personal information, sucha as your name and address, and an email address and password.

Once you are logged into your account, you have the option to connect one or more debit and credit cards to your account. Then, next time you shop and see the PayPal sign, you simply enter your password and checkout. No need to input your details again! With PayPal, there’s no rummaging around for cards on the go.

Paypal is particularly efficient if you like to sell new or used goods on sites like Etsy or Ebay, or are a frequent purchaser there. PayPal lets you snag a bargain without worrying about a stranger accessing your cards, and provides peace of mind with its Buyer Protection guarantee on certain purchases.

Sending & receiving money with PayPal

Rather than setting up a bank transfer, which often requires the hassle of a card reader, you can split a dinner bill after leaving by sending money from your PayPal account to theirs. When you’re logged in, simply enter the amount you want to send and the email address of your recipient. Voila, it’s done!

Similarly, when someone pays you money, your PayPal balance reflects your total. You can add your bank details and transfer the money or keep the balance to make purchases. PayPal also offers a nifty tool called Money Pool, which allows you to add friends in advance to raise money for a group activity.

Alternatives to PayPal

While PayPal has become a household name at this point, there are alternatives that provide similar services. One competitor is Stripe, which is a tech-based approach to payment processing. Stripe is slightly more focused on providing ease and flexibility for businesses, however, while PayPal is often chosen by the individual user who just wants to send a payment for coffee to a friend.

Another potential choice for the everyday online user is Google Pay, which harnesses the power of the search engine giant. Like PayPal, you can add debit and credit cards to pay online with the protection of your Google Pay account, but you can also use the app to scan and pay in stores. In addition, you can add your PayPal account to Google Pay and maximise the benefits of both.

Written by Victoria

Copyright Io4 UK Limited

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