What is Paypal?

PayPal (owned by eBay) is an online service that allows people and businesses to exchange currency over the Internet. PayPal is popular because it's cheap to use, it allows people to make online payments without credit cards, and it processes online payments for merchants looking to avoid the overhead of a merchant account. It's really quite simple and the business has grown to an astronomical size. There are two kinds of PayPal accounts. Personal and business. Here's how they both work and what you can do with them.

Personal account
Personal PayPal accounts are for people who do not have credit cards or do not want to use them online. Funds are sent from one PayPal account to another. You then draw your funds out by electronic transfer to your bank account (takes 3-4 days) or PayPal will write you a check (takes longer).

Example: I have a PayPal account. So do you. I buy an item from you on eBay. When the auction ends I go to PayPal and enter your email address and the amount of money I want to send you. PayPal will then transfer money from my PayPal account to yours.

Personal accounts are free but you cannot accept credit card payments. If you wish to accept credit card payments then you need to sign up for a business account.
Click here to sign up for a free personal PayPal account


Business Account
PayPal will also process payments for merchants (credit card or direct from PayPal account). You register for an account at PayPal. Then you tell PayPal what products and services you are selling and what they cost. You then link directly to these options from your Web site. When a user clicks on a link to buy something PayPal will open and ask for the amount of money specified for that product or service.

Choosing one of the membership options above takes you to the PayPal Web site where the specified amount of money is requested. Payment can be made with a credit card or an existing PayPal account.

You will need a PayPal business account to use PayPal's processing system because you will want to accept credit card payments. When you receive funds PayPal charges you a percentage of that transaction. There is no set-up fee. You can find these fees on the PayPal Website


Does PayPal ship my item for me?
No. You ship the item. PayPal only collects the payment for you.

How do I know someone ordered
PayPal will send you an email to inform you an order has taken place. You can then login to PayPal to see the order details.

How do I get paid?
PayPal will send you your money by check or direct deposit in to your bank account.

What about shipping charges?
PayPal allows you to add shipping charges to your item but there currently is not a shipping service integrated in to PayPal that will give you rates for multiple carriers or plans. That is one of the biggest pitfalls in trying to use PayPal for a multiple item store (see below).

What are the advantages of using PayPal on my Web site?

• PayPal is easy and cheap to use. You do not need a merchant account, credit card terminal, processing software, and you only have minor development costs.
• Time to market. You can set up a PayPal account to accept payments in minutes.
• Offers user another payment option. 25 million people have PayPal accounts.
  More here --> http://www.paypal.com/cgi-bin/Webscr?cmd=p/gen/about

What are the disadvantages of using PayPal on my Web site?

• Customer needs to leave your Web site to complete the transaction. This can be seen as unprofessional and also confusing to the user.
• Asking customer to give personal information to an organization they may not be familiar with.
• Entire order data is not in your database unless you ask for it twice.
• Any complaint about PayPal becomes a complaint against you.
• You do not have the flexibility that you may need for things like shipping charges, design, reporting and handling returns.
• Terrible for member based options where the user joins a service. The user must leave your site to go to PayPal and then come back to your site when they are done. You have to get crafty in making sure they actually went to PayPal, payment was accepted, and then mark them as paid in your system when they return so they can start their services right away. Otherwise; you will need to make them wait until you double check and approve. It's a clumsy process.

Categories: Internet