How PayPal works: Step by Step Guide

If you sell goods online then PayPal offers you an amazing solution of expansive check out solutions to keep your customers happy at all times.

How Does Paypal work?

PayPal helps facilitate online payments to millions of e-commerce stores across the world. In addition, PayPal is equally used by individuals to send and receive money from friends, businesses and loved ones across the globe.

how does Paypal work

PayPal stands as one of the preferred online financial solutions in the world. It is such a formidable platform that many businesses and online marketplaces prefer having the PayPal check-out button due to its seamless use, easily customizable features and added scalability. In addition, sending and receiving money via Paypal is also a simple process with lesser transaction fees.

Features of using PayPal.

1. Secure Payment: PayPal utilizes many security measures to ensure that all possible fraud or suspicious activities on the account of your customers are detected and gotten rid off in record time.

Also, when sending money online via PayPal to others, Paypal will never release your financial information to the other party. This keeps your financial information safe and secure.

2. Faster Checkouts: You do not need to retype your financial information, simply enter your details one-time, and continue with your browsing of all products and services. This feature leads to a faster checkout solution keeping the customer happy and the company even more effective.

3. More rewards: You can earn points, miles and records when you link your credit card to PayPal and use it in shopping across e-commerce websites.

PayPal supported payment methods.

PayPal Supported payment methods

There are many payment methods that are presented to you by using PayPal services. These are the different avenues to which everyone can make financial transactions online as well as make they include:

1. Instant Transfer: When you use instant transfer, it means your funds are credited directly to the recipient’s number. This requires using credit or debit card registered with PayPal, your funds will be accurately delivered without showing any of your financial information.

2. e-check: Using e-check is not quite as instant as using the instant transfer. It is more like writing a check from your checking account and this can take from 3 – 5 days to clear just like writing your normal checks.

3. Paypal balance: When you receive money, you have a balance in your PayPal account. When your account has no balance, you can choose to pay by credit card. It is simplest to keep your books balanced. If you withdraw any balance to your PayPal business account before making a purchase.

4. Credit Card: When you put your PayPal purchases on a credit card, it is not a good idea. You are not only protected by PayPal, but your credit card company also backs you up in case of fraud.

How does Paypal work when using it on your site?

How PayPal Works when sending payments

Would you like to know how PayPal makes life easier? Here is a layout on how PayPal transaction follows a sequence;

  • Take, for instance, a customer decides to get a handbag from your website. The first step to the PayPal button begins after picking the item. Payment thus begins when this customer of ours let say, Janet, clicks on the PayPal button.
  • The button is seen and all its entails depend on the PayPal service you have chosen. If you choose the PayPal payment standard (Check out by Paypal), then your customer will be taken to the PayPal site to complete your transaction.

If you use the simple button, then the process is integrated into your site, so everything, all that your brand details keep on the good chase.

After clicking the button.

  • Once Janet has clicked on the button, if she had a PayPal account of her own then she can simply enter her password and other personal information will be instantly retrieved. If she doesn’t, she can continue to click on all she wishes to buy. Th she can pay at the end by using her card or other payment options she wishes to use.

Once login in, she saw the option “stay logged in for faster purchases” called “One Touch“. This feature keeps her logged in on whatever device she is using so all are purchases are smoothly handled without having to re-login.

Once completed, she can now pay with her credit or debit card.

  • When the send is chosen, PayPal will encrypt the data and send funds covering the transaction without any transfer of financial information. This will only take a few seconds.
  • After this, Janet will receive a confirmation email at the same time as you.
  • Once you are notified of this, you can begin processing the order. You also equally send the order of your own authenticating that you have received the funds.

PayPal Transaction Fees

Signing up on PayPal

When funds are paid or received, PayPal will take 2.9% to $0.30 per transaction. Once funds reach your PayPal account, which happens within minutes of sales, you can only access these funds after about 2 – 3 days. If you do wish to get started with PayPal, all you have to do is click here to start the registration.

Sending funds via PayPal

You can easily send funds through your PayPal account just by using your email address and password. This is an easy solution to your online transactions. However, PayPal does not allow the use of its platform for suspicious and questionable transactions. This includes payment for adult content, gambling and many more. Some of the things you can pay for using your PayPal account includes:

  • Paying for eBay items
  • Payment for goods on other e-commerce sites
  • Paying for services such as online bookkeeping services on popular marketplaces such as Fiverr.
  • Transfer of funds to your friends and loved ones all over the world.

Related: How Skrill Payment Works 


With this article, I believe you now know how Paypal works. Now, you have all the information needed in making your choice of the right payment platform to choose. Feel free to let us know what you like about using PayPal.

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Nolly Tech © 2018
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