What Is PayPal and How Does It Work With eBay?

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eBay has millions of items for sale, but the only way to pay is with a payment system called Paypal. This payment system allows buyers to send money to sellers virtually, without involving personal checking, debit card, or credit card numbers. Paypal is safe, widely accepted, and seamless when paying for items online. 

Exactly What Is PayPal?

Simply put,

"PayPal is a service that enables you to pay, send money, and accept payments. Register your credit card or debit card with your PayPal account. You can pay by simply choosing PayPal at checkout, logging into your PayPal account, and confirming your payment. We complete the process for you. Simply choose PayPal when you select a payment option on this site, and you can quickly open a PayPal account and add your payment method to complete your purchase. You can use your PayPal account to shop with millions of merchants and sellers around the globe wherever you see the PayPal logo."

As a PayPal member, you are able to:

  • Transfer money from your bank account to your PayPal account
  • Get a cash advance from your credit card and deposit the amount in your PayPal account
  • Transfer money from your own PayPal account to another member's PayPal account
  • Transfer money from your PayPal account to your checking or savings account
  • Have a check mailed to you for the balance of your PayPal account
  • Get a PayPal debit card that you can use to make real-world purchases from your PayPal account

How Does Paypal Work With eBay Transactions?

When a buyer wins an auction, has a best offer accepted, or purchases an item on Buy it Now at full price, the seller will send an invoice to the buyer. The process looks like this:

1. Buyer Wins an Auction or Makes a Purchase

A bidder makes a purchase from a seller that accepts PayPal as a payment method.

2. Winning Bidder Checks Out Using PayPal

From the My eBay page or on the item listing itself, the winning bidder, who is a member of PayPal, clicks on the "Pay Now" icon next to the completed listing.

3. Money Is Moved Automatically ​

By checking out using PayPal, the winning buyer automatically triggers a transfer of funds from their preferred payment method (either credit card or bank account) into his or her PayPal account. These funds are then immediately transferred to the seller's PayPal account.

Or, as a Paypal member, you can leave a balance in your account to cover future purchases. 

4. Seller Receives Funds ​

With the funds now in their account, the seller is now free to either transfer them to his or her bank account(s), have a check mailed from PayPal, spend the money in the "real" world using a PayPal debit card, or use the PayPal balance to make other purchases online.

Benefits of Using Paypal

PayPal is a fast and easy way to buy things online. Paypal is the preferred method of payment on many shopping websites, besides just eBay. Paypal offers these seven benefits:

1. Flexibility for Sellers 

With a PayPal membership, even very small volume sellers can quickly and easily accept payments that originate from buyers' credit or debit cards.

2. Speed

PayPal transfers between sellers are instant, and transfers from PayPal accounts to bank accounts can take as little as 24 hours.

3. Affordability ​

The fee to use Paypal is 30 cents per transaction, plus 3% of the total amount of the transaction. 

4. Safe Buying

Because PayPal offers buyer guarantees and a specific process for disputing transactions, so users always have recourse whether they are a buyer who didn't get what they ordered, or a seller who may worry she will be stiffed on payment.

 

5​. Account Privacy 

Paypal is secure. For buyers, this means a level of account protection not offered by brick-and-mortar stores, where retailers commonly have buyers' account information in-hand after purchases.

6. Ease of Record Keeping 

Paypal history goes back to the day the account was opened. Users also have the ability to pull reports and users are provided with a 1099 if they have more than 200 transactions and $20,000 in sales.

7. Acceptance Online

Paypal is now a common method of payment on many shopping websites, as well as websites that take payment for any other reason.

We Live in an Electronic Global Economy

In this day and age, it is common to buy items online, possibly from a seller in another country. We live in a global economy where we are really just a computer screen away from each other.

Paypal is a safe, trusted, and efficient way to purchase goods or services online from anyone. 

Updated by Suzanne Wells on May 14, 2017.