What is PayPal and how to use it: The definitive guide

What is PayPal - App on phone

PayPal has been providing an alternative to cash and check transactions for nearly two decades now, but how much do you really know about the financial giant? It’s grown enormously since the days when it was best known for making payments on Ebay, expanding to hundreds of countries around the world with millions of active customers. So what is PayPal and how do you use it? Keep reading for everything you need to know!

What is PayPal?

PayPal is one of the largest online payment transfer platforms in the world, serving more than 200 countries in 25 currencies. Its long history, wide breadth of features, and secure payments give it an advantage over competitors like Venmo, Apple Pay, and Stripe.

Read also: How to set up a PayPal account — all your questions answered

PayPal allows you to make purchases online via Amazon, Ebay, or any other retailer, or make simple money transfers between other PayPal accounts or supported bank accounts around the world. With robust fraud protection for both buyers and sellers, it’s one of the safest and most reliable ways to transfer money online.

Is PayPal safe?

PayPal setup bank account

For basic money transfers or buying products online, PayPal is safe to use. Its buyer protection program is similar to what you get with a credit card, and all data is encrypted and secure.

For sellers, the matter is a bit more complicated. The company offers some limited seller protection programs, but generally the company with side with the buyer on disputed charges, even if the claims are questionable. PayPal is also not FDIC-insured, so in the unlikely event that the company goes under, you may lose your balance. For these reasons, it’s generally fine to incorporate PayPal into your business, but it isn’t a replacement for a bank.

As always, you should take precautions with your financial data online. Use secure passwords and two-factor authentication. It also pays to be skeptical of non-reputable buyers or sellers, shipping only to verified addresses.

You may also want to tie your account to a credit card rather than a debit card and turn off instant transfers from your bank account. This will afford you the extra protection of disputing the claim with your credit card company in addition to PayPal.

How to send money to friends and family with PayPal

PayPal send money

Sending money to friends and family is one of the main features of PayPal, especially for those without reliable banks or those living abroad. The entire process can be done in under a minute from your smartphone or PC, and all you need is someone’s name, email address, or phone number.

How to send money from the PayPal app

  1. Open the PayPal app and tap Send.
  2. Enter the name, email address, or phone number of the recipient and tap Next.
  3. Enter the amount to send and tap Next.
  4. Select the payment method and tap Next again.
  5. Check the information and tap Send Now.

How to send money from PayPal online

  1. Log in at paypal.com and click Send & Request.
  2. Enter the email address or phone number of the recipient and click Next.
  3. Select Sending to a friend or Paying for an item or a service, whichever is appropriate.
  4. Enter the amount to send and click Continue.
  5. Check the information and click Send money now.

How to receive money on PayPal

Receiving or requesting money on PayPal is also very easy. In fact, you don’t need to do anything at all to claim money that’s been transferred to your account. Once the transaction finishes, you will receive a notification and the funds are ready to be used.

To request money, simply go to the Transfers page and click Request. You can even request money from people who don’t already have an account under certain circumstances.

How to use PayPal on Amazon

How to use PayPal on Amazon - Amazon app on phone

Amazon has long eclipsed Ebay as the largest online retailer, but it’s possible to use your PayPal account to make purchases on the retail giant. That said, there are a few extra steps beyond just tying the two accounts together. Here’s the brief version of how to use PayPal on Amazon:

First of all, you need to get one of PayPal’s physical cards, which vary from simple Cash Cards to Business Debit Mastercards, depending on your account type. These cards function just like any other Mastercard, although they are only available for accounts in the United States. Once you have one, just enter your card number in Amazon during the checkout process.

What other major stores accept PayPal?

Apart from Ebay and Amazon, there are millions of online stores that accept PayPal. These include Samsung, Apple, Home Depot, Best Buy, Target, Walgreens, and many many more. Other apps and services like Spotify, Steam, and Netflix also fully support the service.

It’s worth noting that even if an online store accepts payments from the service, the physical store may not. You may still be able to use your account with one of PayPal’s Mastercards, which you an read about in the next section.

What major stores accept PayPal will also vary depending on where you live, with stores in the United States much more likely to support the service than other international markets.

How to use PayPal in store

To use PayPal in store, you have two main options. The first is to use your phone’s NFC, just like other mobile payment apps like Google Pay, Apple Pay, Samsung Pay, and others.

The other option is one of PayPal’s Mastercard-backed physical cards. There are several types of these cards, and which one you can apply for will depend on whether you have a personal or business account. These cards can be used just like any other Mastercard in stores, even if they don’t explicitly support PayPal.

What is PayPal Credit, and how do you use it?

PayPal CreditPayPal

Source: PayPal

PayPal Credit is similar to a traditional credit card, but instead of a physical card it simply uses your PayPal account. It isn’t available in all of the countries in which the company operates, but the application process is simple and can be done online.

There are a number of benefits to PayPal Credit, like interest free payments for 6 months on purchases over $99. Although you are still subject to approval, results are typically given within seconds of your application.

So how do you use PayPal Credit? Well, once you’ve applied and been accepted, it works just like your normal account. Many online stores that accept PayPal will also accept PayPal Credit, and instead of deducting the cost from your account, the amount will go onto a line of credit.

However, if you have instant transfers enabled on your account, the amount may be transferred directly from your bank account. Be sure to check your settings beforehand, or you may instantly be charged the full purchasing price instead of having the amount sent to your credit balance.

There is no card number or physical card associated with your PayPal Credit account, and the service cannot be used in any physical stores. This makes is significantly more limited than traditional credit cards, so bear that in mind before relying too heavily on it. That said, it does offer purchase protection, so you don’t need to worry too much about fraud or stolen accounts.

Other frequently asked questions

How old do you have to be to use PayPal?

In the United States, you have to be 18 years old to use PayPal. Minors are not allowed to create an account, even with their parent’s permission, and any accounts created by minors (even if the owner is now over the age of 18) may be locked or deleted at any point.

What countries does PayPal work in?

PayPal works in more than 200 countries around the world, supporting 25 currencies. To see which countries are supported, check out this PayPal Global page. Note that fees and services offered vary by country or region.

What kind of fees does PayPal charge?

Within the US, there are no fees for creating an account, sending money, buying products, or withdrawing money to your bank account. Other services, such as exchanging money or selling items, do have a small fee attached. To see a full list of fees, log into your account online and click Fees at the bottom of the page.

Is PayPal the only online payment option worth using?

Absolutely not! There are many reliable alternatives, such as Google Pay, Square, Stripe, Venmo, Shopify Payments, and others. PayPal typically offers the most features and international support, but may charge more in fees or be limited in other ways. Learn a bit more about some of the main NFC-based alternative payment platforms at the link below.

Read also: Android Pay vs Apple Pay vs Samsung Pay: Pros and cons


That’s all for our primer on what PayPal is and how to use it! Check out more guides for other payment platforms below.