PayPal accounts – the advantages of the digital payment service

Over 20 million customers in the UK and 230 million worldwide have already created a PayPal account, making this former subsidiary of American giant eBay one of the most sought after online payment companies. PayPal users have the benefit of shopping online comfortably, safely, and free of extra charges, whether they’re using IKEA to kit out their living room, shopping for new trainers with Adidas, or browsing Sears for a new home appliance. The growing importance of this payment service in e-commerce makes it a necessity for every online shop owner to set up a PayPal account and expand their clientele. We’ll explain how this digital payment method works and which steps are necessary to create a PayPal account.

What is PayPal?

In 2000, the internet firms Confinity and merged to create PayPal; setting in motion an incomparable online success story. Shortly after, the common idea of a simple, online payment service became the preferred payment method of choice for over half of all eBay users. This was reason enough for the management team of the online auction house to buy out PayPal in October 2002 for 1.5 million USD and remodel their in-house payment service. A PayPal account is a virtual account, containing an e-mail address, personal data, and other account information of each user. Once registration is completed, money can be sent to any supported e-mail address. If the recipient doesn’t have a PayPal account, they are notified of the payment and can access the amount as soon as they open their own account. To send money, you must first deposit funds into the virtual account in one of the following ways:

  • Direct debit
  • Credit card (subject to extra charges)
  • Bank transfer

PayPal will also store money for you in credit, like a bank. If you pay in more than you’re required to transfer to another account, the difference is automatically credited back to your PayPal account as a surplus on your balance. When you go to make another transaction, PayPal will first attempt to use money from your existing account balance, paying part or all of the bill, depending on how big your surplus is. In this way, you can top up your PayPal account in advance of making purchases. By linking your bank account to your PayPal account, you can even avoid using cards altogether; PayPal simply withdraws the money for purchases directly from your bank account using an instant transfer. All payments take place using a TLS / SSL encryption to protect personal information against unauthorised access. The seller or recipient is also unable to view their customer’s bank account or credit card information. For added security, there’s the option of protecting your PayPal account using an SMS security key.

Advantages for buyers and sellers

The sharp rise and huge popularity of PayPal should come as no surprise: the online payment service takes on the role of mediator, creating a safe and secure base that benefits customers and shop owners alike. It also features super quick purchase and shipping, leaving other payment systems far behind.

Buyer and shop owner protection

Should purchased goods not reach a customer or fail to meet expectations based on the product description, then the issue can be reported to PayPal – up to 180 days after payment. PayPal then contacts the seller, who has a maximum of 20 days to react. If they fail to respond, then PayPal refunds the corresponding amount, so long as the buyer protection claim is legitimate. But this decision lies solely with PayPal, in other words the buyer protection can’t be claimed legally. Unauthorised access to a PayPal account can also be reported to customer services, who then take the necessary security precautions. PayPal protects sellers against involuntary payment defaults. If the goods are already en route but the customer payment hasn’t been approved, then the seller is protected. Shop owners have to prove this through a valid shipping document confirming that the goods were sent to the buyer. There are certain circumstances whereby PayPal doesn’t protect the buyer or the seller. For a full list of these, we recommend you read the PayPal additional terms.

Cheap and quick

Through the uncomplicated exchange of money paid into the virtual PayPal account balance, payments for ordered goods can be made in a very short space of time. By regularly checking incoming e-mail notifications, the seller can enable shipping to get under way. Another big plus: When you set up a PayPal account, be it privately or for business, there are no costs incurred for initial setup or account maintenance. Additionally, PayPal doesn’t charge a fee for standard payments, although there are charges for credit cards, PayPal CASH deposits, and overseas transfers. Online shop owners have to pay a percentage amount based on monthly sales as well as a fixed fee per transaction.

How to set up a PayPal account – step by step

Signing up to use the world’s most popular digital payment service opens new doors to both buyers and sellers dealing in e-commerce. Millions of online shops worldwide already accept PayPal payments, which many customers consider to be a decisive factor in choosing where to spend their money. To increase their customer base, shop operators should certainly consider this payment method, operating it as a trial period if they’re in doubt about the benefits of PayPal. It’s also worthwhile trying out the online service as a buyer, too. Registration isn’t just free, it’s also quick and uncomplicated. Here’s how it works.

Creating a PayPal account

  1. Open the PayPal homepage and click on ‘Sign Up for Free’ to create a personal account, or ‘Explore Business Solutions’ to create a business account.

  2. If you’ve selected a personal account, then simply enter your e-mail and create a password that is at least 8 characters long, including a number or a special character. If you chose to explore business solutions, click ‘Get Started’ to see the two standard options available to you. Choose your PayPal package type, either the free, ‘Standard’ package, or the fee-based ‘Professional’ package. Then enter your e-mail address and click next.

  3. After this step, you’ll need to enter your personal data, including your legal first and last name, your address, and a telephone number. For business packages, you’ll have to choose a password at this stage too. By continuing from this stage, you’re accepting PayPal’s User Agreement, Privacy Policy, and E-Communication Delivery Policy.

  4. In both cases, PayPal will now send you a confirmation e-mail to the e-mail address you entered. Open this and click on the activation link provided in order to complete your registration.

  5. You can now log into your PayPal account and connect it to your bank account.

  6. Within the next 2-4 working days, PayPal will transfer you a small cent amount, containing a numerical code in the reference. After you’ve enter this number in ‘Settings’ under ‘Confirm Bank Account’, your private or business PayPal account will be ready to use.

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