Description
What is PayPal?
PayPal was founded back in 1998, in Palo Alto, CA, as an online payment system to safely send and receive money. The platform has revolutionized financial technology and the way people pay in a digital environment. This makes it one of the top-recognized brands in payment processing.
The system is known for having a low barrier to entry, meaning it’s easy for any type of business to set up an account. All you need to do is link a bank account, debit card, or credit card. You can also use PayPal to make purchases online with participating stores.
PayPal integrates with a variety of business applications, from accounting to CRMs, and boasts 210 million active users in 200+ markets.
What Does PayPal Do?
PayPal is a combined payment gateway and payment processor. There are no fees to set up a business account, and you don’t even need to register to use the service. PayPal charges can be added to the recipient. How much does PayPal Charge?
How does PayPal work? A business can accept payment for goods and services through PayPal, and also send global payments out. The system works as an end-to-end commerce partner for brands and marketplaces with the flexibility a business needs to stay competitive.
PayPal integrates with a variety of programs for small to medium businesses and enterprises that include risk management, accelerated growth, fraud protection, fundraising, e-commerce, and product spotlight.
What are PayPal’s Top Features for a Business?
Receiving Payment
PayPal Checkout enables a business to accept a range of payment types. Customers can use a single solution to pay on your site or in a mobile app (for iPhone and Android). The system will intelligently present the most relevant payment type to customers, including credit/debit card, another PayPal account, or even installments through PayPal Credit.
A brand can use PayPal Invoicing to send custom invoices to clients for free. The documents are tracked in the system, which alerts you when an invoice has been paid. Companies can also give customers a repeat way of checking out through recurring payment options (i.e. subscriptions).
In addition, a business can sell on social media through PayPal. Create shareable listings across different platforms that include photos, descriptions, and a direct payment link. Learn more about PayPal international fees for receiving a payment.
Sending Payment
A business can pay contractors, vendors, freelancers, and other entities directly from their PayPal account. Transfers can also be scheduled through the main dashboard.
The PayPal Business Debit Mastercard allows you to use a PayPal account anywhere Mastercard is a payment method, without an annual fee or a credit check.
PayPal can also be used to send mass payments across the globe through PayPal Payouts. Funds are received by recipients in over 100 countries, using 24 different currencies. This makes PayPal mass payments a highly useful feature.
Managing Funds
PayPal has one of the largest payment datasets to help a business connect with qualified customers across the globe.
Rather than wait a day or two, the “Instant Transfer” feature allows you to move funds to an eligible bank account or debit card immediately for a small fee.
Fraud detection tools use machine learning to grow smarter with each transaction you make, protecting your account from existing and evolving threats.
The platform promotes chargeback protection by assuming liability for all eligible debit and credit card transactions. If one turns out to be fraudulent, PayPal will reimburse the chargeback fee and purchase amount.
PayPal also helps a business manage its funds with in-depth reporting, analytics, shipping, cash management tools, and more.
Working Capital
The PayPal Business Loan is a fixed-term loan that’s based on the full picture of your business. Check your eligibility in minutes, and if approved, funds can be deposited as quickly as the next business day. There are no late, processing, or early repayment fees.
PayPal also has plans to boost nonprofit fundraising. They can help you find the best way to connect with donors, anywhere, at any time.
PayPal Pricing
Although PayPal is incredibly open about its fees, expect to find pages and pages to sift through. Much like a credit card company, transparency can drown in an overload of data.
Does PayPal Have a Monthly Fee?
PayPal does not charge a monthly fee to keep an account open. Unlike Payoneer, you can have a $0 balance for a year straight, and the platform will not close your account.
There is no minimum balance required. If someone uses PayPal to send money to your account, there is also no fee associated with that.
It should be noted, transaction fees for PayPal can vary depending on the circumstance. It involves things like:
Country
Whether you were using your bank account or PayPal balance
Whether you used a credit or debit card
International transfers
Getting Paid
The standard rate for receiving domestic transactions through PayPal is 3.49% + fixed fee. The PayPal Here solution is great for a business to get paid while on-the-go, or to bring the checkout experience directly to the customer.
When it comes to accepting payments, here are some rates to consider:
Card Present Transactions – 2.70%
Keyed Transactions – 3.50% + fixed fee
PayPal Transactions (In-Store) – 2.70%
QR code Transactions – 2.70%
International – 1.50%
Paying Out
Sending payments from your PayPal account (or attached bank account) costs nothing. The fee is always waived. For card transactions, there is a charge of 2.90% + a fixed fee.
International Fees
PayPal international transaction fees also include currency conversion fees. It costs 2% of the total transaction amount to use PayPal Payouts for international transactions. This is not to exceed the maximum fee cap, which can range from $1-$20 in the United States.
The conversion rates for PayPal mostly run at 4% (with rare instances of 3%). This includes paying for goods/services in a currency other than what is listed. Sending money to be received in a currency different from what you paid will also incur fees.
Making a Transfer with PayPal
Anyone can send money through PayPal, even if you don’t have an account. There’s no need to share bank information, just to send money. Although in some cases there is a PayPal limit per day.
It’s always free to make a transfer as well. It can be done in these easy steps:
Enter the seller’s email address.
Enter the amount.
Type in your payment data.
Click “Transfer”
If you have a PayPal account, all transactions are tracked and accounted for in “account activity.” This makes it much easier when it’s time for taxes.
Is PayPal Safe?
PayPal is one of the oldest payment processing brands on the market, so they’ve had a lot of time to work out security kinks. All data communicated from your device to PayPal’s servers is secured with end-to-end encryption. This means financial information is never revealed to the recipient.
App users can also employ a second authorization factor to make every transaction safer. After enabling the SecurityKey feature, a temporary code is sent through SMS that must also be entered, in addition to the password.
PayPal has policies that are designed to address e-commerce fraud. The PayPal Purchase Protection policy ensures that a buyer is fully reimbursed if an online product purchased is significantly different than the description. If something doesn’t arrive, it can be reported through the platform, with a full refund issued.
If any unauthorized purchase is made on your PayPal account, you are not liable if it is reported within 60 days. PayPal security is tight, and the system offers in-depth protection for both buyers and sellers.
PayPal Card
The PayPal Cash Card gives a business the ability to shop online or in-store everywhere Mastercard is accepted. You can tap, insert, or swipe that card as a safer way to shop.
Withdraw cash worldwide, including over 32,000 fee-free ATMs. There is no monthly fee to retain the card and no minimum balance. It can sit in your wallet forever.
When it comes to withdrawal limits, PayPal has an initial $500 withdrawal limit for unverified accounts in the United States. This limit can be lifted by following these steps:
Verify your bank account.
Link and confirm your credit/debit card information.
Provide your social security number.
Does PayPal charge a fee? Learn more about PayPal Fees.
PayPal Limitations
PayPal payments have limitations for non-verified accounts. This includes a $10,000 cap on individual transactions. A payee can only send 5,000 payments/files through UI, and 15,000 using the PayPal Payouts API. This means, if a payment fails, it’s challenging to determine why.
Another issue with PayPal is that sometimes accounts are put on hold without warning. This can be detrimental to a small business and prove difficult for small business owners that are sending out large sums.
PayPal Support
PayPal offers calls, live chat, or text for support. However, they mostly rely on the help center and pre-written resources to guide customers. The dedicated Resolution Center helps a business resolve transaction and account issues.
The Community and Message Centers are designed to find answers and join the conversation. View, send, and receive all communications in the PayPal Message Center to keep track of ongoing issues.
In the Dispute Management Center, buyers and sellers can resolve unavoidable disputes, and settle all transactions from the account dashboard.
Most of the PayPal support system is automated, and the brand pushes toward self-help.
Payoneer vs PayPal: Which is Better for Business?
Costs: Tie
Security: PayPal
Ease of Use: Payoneer
Speed: PayPal
Volume: Payoneer
MasterCard: PayPal
Support: Payoneer
Loan: Tie
Who Will Save You More Money?
Winner: Tie
This is the ultimate question, but it boils down to what you are doing with the account.
If you are a small to medium business with a low volume of transactions, PayPal might be your best option.
However, the bigger your business becomes, the more apt you are to save money on Payoneer. That’s because PayPal fees include a percentage of the transaction and a fixed rate, while Payoneer only includes a percentage.
That means the higher volume of transactions, the more of a fixed rate you will pay through PayPal. In this case, Payoneer is the winner.
If you’re making international payments, Payoneer has slightly higher exchange rates, but again, if you are making a high volume of transactions, it still may be the better platform.
Your best bet is to sit down and calculate how many global transactions you expect to be made through the business (in a given year), in order to choose the best platform by price.
Who is More Secure?
Winner: PayPal
PayPal has a larger network and has been around much longer than Payoneer. Both use end-to-end encryption and are fully regulated as a US Money Service Business (MSB). Payoneer is also certified at a PCI Level 1 Data Security Standard.
However, Payoneer has had issues with fraud on its card in the past. Additionally, PayPal extends the security beyond encryption, offering companies seller and chargeback protection.
If fraud occurs on any PayPal account, funds are returned immediately. This hasn’t always been the case for Payoneer, where it took time to clear things up.
Therefore, due to factors like age and incidences, PayPal is the winner.
Which System is Easier to Use?
Winner: Payoneer
When it comes to branding, payees register on the Payoneer network and are subject to its marketing. This includes email, which can be bothersome. However, when compared to PayPal, the system still may be easier to use.
The more PayPal adds to its platform, the more complicated things can get. Additionally, while Payoneer plays well with others, PayPal does not. You can connect any Payoneer account to PayPal, but the platform does not extend the same courtesy.
That means, with a Payoneer account, you can use both platforms together. However, if you only have a PayPal account, they will not work with Payoneer. This can prove an obstacle when it comes to running an e-commerce site.
Ultimately, Payoneer is a simpler platform that offers more flexibility on integrations. This makes it the winner for ease of use.
Who is Faster?
Winner: PayPal
Transfer speeds with PayPal occur within 1-2 business days, while Payoneer transactions occur within 0-3 business days. PayPal is the winner here, plain and simple. You can even get instant access to funds for an extra fee.
Which is Better for Mass Payments?
Winner: Payoneer
When it comes to making mass payments, the PayPal Payouts feature allows a business to pay up to 10,000 people at once, while a Payoneer account lets payers batch-pay up to 200 payments.
However, the currencies and markets are much more limited for PayPal. That means some of your customers or vendors may not be eligible for mass payouts, to begin with.
It should also be noted that Payoneer mass payments are cheaper than PayPal. Payoneer caters to companies that pay funds of at least $50,000 to a large number of international beneficiaries each month.
Since Payoneer is the easier choice for a cross-border payment solution (in more markets and currencies) with fewer fees, it’s the winner for mass payments.
Who Has the Better Card?
Winner: PayPal
If you plan on using the prepaid card often, PayPal is your winner. While PayPal is free, the Payoneer Mastercard will cost you $29.99/year.
