PayPal logo

PayPal is the largest debit electronic payment system. Allows customers to pay bills and purchase, send and receive money transfers. Since October 2002, it has been a division of eBay. Since July 20, 2015, PayPal and eBay shares have been sold separately on the market. In 2015, the value of the separated PayPal company in the stock market was estimated to be higher than the value of its previous parent company.

As of 2017, PayPal operates in 202 countries (although not all Provide a full range of services), has more than 200 million registered users, works with 25 national currencies. In the case of payment for purchases, the most important feature of PayPal is to provide security guarantees to both the buyer and the seller.


PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. A PayPal account can be funded with electronic debits from a bank account, from a MoneyPak card or by receiving a money transfer from another PayPal member. Funds in a PayPal account can be withdrawn to a bank account or by sending a money transfer to another PayPal member.


Online Payments – PayPal Commercial

Payments are made through a secure connection after entering the e-mail and password specified to confirm the account. Your account includes the address to which your purchases will be delivered. PayPal users can transfer money to each other.

Confirmation of the account includes the procedure of writing off a small amount of money (usually a little less than two dollars — $1.95) from the user’s card with the indication of a four-digit code in the details of payment, which must be reported to PayPal. This confirms the identity of the cardholder who has access to the payment history of their card. After confirmation, the money is transferred to your PayPal account balance.

The use of PayPal is free of charge: registration in the system is free of charge, for sending money from the sender is not charged. The fee is charged to the payee. Its amount depends on the country of payment and the country of the user accepting the payment, as well as its status. PayPal also earns income from currency exchange differences when it converts the money itself, not through the issuing Bank.

In case of payment of the purchases to be delivered, the money is not credited to the seller’s account until the buyer confirms the delivery or the time of opening the dispute by the buyer expires. Within 45 days from the date of payment, the buyer has the opportunity to open a dispute if the delivered goods are different from the ordered, or delivery failed. If the buyer and seller are unable to reach an agreement, the dispute may be referred to the claim. The claim can be placed within 20 calendar days from the date of opening of the dispute. If PayPal decides in favor of the buyer, The buyer will be refunded the full purchase price, including shipping costs.


PayPal is headquartered in San Jose, CA, on North first Street campus. The company’s operations center was opened in 1999 and is located in Omaha, Nebraska. In 2006, PayPal opened a technology center in Scottsdale, Arizona, and a software development center in Chennai (India) in 2007.

Since July 2007, PayPal has been operating in the European Union as a Bank in Luxembourg. PayPal’s European headquarters are in Luxembourg and its international headquarters are in Singapore.

In October 2007, PayPal opened a data service office on the North side of Austin, Texas, and opened a second operations center in La Vista, Nebraska, in the same year.

In 2011, they joined similar customer support operations located in Berlin, Germany; Chandler, Arizona; Dublin, Ireland; Omaha, Nebraska; and Shanghai, China; PayPal opened a second customer support center in Kuala Lumpur, Malaysia, and began the hiring process.

In 2014, PayPal has opened a new global operations center in Kuala Lumpur

PayPal Here

In March 2012, PayPal introduced a new device called PayPal Here, which will allow you to pay by credit card via mobile phone. Supported on iPhone and Android OS.

PayPal Here is a card reader-a small blue triangle that joins the phone through the headphone input. The innovation is focused primarily on small businesses and small retailers. The payment system will charge a fee of 2.7 percent of the payment amount. In addition, the company provides a debit card, which will return one percent of the transaction. Thus, the Commission will be able to reduce to 1.7 percent.


PayPal was created by a group of students, including an emigrant from the USSR, Max Levchin, who later noted in the Facebook project.

PayPal Inc. it was founded in March 1998 as a result of the merger of Confinity and in the first months of its existence, the company began to serve electronic auctions, so, by April 1998, more than 1 million auctions on eBay offered payment via PayPal.

PayPal was acquired by eBay in October 2002, and since then more than 50% of eBay auction transactions have been made using PayPal. Most of PayPal’s main competitors are closed or sold.

At the beginning of 2012, PayPal operates in 190 countries. As of September 2011, PayPal used 24 types of world currency. In the beginning of 2015, eBay and PayPal have become different companies[1].

June 24, 2013 PayPal for unknown reason, wrote to the American Chris Reynolds the amount of 92 233 720 368 547 800 dollars. Thus, for a few hours he became richer than the richest man in the world more than a million times.

In 2015 PayPal launched PayPal, which allows you to create personal pages for accepting payments.

In August 2017, PayPal bought out a company in the field of online lending – Swift Financial, which is a leading provider in the field of online lending for small businesses in the United States. This acquisition will allow PayPal to issue long-term loans up to 500 thousand dollars to its sellers. PayPal will also use Swift FINANSIAL data to process credits for new users of the system.

PayPal Working Capital has been providing lending services to small businesses since 2013. Loans are issued in the amount of up to 125 thousand dollars. The company calculates the level of creditworthiness on the basis of previously processed payments of the borrower. Since the launch of the lending PayPal has issued loans in the amount of more than 3 billion dollars for 115 thousand small enterprises.

August 16, 2017 it became known about the transaction between PayPal and the British technology startup Thyngs. The latter deals with mobile payments, and Thyngs technology allows users to lean the phone to the stickers on various sites for information using QR codes, NFC, Bluetooth, as well as payments.

As a result of the merger, PayPal will offer Its platform for contactless payments, and Thyngs will have access to the 200 million customer base PayPal.


Security token

In early 2006, PayPal introduced an optional security key as an additional precaution against fraud. A user account tied to a security key has a modified login process. The account holder enters his or her login ID and password as normal, but is then prompted to enter a six-digit code provided by a credit card sized hardware security key or a text message sent to the account holder’s mobile phone. For convenience, the user may append the code generated by the hardware key to his or her password in the login screen. This way he or she is not prompted for it on another page. This method is required for some services, such as when using PayPal through the eBay application on iPhone[2].

This two-factor authentication is intended to make it difficult for an account to be compromised by a malicious third party without access to the physical security key, although it does not prevent so-called Man in the Browser (MITB) attacks. However, the user (or malicious third party) can alternatively authenticate by providing the credit card or bank account number listed on his or her account. Thus the PayPal implementation does not offer the security of true two-factor authentication.


It is also possible to use a mobile phone to receive an mTAN (Mobile Transaction Authentication Number) via SMS. Use of a security code that is sent to the account holder’s mobile phone is currently free.


The fee for transferring money to another PayPal member can vary based on options. The typical transaction charge for PayPal is $0.30 per transaction plus 2.9% of the amount transferred. The transaction charge is deducted from the payment amount. A “personal, payments owed” transaction to another PayPal account where the recipient’s account is not a business account will incur no transfer fee. International payments will incur an additional currency exchange fee of at least 1%, in many instances.

PayPal and cryptocurrency

PayPal and Bitcoin

The company is developing a way to speed up the processing of cryptocurrency payments. The application called “System of fast-track transactions using virtual currencies” was published on the website of the Bureau of patents and trademark United States on March 1. It follows from the document that PayPal processing service became interested in the possibilities of blockchain technologies in the summer of 2016. The company proposes to create secondary wallets for buyers and sellers, which will be recorded separate private keys corresponding to the amount of purchases.

The application States that since some online transactions are now conducted using virtual currencies, there is a need for an accelerated transaction processing system of this kind: “however, the decentralized nature of such virtual currencies is accompanied by the need to confirm transactions, and these confirmation processes cause a time delay or waiting period between the initiation of the transaction and the point at which the transaction is confirmed.”


U.S. Accounts

When a payment is funded from a linked bank account, an ACH transaction is made. There appears to be differences in the type of ACH transaction depending on where the PayPal payment was sent.


For payment from a U.S. PayPal account to another U.S. PayPal account, the ACH transaction code used is WEB.


For payment from a U.S. PayPal account to a PayPal account that is outside the U.S., the ACH transaction code used is IAT. Accompanying the IAT transaction is the payment recipient’s name.

In other words, more information is transmitted to the bank when the PayPal transaction is for a payment that crosses borders than might be sent for a payment that stays within the U.S.


It is not recommended to use PayPal for bitcoin transfers. In many cases the buyer issued a charge-back-fraud. The case is automatically closed by PayPal if he states that his account was compromised. It is not uncommon for PayPal to ban your account and keep your funds if they find out that you are transferring bitcoin[3].

See Also on BitcoinWiki

External Links


  1. How PayPal Works?
  2. Pocket-lint – What is PayPal and how does it work?
  3. Pablo Software Solutions – PayPal