How does PayPal Work

How does PayPal Work? Everything you Wanna Know

PayPal is currently one of the biggest online money transfer portals. It was found in 1998 and has been around for over two decades. Since digital transactions are becoming much more in use nowadays, PayPal is becoming much more famous and recognition than earlier. It is available across different platforms like Android, iOS, and others. Today, we will tell everything you need for PayPal and How does PayPal Work.

What is PayPal?

If you want to understand How does PayPal Work, you should first know what exactly is PayPal. PayPal is an online portal, which allows you to send money digitally to any corner of the world. Businesses mostly use it for transferring payments. Big online shopping portals like eBay and many other Websites accept payments through PayPal. PayPal is just like your traditional wallet. You can add several credit and debit cards in it. You can receive or make payments to any corner of the world in minutes. In addition to paying money, you can also earn money very quickly. Payments on PayPal are made using a unique e-mail address. You can send $2 or $2000 to a person’s PayPal account using the e-mail address.


PayPal has been around since 1998, adding to the trust of people. It first started as Confinity, a company that built security softwares for devices. In 2000, it merged with found by Elon Musk. Musk believed that the online money transfer system could be successful in the future and thus began the journey of PayPal. was renamed as PayPal in the year 2001 and quickly expanded. Peter Thiel replaced Musk as a CEO. In 2002, the company went public. Any person can create an account on PayPal. How does PayPal Work? To do that, you should have the right documents to open the account. So, before we tackle the question, let us take a look at different cons and pros of using PayPal and how does PayPal Work.


  • Transfer money anywhere in the world in minutes.
  • Supports transfer of significant amounts without any difficulty.
  • PayPal provides fraud protection. Thus you need not worry about losing hard-earned money.
  • PayPal has also started a credit service without any credit card in which you can make payments to others without having money in your account. If you clear your account in time, PayPal will not charge you any sort of interest.
  • One of the main benefits is that sending money to friends, family, and other payments are free.


  • PayPal sometimes freezes your account for no reason. If the algorithms in PayPal detect any suspicious behaviors in your account, they will freeze your account, which can be unhealthy for your business.
  • PayPal is free for individual accounts but charges for business accounts. 3% of the money received by a business goes to PayPal.
  • Some banks might charge small fees for transferring money to your PayPal Account.

 How to create an Account on PayPal?

 How does PayPal work? To use PayPal, you first have to create an account. Creating an account on PayPal can be complicated as it involves many steps. If you wish to create an account, follow the steps below:

  • Open a web browser and open PayPal’s official site.
  • Click on the signup option and fill whether you want to have an individual account or Business Account. For the sake of simplicity, we will describe how to open a personal account.
  • Enter your primary e-mail address and choose a strong password.
  • A new page will open where you have to fill your details like Full name, phone number, etc. If you enter the wrong information, your account will not open.
Opening Account
Opening Account
  • On the next page, decide whether you want to enter your credit or debit card details. If you want just to receive payments, then do not enter card details. If you want to send payments, you will have to enter them.
  • This will open up your PayPal account. However, you still have to add several details.
  • In the notification section, you will find them asking for Pan Card details. Fill them out.
  • Next, confirm your mobile number, e-mail address, and finally, add your bank account details.
  • If you are having difficulty finding bank details, you can easily find your account number and IFSC Code in your bank passbook.
  • Within 4-5 days, PayPal will confirm your bank account by transferring small amounts of Rs 1.5 or Rs 2 into your bank. Now, let us discuss How does PayPal Work.

 How does PayPal Work?

So, How does PayPal Work? PayPal works in most places where digital transactions are accepted. You can even make payments through PayPal in Walmart. Some of the major stores which accept PayPal are Apple, Argos, Asos, Barbour, Domino’s, Amazon, eBay, Nike, PlayStation, Spotify, Steam, Xbox, Zara, and many others.

In the checkout box of the online portal you are using for shopping, look for the PayPal symbol and simply click on it. This will open up your PayPal account. PayPal also shows you a list of vendors and restaurants near you can make payments through PayPal. Besides, you can easily send money to your loved ones using the PayPal App.

There are two types of Payments you can make using PayPal:

  • Commercial Payments- When you buy an item using PayPal, the seller to whom you are making the payment will be charged particular fees. This is mostly how PayPal earns revenue.
  • Personal Payments- When sending money to your loved ones using PayPal via bank account or debit card, it will be completely free. However, if you make payments using a credit card, you will have to pay certain fees.

 Is it available on your Mobile?

PayPal is available as a site on your PC and as an app on your Android and iOS mobile phone. To use PayPal on your mobile phone, simply download the app and log in. Do make sure that your device has at least Android 7.1.1 and iOS version 8.1 to run all functions of the app properly.

Paypal Mobile
Paypal Mobile

PayPal works the best on your iPhone. If you have One Touch enabled, on Steam, you need to click on the payment option and rest will be done automatically.


Well, we hope you have understood How does PayPal Work in this post. PayPal’s earnings for the year 2018 were over 2 billion dollars. This estimate confirms how many companies use PayPal as their principal portal for receiving and making payments. You can easily transfer money received in PayPal Account to your bank account with just one swipe. Thus, you can say that PayPal is one of the best online money transfer portals in comparison to others.

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