What is PayPal and is it secure?
Once associated solely with payments on eBay, PayPal has become a widely accepted method of payment. At its core, PayPal is an online payment service that allows individuals and businesses to transfer funds electronically – as of 2019 it has over 277 million active accounts.
PayPal is designed to act as a middleman when parties exchange money online, as both buyer and seller deal with PayPal instead of each other. This is because both sides provide their bank account or credit card information to PayPal and, in turn PayPal handles all the transactions with various banks and credit card companies, and pays the interchange.
PayPal touts its very existence as a security feature – providing an extra layer of protection during transactions. That’s because everyone’s information, including credit card numbers, bank account numbers and address, stays within PayPal. Unlike other online transactions, this information is transmitted across all the networks involved in the transaction, from the buyer to the merchant to the credit card processor, under one umbrella.
When making purchases online, using a PayPal credit card is a good idea as not only are you protected by PayPal, but your credit card company also backs you up in case of fraud. In addition, all PayPal transactions happen on web pages with Secure Sockets Layer encryption, a tool used by many other financial services providers, meaning it is very difficult (although not impossible) for hackers to intercept the transactions.
As an added layer of security, PayPal also offers a PayPal Security Key, a two-factor authentication (2FA) method that creates a temporary six-digit code when a user attempts to log in. Here, PayPal sends the code to the user’s registered phone and then when entered, the code allows access to the PayPal user’s account.
To send money to a person, all you need is the email address associated with that person’s PayPal account. For an organisation or business, you can usually send money from a PayPal link at its website. What’s more, if you have a verified account, you can send up to $10,000 in a single transaction, and there are generally no transaction fees for sending and receiving money between PayPal accounts. However, you’ll pay a fee for any transaction that requires a currency exchange.
After you send money, the record of your transaction should appear on the “Activity” page at PayPal.com. If needed, you can search that history for a specific time in the past. If you click the “details” link on a transaction, you can view all the details, including the amount, date, recipient and a unique transaction ID used by PayPal to track your transaction. If you ever dispute a transaction, this transaction number will be used by customer service when handling the dispute from both the sender and recipient.
Nonetheless, it is important to be vigilant when using PayPal. This is because although PayPal acts like a bank, it isn’t regulated to exactly the same extent. Therefore, PayPal is not required to offer the same level of protection, customer service, or dispute resolution services that real banks provide.
We hope you found this post helpful when making decisions about how to pay online. If you enjoyed this post, you might also like: