Answer: PayPal is the world's most popular "middleman service" for online purchasing. Where moneygrams and wire transfers were the standard in the 20th century, today over 99 million Internet users prefer to use PayPal to send money to each other via email. PayPal has become such a convenient and trusted way to transfer money online, 95% of eBay's purchases go through PayPal.
How PayPal Works.
As an online financial transaction broker, PayPal lets people send money to each other's email addresses. At no time will either party see the other's credit card or bank information.
Similar to an escrow service, PayPal acts as the middleman holder of money. Through its policies, practices, and business integrity, PayPal has earned the trust of both parties. With multiple guarantees in place, buyers and sellers entrust PayPal with their credit card and bank information. PayPal keeps that private customer information secret. Then, while "blinded" from the other party's confidential information, strangers safely send money to each other through PayPal and email.
You need no special technology nor a business license to send/receive money through Paypal. The only requirements are:
- a valid email address.
- a valid credit card or bank account.
nswer: as a middleman financial broker, PayPal makes its profit by charging a percentage of the money it transfers for you.
- PayPal is Free for Buyers and for Sending Money to Someone Else. Once a buyer sets up a Paypal account, then it costs nothing to send money to a vendor. The funds are withdrawn from the user's credit card or bank account, or both. PayPal does not charge buyers to send money.
- PayPal Commonly Charges Money Receivers (Sellers) a 30 Cent Fee + (1.9% to 2.9%) Surcharge. PayPal will only charge you to receive funds. Using a special surcharge formula, PayPal will bill you whenever you receive a payment from a buyer.
Paypal Fee Table:
- For receiving transfers under $3000 USD: the fee is 2.9% + $0.30 USD.
- For receiving transfers $3000.01 to $10,000: the fee is 2.5% + $0.30 USD.
- For receiving transfers $10,000.01 to $100,000: the fee is 2.2% + $0.30 USD.
- Receiving transfers over $100,000: Paypal charges 1.9% + $0.30 USD.
As you might guess, smart sellers will increase their prices to offset this charge on their side of PayPal.