How Does PayPal Work?

Hey, welcome back to the Six Figure
Mastermind. Marianne DeNovellis here. Happy to see you again. Today, we’re going to
talk PayPal again today. PayPal is a huge platform, everyone uses
it but not if it would no has out but not everyone knows how it works so today
we’re gonna go through the A to Z steps on how PayPal actually works and
functions for your business. Stay tuned. So PayPal has been around for a long
time and if you’re not using it for small business, I highly recommend that
you do, it’s an easy platform to send and receive money but a lot of people don’t
exactly know how PayPal works. You know, PayPal was a forerunner to what we now
currently know as cryptocurrency, it’s not cryptocurrency, don’t get confused,
don’t get me wrong but it functions in a similar way so let me just walk you
through the basics of how exactly PayPal works. Most of PayPal operates in USD,
meaning US dollars but it doesn’t have to. There’s a lot of currencies out there
in the world that can operate through PayPal and PayPal will take all of them,
okay, and what will happen is that you have a bank account whether that’s a
checking account, whether it’s a savings account, even a credit or a debit card.
Someplace where you’re keeping your whatever form of currency that you keep,
okay. What happens then is PayPal will act as a digital wallet and when you
need to send money to someone, what will happen is that money will come either
from the debit account, that credit account, that savings account, that credit
union account, basically any bank account or entity that has money will take that
money and give it to PayPal. Now you can do that or on your own, you can take your
own money and put it in your PayPal wallet or you can pay a bill from someone
and that money will go from your account to the PayPal wallet. Once it’s in that,
the PayPal wallet, it can do one of two things..
It can be paid out to someone directly into their PayPal wallet or you can just
keep it in your PayPal wallet and what happens is that PayPal money, it’s still
USD or whatever currency you you brought into it will go from one PayPal Wallet
to another and once it goes into the other person’s PayPal wallet, then they
can take that money and through a transaction time of between three and
five business days, that money can be put into their bank or their credit card or
whatever it is that they.. their debit card or credit union and
whatever it is that they do so what happens with PayPal is if you are
talking bank to PayPal for it to PayPal to bank and it’s a savings or a checking
account, there aren’t any fee
associated with that. Now if you do have a merchant account or an a credit card
that using, there are what is called merchant fees and anytime you have a
credit card transaction, merchant fees are part of that. You typically don’t
have to pay for merchant fees as a customer but as a service provider or a
product provider, you’re definitely paying merchant fees and it can range up
to three, four, five percent depending on the credit card that you’re using. Visa is
usually the cheapest, Discover card, American Express can get up there as far
as merchant fee goes so what happens when you use a credit card on PayPal,
where do those fees get taken out? Let’s say that you are a
vendor on PayPal, you’ve created an invoice and you’ve sent it off to your
client, that client gets that invoice and they’re going to pay it with a credit
card so they open up their email, they say the invoice from you, if they say
great, I’m looking forward to fulfilling this invoice, they reply to that email or
click on the link in the email and decide to pay with a credit card. Now
they don’t have to have a PayPal account to do that but they can, either way will
work. If they have a PayPal account, they can just pay with the money in their
PayPal wallet or use the backup of the credit card as the funding source. Now
let’s say the invoice was for $50, you send that over and they’re gonna pay
with a credit card. When they pay that invoice with the
credit card, they are going to pay $50 so their credit card will have $50 charge
on it however, you will only receive about $47 $48 because of the
merchant fees so when that invoice goes to them and they pay it, before that
money comes to you, there’s this third party called a merchant account that’s
going to take out a certain percentage so when you get that money into your
PayPal account, yes, they’ll have to pay the invoice in full but you will have a
transaction fee removed from that from the merchant, okay. So let’s break it down
into simple terms.. you’ve got a bank credit debit credit union, whatever you
have you have, PayPal Wallet where all those transactions are taking place on
the other side, you’ve got another person’s bank account when you bring
that money in, it goes into your PayPal wallet, you can sit there as long as it
wants or you can transfer it out directly to your account. When that money
is sitting there in that PayPal account, it needs to go somewhere if you’re
paying for some so it’s either going to go to someone else’s wallet directly
from your wallet or it’s going to go from your
to their wallet to their bank account, they can choose where that money goes.
Alright, so it’s from bank account to PayPal wallet, from PayPal wallet to the
other PayPal wallet and then from PayPal wallet to their bank account and the
same works in reverse, it’s basically a digital coin system. Again, very much like
cryptocurrency is operating right now but PayPal is the middleman,
cryptocurrency for example doesn’t have a middleman, it’s directly from person to
person but PayPal will secure all of their transactions with encryption and
make sure that the buyer and the seller are both taken care of. Hey, thanks for
tuning in today, I hope that video is helpful for you. What questions do you
have some at PayPal? Post them in the comments below, I’d love to hear them. Hit
the subscribe button, give the bell a ring. I’ll see you tomorrow.

26 thoughts on “How Does PayPal Work?”

  1. I have a question if anyone can help. Is it safe to trust them with ur Social security number? Why can't I use it without my SSN? For the Taxs?

  2. I had no idea about PayPal. I got the idea as well as could able to know about the difference between PayPal and merchant account. Thanks for this video.

  3. Hi you would like to know how to make passive income and get paid via paypal instantly,Just click the link below to download.

  4. I've always have heard this PayPal all over , from social networking like yt ( which is here where i have seen your video too ) and fb ( junky-social-net lol ) i plan to sign up bcz i am interested for my future use.

  5. So basically i bought things with an empty wallet but with a debit card backup. and i was in the minus on paypal so i topped up and im getting like every 2 days money from paypal and idk where its from

  6. Okay had to press that like button I am in turmoil about it I am so old fashioned when it comes to money😳 and transactions. About to start a small business so I guess I most definitely have to keep up your video was to the point and knowledgeable. Thanks a bunch🙌.

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