Table of Contents
- What is PayPal?
- Why choose PayPal?
- How did PayPal start?
- Significant developments of PayPal
- Acquisitions made by PayPal
- Interesting facts
What is PayPal?
For anyone interested in knowing what PayPal is, it is important you get the right answer. PayPal is an online service that enables its users to send money, pay for purchased products and services, and of course, accept payments. In simple terms, PayPal is like an online bank, with an option of sending money to people in other countries in various currencies used internationally. As of 2019, PayPal allows users to hold funds and transact in 25 currencies all over the world. Even better, a PayPal account holder can set currency conversion option in the settings for their convenience.
An American company, PayPal operates globally offering an electronic alternative to traditional paper ways such as money orders and checks. By charging a fee in exchange for services, PayPal runs a payment processor for vendors and auctions online as well as many other commercial users. These also include individuals who want to use or get money from both local and international partners.
PayPal users can:
- Transfer money from their PayPal account to their bank accounts and vice versa
- Get a cash advance from their credit cards and be able to deposit it in their PayPal account to use it. Register your credit or debit card with your PayPal account to use this service.
- Transfer money from their PayPal account to another member’s PayPal account. This simply requires members to share their PayPal account emails.
- Transfer money from their PayPal account to their savings account
- Receive a check via email for the balance of their PayPal account
- Acquire a PayPal debit card that allows them to make a real-world purchase using their PayPal account.
Obviously, there is a lot of convenience and flexibility offered by PayPal to its users. For PayPal members transacting with operating merchants, there is a “one-touch” option service that also eases things for users. Take note that since PayPal interacts with its members’ bank account, it is essential to link your bank account to your PayPal account.
With users over 285 million, a PayPal member can access millions of merchants to do business with as well as other members for many types of financial transactions. Currently, the company operates in over 200 markets linking millions of consumers to business people.
For those wondering if it is a must to register with PayPal to enjoy its services, then you have nothing to worry about. You can use the company’s services without a PayPal account.
Users who prefer to use apps can download the PayPal app available on the Google Play Store and iTunes app store. The app allows PayPal members to have a great PayPal experience, thanks to a couple of features, including the “one-touch” option for buyers and merchants.
Right now, a member can search for local restaurants, shops and business places that accept PayPal payments courtesy of the updated PayPal app. On top of that, one can access their main PayPal accounts and the credit accounts as well as order ahead at participating events.
PayPal has a penetration of almost 100% where it can be used in over 200 countries or regions globally. There are, however, certain limitations in various countries. You can always check what services the company offers in your particular country or region.
In this digital era, PayPal is steps ahead with digital marketing, where it engages people in various marketing activities. There are many channels through which PayPal stresses consumers can benefit in varying ways. These modes include social media such as Facebook and Twitter, TV commercials, display advertisement and outdoor advertising.
For traders looking for options where their consumers can utilise online payments and other transactions, PayPal provides free analytics. As a merchant, you can get help when trying to reach target consumers. Since this free service is beneficial to you as a merchant and to PayPal, they will assist you by collecting information about your consumers which can be installed on your website.
If you get to own a PayPal Cashback Mastercard, you get 2% return cash if you shop in physical or online stores with PayPal. PayPal has an agreement with Synchrony Financial to offer this service that promotes the number of prospective clients.
It is important to know that PayPal works with many organisations, companies and of course, individuals to offer a lot to its customers.
What Are The Benefits Of PayPal?
The millions of PayPal users obviously enjoy certain benefits of this online service. Indeed, there must be a reason why PayPal continues to grow. Many users can tell you why they prefer PayPal to other modes which can all be summarised to certain benefits.
It may also help to know how PayPal feels about their company’s services. According to the company;
- Signing up for a PayPal account is free and easy to use. Sending money to loved ones and making purchases using the account in the US is free.
- PayPal a faster, more secure online way of transacting as compared to many other ways. They always go out of their way to ensure your financial information is secure.
- You have a high likelihood of buying from any store, considering it allows people to purchase from millions of online stores and other physical ones across 203 international markets without the trouble of currency converting.
- PayPal offers a level of convenience to ensure it is a simple experience for its users. You can make one-time purchases, and have a quick, easy way of making your all recurring payments of all your monthly bills and subscriptions.
People using PayPal have found that;
Consumers can quickly pay for products or services purchased online without the need to visit physical stores or banks. This is also made easier by the fact that PayPal account can be linked directly to a user’s bank account. You might not even need a credit card to make purchases.
- By buying with PayPal, buyers have a level of security since your bank information is not revealed, only a PayPal account details.
- Merchants using PayPal get to enjoy direct and immediate payments without the hassle of going through the clearing banks, or wait for checks.
- You can save yourself some money in fees if you are a trader who uses PayPal like credit card fees and other processors’ fees, which merchants find more expensive than those of PayPal.
- PayPal provides to sellers a seller protection policy which may cover losses should products get damaged or lost en route to the buyer, or from a chargeback.
A user of PayPal gets to enjoy one of the most flexible online payment methods and can easily access their funds. One has to agree that the online transaction is an exceptional alternative to physical shopping and banking one has to do. PayPal suits people nowadays with their busy lives.
Disadvantages of PayPal
Every financial organisation or institutions has some drawbacks, and so is PayPal. It is essential to know what problems are there for being a PayPal member or using their services.
Account freezes, holds and limitations
You could have your account frozen by PayPal for breaking the terms of service. PayPal can limit the number of cash users can send, receive or withdraw if they suspect users are violating the terms of service. Should customers complain because of you as a trader, or have what administrators regard as a high number of chargebacks, PayPal may limit your account.
In case of unlawful behaviour by a user suspected by PayPal, the member may have their account frozen for an unknown period of time. The measure is to protect members from fraud and investigate a case of unlawful activity account.
Traders for particular merchandise such as firearms and prescription drugs cannot sell their commodities and receive payment via PayPal.
PayPal members receiving money for products or services considered questionable content may not benefit from the good service of PayPal. In April 2019, for instance, PayPal announced to businesses selling academic papers to university and college students that they should move their business elsewhere after it was urged to block essay-writing firms. Traders with products that PayPal considers obscene may also experience problems with PayPal.
That said, merchants with PayPal accounts for legitimate businesses shouldn’t worry about freezes.
While funds transfer via PayPal is quite fast, some traders especially those selling commodities, via eBay may not immediately access their funds. If there is an issue with your transaction, you could have your payments as a merchant held by PayPal for 21 days.
If as a seller you have limited activity on your account or a history of chargebacks you could be put on administrative hold. Other merchants susceptible to this kind of hold are those who sell products such as gift cards, event tickets and electronics. Such a decision tends to lower the benefits of PayPal, including the speed users enjoy.
Some people think PayPal fees are not as ideal as other services are per transaction. Obviously, this is by comparing PayPal to other similar accounts that have monthly charges instead.
Security and insurance issues
PayPal is an excellent alternative to banks, but we can all agree it isn’t a bank, a fact that may bring a couple of issues such as security and insurance. Money in PayPal is not covered by deposit insurance countries have for the money in banks. Your money in PayPal may be lost since you are not protected against PayPal’s insolvency.
Since PayPal does not adhere to bank rules, some users find it untrustworthy. Not meeting some financial regulations such as the Bank Secrecy Act and the Electronic Funds Transfer Act, PayPal may seem shady.
Why Choose PayPal?
As aforementioned, PayPal has over 280 million members all over the globe, both businesses and individual users. Billions in payments have been transacted via PayPal with more than 16 million merchant accounts. It has been reported that close to 770 thousand websites regularly use PayPal and this is predicted to continue.
Up to this point, it is easy to see why PayPal is so popular. For those looking for an ideal online payment platform, there are reasons why one should choose PayPal.
Consider the following points:
- Global reach
- Cost-effective charges
- Discounts available
- Mobile friendly
- Multiple payment options
PayPal is global
The fact that PayPal operates internationally and is available in over 200 countries and regions makes PayPal stand out against all other similar platforms. The flexible PayPal accounts allow users to hold balances in 25 currencies and withdrawal money in 56 currencies all over the globe. You can receive money from 100 currencies. Considering how the internet has penetrated all over the world, changing how people receive products and services, one can see why PayPal is a perfect fit for financial transactions required by involved businesses.
You can sell or buy millions of products and services from millions of places using PayPal. It allows you a global reach anytime.
PayPal charges are cost-effective
While some users may not like the fees one pays for particular transactions, PayPal charges are quite economical with many being free for certain regions like the US. Considering the many benefits of PayPal, the small fee charged is very affordable for almost every PayPal user.
PayPal offers discounts
Every now and then PayPal publishes a number of discounts it offers for shoppers in many large retailers. It is easy to benefit from these discounts through an easy promo code provided on the PayPal shopping page.
PayPal is available for mobile
One of the things that makes PayPal easy and convenient to use is its availability for the mobile user. For many years, the PayPal platform has allowed access through mobile devices. Besides that, Android and iPhone device users can download the PayPal app, which offers all the features of the PayPal website. You don’t need to sit at a computer to do PayPal transactions.
PayPal offers users multiple payment options
You can choose whether to transact on PayPal using bank accounts, numerous bank accounts and of course, the PayPal account itself. This saves you from a range of hassles you find in physical banks.
Despite the few security concerns people have about PayPal, the company offers one of the safest ways to shop or do other transactions online. You can shop without providing your financial details, as no such information is shared to the merchant.
The company also provides its own security using top fraud prevention systems that protect your financial information. You only need to provide your bank account and credit card details to PayPal once, and you’ll never have to repeat this, increasing security.
These are some of the most significant reasons why anyone looking for an online payment method should choose PayPal. It might take a lot of work for other systems to reach the level PayPal is at right now.
You might be interested in knowing how PayPal began.
How Did PayPal Start?
Here a brief story of how PayPal came into being the popular online money transfer mode for millions of people. In December 1998, a group of six people founded PayPal as Confinity. The company developed security software for handheld devices. The group of six professionals, some engineers and other entrepreneurs are Ken Howery, Luke Nosek, Max Levchin, Peter Thiel, Yu Pan, Russel Simmons. In 1999, through funding by John Malloy of BlueRun Ventures, PayPal was developed and launched as a money transfer service at the same company Confinity it was founded.
Interesting, PayPal, according to one of its original founders, Luke Nosek had an initial mission to create a global currency independent from corrupt cartels of banks as well as governments that would debase their currencies.
There is, of course, more to founding that has made PayPal be many people popular online money transfer platform. Before its renaming from Confinity to PayPal, the company had the contribution of another founder, Elon Musk.
In March 2000, Confinity merged with X.com an online banking company started by Musk. Musk optimism about the Confinity’s money transfer future success made him disagree with Bill Harris, who was then the president and CEO of X.com, causing Bill to leave the company in May 2000. Later that year in October, Musk decided that X.com terminate its other internet banking operations and focus on the money service provided by PayPal. The same month, Peter Thiel replaced Musk as the CEO of X.com. In 2001, X.com was renamed PayPal, a year which saw the company rapidly expand. In 2002, PayPal executives decided to take the company public, allowing others to invest in it.
Some Significant Developments Of PayPal
In 2005 PayPal acquired Verisign payment solution, a move to expand its e-commerce business as well as offer added security support.
In 2007, PayPal partnered with MasterCard, something that led to PayPal Secure Card development and launch. By generating a unique, single-use MasterCard number for every checkout, the service enables customers to pay on websites that don’t directly accept PayPal.
In 2008 PayPal acquired Fraud Sciences, an Israeli company dealing with online risk tools in order to enhance PayPal’s fraud management systems.
PayPal has been a subsidiary of eBay from 2002 to 2015, and there has been a lot that has happened. After the acquisition of PayPal by eBay, over 70% of all eBay auctions were being paid via PayPal. PayPal even became the payment method for most eBay users. Even though eBay had other payment options, PayPal becomes its default choice.
Still, under eBay, PayPal Merchant Services division continued to grow, providing to retailers on eBay e-payments.
In 2012, PayPal announced its partnership with Discover Card a move to move PayPal businesses offline for customers to be able to pay via PayPal in physical stores. By then, Discover Card’s network had 7 million stores.
eBay announced that it would spin-off PayPal into a separate publicly-traded company in September 2014, and this was completed in July 2015.
The Acquisitions Made By PayPal Over The Years Are:
- Fraud Sciences in January 2008
- Bill Me Later in October 2008
- Where.com in April 2011
- Figcard in April 2011
- Zong in October 2011
- card.io in July 2012
- IronPearl in April 2013
- Braintree and Venmo in September 2013
- Stackmob in December 2013
- Paydiant and CyActive in March 2015
- Doom Corporation in July 2015
- Modest Inc in August 2015
- TIO Networks in February 2017
- Swift Financial in August 2017
- iZettle in May 2018
- Hyperwallet and Simility in June 2018
- GoPay teen in September 2019
- Honey in November 2019
Some Interesting Facts about PayPal
There was a time PayPal paid people $20 to join and $20 to refer to other people. It was at this time, PayPal was voted as one of the ten worst ideas in 1999.
Some years back, when many Nigerians used PayPal to defraud many foreign buyers on eBay, the payment platform necessitated a restriction.