PayPal As A Digital Form Of Payment
Looking back to the evolution of money, the way trades and payments developed from barter exchanges to commodity forms, etc., and then to fiat currencies, the need for banks came up when fiat currencies, also known as paper money, came into existence. Fiat currencies are currencies controlled and regulated by the government or third parties. Now, we have digital money, which was created/launched in 2008. The concept behind digital money is decentralization, not owned, controlled, or regulated by the government or third parties. PayPal is a US-based e-commerce and financial technology company with organized structures for online payment methods that support online money transfers.
PayPal came in as an innovative option to send and receive money, as some countries are yet to accept the idea of digital currencies. It currently operates in over 200 countries in the world, with over 300 million users, and supports about 25 currencies. Sending and receiving money without having to queue in the banks just became easy with PayPal.
How Does It Work?
Its transfer methods are highly safe and secure; this also includes receiving money from people in different countries in the world. We can differentiate PayPal in two ways: the personal PayPal account and the business PayPal account. Both accounts have a great level of security that protects their users from fraud and scams, and enhanced encryption for all transactions.
Through PayPal, we can send money to families and friends: you can send money by just adding the name, email address, or phone number of the recipient or scanning your friend’s QR code for ease. There are no charges required for this. Through PayPal, we can make payments for goods and services: if the seller has a PayPal QR code, you could scan it or go through the same process of sending money to someone, using their email address and phone number. There is a small processing fee attached, then the balance will be sent to the receiver. Through PayPal, you can receive money from friends and families: all you have to do is start a request, add the sender’s email address or phone number, create an invoice, or the sender could just send funds to you by adding your email address or phone number. At this stage, you could transfer your funds to your external bank account or leave them in PayPal.
Sounds simple, right? Yes!
Is A Bank Account Necessary For PayPal?
No, we don’t need a bank account. PayPal grants easy access to sign up and receive payment on the platform. Bank accounts are not needed. However, when you want to send funds, your PayPal account can be connected to your bank account, a debit, or a credit card.
Advantages And Disadvantages Of PayPal
Regardless of how great this innovative technology is, it has its advantages and disadvantages as well:
Advantages
PayPal is easy to use. It is a precise and fast way to send funds.
PayPal prevents its users from falling victims to fraud cases. In terms of fraudulent transactions, PayPal can help retrieve your funds.
PayPal doesn’t charge its users any fee to send funds to families and friends.
PayPal protects your identity and information gotten from your bank account and credit card details. You need not worry about your details being revealed to third parties. PayPal would never disclose your details to anyone.
Disadvantages
With PayPal, free transfers with no charges could take several days, but if you require the funds immediately, a 1% fee would be charged to your PayPal account. PayPal is free when sending money to families and friends. For business transactions, PayPal would charge some fees. PayPal can decide to freeze your account if they suspect any fraudulent activity. That is a policy that’s strictly being adhered to, and if your account gets frozen, they would withhold your funds until you can prove that the fraudulent activity is not from you. Apart from freezing your account, PayPal can delay access to your funds for a period; it could be for 21 days or fewer. It’s a policy and maintenance routine for both parties in terms of disputes and conflict resolution. The money is still yours, but temporarily inaccessible for instant recovery or withdrawal until the conflict is resolved.
Can PayPal Serve As Your Bank Account
PayPal has its similarities with a bank, but it’s not a bank. You can use PayPal to pay your bills online, but to cut out stress and gain more, you could choose the credit or debit card options for your transactions. To a good extent, PayPal functions as a bank does, but there are some major differences. In a bank, we can receive easily cash deposits and checks, but with PayPal, depositing cash is difficult. Also, government authorities and third parties regulate banks. PayPal is unregulated, unlike banks, and because of this, there are certain benefits and protective measures that a PayPal user will not benefit from, unlike a bank account owner.
Is PayPal free to use?
Yes, it is. Although PayPal takes a small processing fee when sending funds to purchase goods and services.
Can you get scammed using PayPal?
Yes, it’s very possible. Once you detect the scam, if acted upon quickly, PayPal can retrieve your funds.
Are there alternatives for PayPal?
Yes, you could check out Venmo, Apple Pay, Google Pay, Stripe, and Skrill (formerly Moneybookers).
In countries where PayPal is unavailable, what options do we have?
If you’re in any of these countries, consider bank transfers and fiat transactions in the banks. Also, you can make use of Stripe, to receive funds and other available alternatives addressed above.
