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What is PayPal? Understanding Payments for Buyers and Sellers


All online marketplaces require a secure payment method. More often than not, selling platforms offer their customers a variety of electronic payment options, including major credit cards like Visa and MasterCard, debit cards, even cryptocurrency, and PayPal. 

While once only used for purchases and transactions done through eBay, PayPal has reinvented itself with a series of products and services, including a new app designed specifically for small business owners. This article will provide an overview of what PayPal is used for, and why it could be an ideal payment for both buyers and sellers.

What is PayPal?

Launched in 1999, PayPal is a household name that’s synonymous with online transactions. PayPal is an open digital payments platform that currently has over 325 million account holders all around the world. After creating an online account, PayPal allows individuals to connect with goods and services providers and complete digital transactions securely either online, or by using the PayPal app. With a focus on making financial transactions available to everybody, PayPal is currently available in over 200 markets around the world. The company’s platform also includes Braintree, Venmo and Xoom, which lets consumers and sellers receive funds in more than 100 currencies, withdraw funds in 56 currencies, and hold balances in their PayPal accounts in 25 currencies. 

How do I get a PayPal account?

Signing up for a PayPal account is relatively quick and easy. There are two different PayPal accounts, but both options are free to sign up for. 

Below, we’ll break down the differences between a personal account and a business account.

Personal Account

A personal PayPal account is for those looking to make secure payments online. Personal PayPal accounts are free, which means the individual is not subject to any transaction fees (minus any potential currency conversion fees). They store all financial information behind a secure paywall, which means a user can shop securely online. A personal PayPal account also allows users to shop globally and pay in 25 different currencies. Purchases from Canadian companies will not be charged a fee.

Here’s now to add a personal PayPal account:

  • Sign up for PayPal then link your bank account, credit card, or Visa Debit card.
  • Select PayPal at checkout and you’ll be taken to a secure page to pay.
  • Your purchase gets shipped to you without the seller seeing your financial details.

Business Account

Small business owners widely use a business PayPal account for several reasons. Holders of a PayPal business account can securely accept all Visa Debit card and credit card payments without being charged a monthly fee. Additionally, other buyers do not require a PayPal account to purchase your products or services. 

PayPal business accounts offer small business owners the following advantages:

  • Connect with a global market and accept funds in 130 currencies
  • Provide flexible payment options to customers
  • Get paid online, or send free professional, customizable invoices 
  • Offer your customers recurring or subscription-based payment options
  • Download and print your business’s PayPal QR code to accept touch-free payments.

How safe is PayPal?

Like any online payment solution that deals with major credit cards and accepts large sums of money, PayPal strives to provide a safe checkout experience for its customers. When an individual sends payment information through their PayPal account, PayPal doesn’t store any financially sensitive data, like your credit card or bank account number. In 2019, PayPal’s transaction revenues amounted to nearly $16.1 billion U.S. ($19.8 billion CAD). That year, other value-added services also generated $1.67 billion U.S. in revenues.

PayPal stores any and all financial data in secure databases. In addition, all confidential information is automatically encrypted once it’s entered into the platform. As a consumer, no payment details are shared with the seller, and as the seller, you can’t view any of your customer’s financial data, either. PayPal also does not sell any personal data to third parties.

Consider taking the following measures when signing up for a PayPal account:

  • Choose a secure password. Don’t use anything that can easily be guessed, for example, your child’s name, or an important date.
  • Don’t share your password with anybody else.
  • Don’t enable the auto-fill feature on Paypal’s website that stores your password; always log out of your account when you are finished.
  • If you believe your data has been breached, contact PayPal immediately and ask to freeze the account in order to minimize risk.

How PayPal Works

PayPal offers individuals a secure and easy way to pay for goods and services online, making it an optimal solution for small business owners.

Once you’ve created a PayPal business account, you can begin accepting payment options via your ecommerce store. PayPal works differently for buyers than it does for sellers. As a small business owner, you’ll likely be interacting with PayPal as a seller, which will grant you:

  • Accept online payments from mobile, desktop, or in-person via the app
  • Allow customers to transfer funds directly to your account; this is a great solution for small sales, or one-time purchases
  • Set up recurring billing cycles for your customers and have the money come from their PayPal accounts directly.

PayPal also has an app called the PayPal Business App that can be used remotely to view account activity, manage refunds, add contacts, and manage your transaction history. 

Does PayPal support crypto?

Cryptocurrency continues to be a popular payment method for eCommerce. Unlike physical coins and banknotes, cryptocurrency is a fully digital currency. All transactions are verified digitally, and all withdrawals and deposits, and other records are maintained by a decentralized system using cryptography, rather than by a centralized authority such as a bank.

There are several kinds of cryptocurrency that are used online, including Bitcoin and Ethereum, which is currently the second-largest cryptocurrency by market capitalization, after Bitcoin. The conversion rate on digital currency fluctuates much faster than the conversion rate between foreign currencies, because of the number of changes over a short period. 

PayPal supports crypto transactions. However, this service is currently only available to users in the United States. PayPal users in the U.S. can buy, sell, hold, and checkout with cryptocurrencies directly through PayPal using their personal or Premier PayPal account. From there, users will be able to learn about crypto, track crypto prices, all without leaving the PayPal app. Crypto transactions via PayPal are currently not available to PayPal business account holders. 

PayPal supports transactions using the following cryptocurrencies:

  • Bitcoin
  • Ethereum
  • Litecoin
  • Bitcoin Cash

Earlier this year, PayPal announced a brand new crypto checkout service for U.S. buyers and sellers. It will allow users who currently have Bitcoin, Ethereum, Bitcoin Cash, and/or Litecoin in their PayPal digital wallets to convert their holdings into flat cash at checkouts to make purchases. 

PayPal has previously said that it is aiming to make crypto transactions available to select global markets at some point in 2021.

Is PayPal right for you?

Just like paying for online purchases with a credit card or a debit card, PayPal offers a fast, easy, and secure option for online transactions between buyers and sellers. PayPal is trusted by millions of small business owners, buyers, and sellers. With access to over 200 global markets, over 25 currencies, and cryptocurrency, PayPal makes it possible to conduct your business anywhere in the world.


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