All about PayPal
PayPal, eBay's online payment service, was founded in 1998 and quickly became a useful and popular tool for online auction participants. PayPal enables any person or business with an e-mail address to securely send and receive payments immediately, online. The site acquired PayPal in 2002. By mid-2005, the online payment service had grown to 71 million members in forty-five countries and was signing up roughly 50,000 new members per day. Part of the growth surge was attributed to the 2005 elimination of a long-standing PayPal policy. Now, payments can be made through PayPal without opening a PayPal account first.
The sellers of more than 90 percent of the items listed on eBay accept PayPal as a payment method. Not surprisingly, PayPal now touts itself as “the global leader in online payments.”
How PayPal Works
PayPal's free Send Money feature enables a buyer to use a bankcard to pay any seller with an e-mail address in the countries that accept PayPal. The recipient does not have to have a PayPal account. You simply enter the seller's e-mail address and the amount you wish to pay. PayPal then e-mails the seller with information on how to get his or her money.
PayPal's Request Money feature follows a similar format. It can be used to request money from an auction's winning bidder, or to invoice a customer or to send someone a personal bill. PayPal sends the recipient an e-mail message that contains instructions on how to pay via PayPal.
Many eBay sellers now choose PayPal as their primary choice for receiving payments because of its convenience and widespread acceptance. This means a new eBay auction buyer should consider establishing a PayPal account as well. With a PayPal account, you do not give the seller any of your financial information, such as credit card or debit card numbers. “When you make a payment using PayPal,” the Web site promises, “the recipient never learns your financial information. All PayPal transactions are based on the buyer's and seller's e-mail addresses.”
You can open a PayPal account without giving PayPal any credit card information. However, you can't pay for an online purchase until the information is provided.
PayPal and eBay came to the rescue of Si Dunn during the writing of this book. One day, while he was typing away on one of the chapters, there was a sudden, loud
As of mid-2005, PayPal payments could be made in the following currencies:
Australian dollar
Canadian dollar
Euro
Japanese yen
Pound sterling
U.S. dollar
A PayPal payment in one currency, such as the U.S. dollar, is automatically converted to the currency desired by the seller, as long as it is on PayPal's list of supported currencies. The buyer no longer has to know currency exchange rates, or have a balance in a foreign currency, to make payments.
PayPal's Buyer Protection plan is another reason the online payment service is increasingly popular. Buyer Protection offers “free coverage up to $1000.00 USD at no additional cost on qualified eBay purchases.” The “qualified” purchases are those “significantly not as described or never received.” PayPal first tries to help settle a dispute between an eBay buyer and a seller. But if a satisfactory solution cannot be found, Buyer Protection may be invoked.
But eBay is not the only place where PayPal can be used. Any buyer and any seller with an e-mail address can use it. As of mid-2005, PayPal was also accepted at more than 42,000 online shops and at a number of charitable organizations seeking donations, such as Doctors Without Borders.
Account Options
When you sign up for PayPal, you have a choice of three types of user accounts: personal, premier, and business.
Personal Account
A personal account allows you to send money via PayPal and to receive money with certain restrictions. This type of account is adequate for personal online shopping, bidding in online auctions, and selling an occasional item on eBay. You can pay for auction purchases using a credit card, a debit card, or your bank account. No fees are assessed. However, personal account holders cannot receive payments funded by credit cards. They also may not receive more than $500 per month in payments for eBay items, non-eBay auction items, and other payment types specified in the account agreement.
Premier Account
A premier account allows you to buy and sell online under your own name. The account is free, and you can send payments without charge. There is no limit on how much money you can receive through a PayPal premier account. But you will be charged a small fee each time you receive money. The fees are spelled out in the PayPal account application pages.
Business Account
A business account enables your online business to accept payments via credit cards, debit cards, and bank accounts. Sending money is free, and there is no limit on how much money can be received. But your account is charged a small fee each time you receive a payment via PayPal. A business account also allows multiuser access. This feature lets you establish separate logins and give others in your business varying levels of access to your PayPal account.
If you enjoy buying items for personal use on eBay, then decide you also want to buy and sell other types of items and run an online business, there is an option for you. PayPal will let a member set up one personal account and one premier or business account. Each account must have a different e-mail address and separate financial information, but accounts can be upgraded as needed, at any time.
Beware of Spoof Pal
Many PayPal users receive frequent e-mails from “spoof” PayPal Web sites. The messages often contain telltale misspellings or punctuation errors and warn darkly that there has been some “suspicious” activity in our accounts recently. Or, they warn that our accounts are about to be canceled if we don't update our personal information and credit card information immediately. The “spoof” messages always include convenient links, such as “Please click here to update your account records.” The links will take you to Web sites that look a lot like the real PayPal, but aren't.
“Spoof Pal” Web sites have only one purpose: to steal your personal information and credit card information. Many PayPal newcomers have fallen into these digital traps. Should you become a victim, PayPal offers the following advice: “If you have surrendered any personal or financial information to this fraudulent Web site, you should immediately log into your PayPal Account and change your password and secret question and answer information. Any compromised financial information should be reported to the appropriate parties.”
What are the two worst ways to pay for an online auction purchase?
Cash and instant wire transfers, according to eBay. If you pay with cash and there is a dispute, you cannot prove that the payment was made, nor can your cash payment be traced and verified. Instant cash wire transfers also are not traceable, and locating the recipient could be difficult or impossible if a paid-for auction item is not shipped.
Be suspicious of any Dear PayPal User or Dear PayPal Member e-mails that appear to be from PayPal. If the message does not address you by first and last name, it likely is not from PayPal. If you have any doubts, forward the message to
