Like a lot of good ideas, how does PayPal makes money is pretty easy to understand. u PayPal account and very similar to any savings or checking account, except that PayPal was.
Like many good ideas, how does PayPal makes money is pretty easy to understand. Your PayPal account is very similar to any checking or savings account, except that PayPal was specifically designed for online transactions. Before you can start using PayPal, the first thing you need to do is open a PayPal account. Consider starting with a personal account, as there are no fees associated with sending or receiving money. After getting your feet wet, you can always upgrade to a Premier or Business account.
You must send a personal account to a Premier or Business account if you are sending payments totaling $ 2,000 or more. This limit can vary, depending on whether you have the US or international account. There may also be limits on the amount of money you can transfer from your PayPal account to your bank account. To see what limits apply to your account, click the View Limits link, located to the right of your account balance chart, on the Account Overview page.
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Money makes the world go round (PayPal)
Okay, you are convinced and you opened a personal account. Now what? An account without funds is like a cone without ice cream: what’s the point? You must put money into your PayPal account before you start doing anything.
Fund your PayPal account in one of three ways:
- When receiving payments from other PayPal members
- By linking a checking or savings account to your PayPal account and using Electronic Funds Transfer (EFT) to transfer money
- By obtaining interest payments on the funds that are in your PayPal account
When you make a payment with PayPal, you have several sources of funding from which you can choose to fund the transaction. These sources include the following:
- If you have sufficient funds in your PayPal account to cover the payment you want to make, the funds are deducted directly from your PayPal account.
- If you have a linked checking or savings account to your PayPal account, the funds can be deducted directly from your bank account in the form of eCheck.
- If you link a credit card to your PayPal account, the payment amount may be deducted from your credit card after you have depleted the funds in your PayPal account balance. The payment appears on your monthly credit card bill.
The process to buy a good or service with PayPal is very simple:
- After winning an auction or purchasing an item, if you choose to use PayPal for payment, PayPal deducts the amount of your purchase from the funds in your PayPal account or authorizes payment from the credit card that you have linked to your account PayPal.
- how does PayPal make money credits the seller’s account with the funds deducted from your account (less any applicable transaction fees)? Rates only apply to sellers with Premier and Business accounts.
- PayPal generates emails to you (the buyer) and the seller to confirm the transaction and the transfer of funds.
The actual transfer of funds is no more complicated than if you had to pay for an item with a check from your checking account.
How PayPal makes money
Like a bank, PayPal makes money from the “float” of the funds they manage. In other words, PayPal is earning interest on money that you (and millions of others) have deposited into your accounts, but have not yet spent.
Think of it this way: PayPal has approximately 50 million members. If each member left $ 10 in their account for a year, PayPal would start with around $ 500 million as capital. Even at an interest rate as low as 1.75 percent, PayPal would make $ 8,750,000 every year, just for letting the money stay there!
Additionally, how does PayPal make money by charging transaction fees for Premier and Business accounts – there is no fee to send money, but when you receive money, PayPal takes a percentage of the amount (between 1.9 percent and 2.9 percent) plus a transaction of 30 cents USD fee.