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Spotlight On: PayPal, Its Payment Services & Fee Structures

Updated on November 24, 2020 01:14 pm
PayPal Fees review

If you make online purchases or send money online to your friends and family, you are probably familiar with the name PayPal. PayPal, headquartered in San Jose, California, USA., is a leading online payment service provider in the world. The digital payment company offers a range of payment services and solutions for both individuals and businesses. It has 48 central offices across 27 countries.

A Brief History of PayPal

Paypal history

PayPal was founded in December of 1998 under the name "Confinity". In 2000, it merged with and soon became an online money transfer company with the current name, PayPal.

In October 2002, eBay, an online shopping platform best known for its auctions and popular with online merchants acquired PayPal. This partnership enabled buyers/sellers on eBay to send and receive payments securely and more efficiently than money orders or checks.

In 2015, it spun from eBay and became a public traded company, PayPal Holdings, Inc. PYPL.

PayPals Popularity

PayPal's reach is far and wide with a large user base. Currently, PayPal has 346 million active registered users.

Through PayPal, people can send and receive payments digitally in 25 currencies worldwide, pay for goods and services, or purchase or sell items online.

PayPal is a widely accepted payment method for online merchants, auction sites, and buyers. As of today, over 26 million merchants in over 200 markets accept PayPal.

It is the oldest peer-to-peer payment service available through its website and mobile app of PayPal and its sister brands such as Venmo and Xoom.

How Does PayPal Work?

To send money online with PayPal, all you need is to set up your PayPal account with your email address/mobile number for free through the PayPal site or its mobile app. To fund the money transfer, link your PayPal account with your bank account or a debit or a credit card.

Receiving money is also easy and convenient. All you need is the recipient's email ID or mobile number. You can opt to open a personal account or a PayPal business account.

If you ever need to close your account, transfer your PayPal balance to your bank account before closing it. You can download or take screenshots of transaction history for later use.



Venmo, a PayPal owned mobile payment app allows its users to transfer money back and forth between themselves or use it to purchase things from select merchants. You can either use your bank account or debit card or credit card to fund the transfer. It can also act as a digital wallet.

Venmo has 40 million users, mostly consisting of millennials. To use Venmo, you should be in the U.S. and download the Venmo app on your phone. Check out the alternatives to Venmo.


Xoom is a PayPal remittance service that facilitates domestic and international money transactions. With Xoom, you can transfer money internationally to a bank account directly, send cash for pickup, pay international bills, or recharge a prepaid mobile phone from countries like the U.S. and Canada in 131 countries.

To send money with Xoom using your personal PayPal account, you'll be directed to the Xoom website where you will need to open an account in Xoom. This is fairly an easy process as you don't need to enter any details. You can use your PayPal credentials to create the Xoom account.

Xoom offers competitive exchange rates and it is one of the fastest ways to send money internationally in the cross-border payment industry.


You can send money at zero cost if you use your PayPal balance to fund the international money transfer. It can save you both time and money.

Direct Money Transfers with Xoom

Xoom recently launched a new service that allows customers in the U.S. to transfer money directly to an eligible bank account or debit card without the need to open an account with Xoom or PayPal or fill up a form.

Xoom's new functionality has been introduced at a critical time when the unemployment rate in America reached a new record high due to the pandemic. People across the country who are financially affected by the pandemic are relying on family, friends, and loved ones for financial support.

With immigrants making up around 20 percent of the total workforce in various sectors such as retail, hospitality, and food that are heavily affected by the economic hardships, financial help is needed more than ever.

With Xoom, people can send money to support loved ones across the country either online or through the Xoom mobile app from the comfort of their home amid the COVID-19 pandemic and social distancing measures.

The new service makes the process of sending and receiving money easy on top of being reliable and super affordable by simply visiting or downloading the Xoom mobile app.

PayPal Credit Card and Debit Card

PayPal also offers both credit and debit cards with several benefits. These are the PayPal Prepaid Card and PayPal Cash Card. You need to link your PayPal cards to your PayPal Cash Plus account to enable its usage.

You need to load funds on the PayPal Prepaid Mastercard because it cannot directly pull funds from your PayPal account. Cardholders can enjoy special offers and cash-back rewards with this PayPal credit card.

With PayPal Cash Card, you don't have to load funds onto it as it is automatically linked to your Cash Plus account and pulls money directly from your PayPal account. You can also withdraw cash at ATMs worldwide or for free at MoneyPass ATMs with the PayPal debit card.

Do keep in mind there may be certain fees involved with these cards. Look out for alternatives to a PayPal Credit Card and compare to find the one that meets your financial goals.

PayPal's Cryptocurrency ServiceIn the latest development, PayPal users in the U.S. can now buy, sell, and hold cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash, and Litecoin directly from their PayPal accounts. The cryptocurrencies can be used as payments at 29 million stores around the world.


PayPal's entry into the crypto space is not a new thing. Back in 2014, PayPal has already allowed its merchants to accept Bitcoin by partnering with payment processors like BitPay, GoCoin, Coinbase. Like many other companies and investors, PayPal is among the first companies to be interested in the use of blockchain technology in the financial service industry.

PayPal plans to expand the cryptocurrency services to Venmo and to select international markets within the first half of 2021 and allow users to pay PayPal merchants with the digital currencies by early 2021.

The recent spike in the prices of bitcoin coinciding with the launch of PayPal's cryptocurrency service is making headlines. PayPal's support for digital currencies may encourage people to adopt them rapidly.

How Secure Is PayPal?

PayPal is one of the safest and secure online payment companies. The company uses Industry-leading technology such as SSL (Secure Sockets Layer) encryption and two-factor authentication (2FA) to keep your information safe and confidential and prevent identity theft.

PayPal around-the-clock account monitoring, anti-fraud detection protocols, and safety policies protect both buyers and sellers.

Additionally, PayPal services are PCI (Payment Card Industry) compliant.

PayPal is trusted by millions of users with online transactions because of its world-class security features and privacy protection measures.

Do take precautionary measures from your side to protect your money. Scams and data breaches can happen.

PayPal Fees

PayPal fees can vary depending on whether you use a personal or business account or sending money domestically or internationally, the country you are sending money to/receiving from, your location, or using credit or debit card to fund the payments.

For domestic transfers between friends and family, the platform is free if you use your bank account, as long as there is no currency conversion involved.

Paypal Fees

Fees are mostly associated with PayPal merchants receiving payments for goods and services, when there are international transactions involving currency conversion, or when you transfer using your credit card/debit card and moving your fund from your PayPal account to a debit or credit card.

Paypal Cards

The good news is that you only have to pay for payment processing fees with PayPal. There is no setup fee, no annual fee, or cancellation fee. For most online transactions in the U.S., the standard fee is 2.9%+$0.30. And there are tips to save on fees with PayPal.

There are no monthly fees when you use PayPal Checkout or Standard on your website. Although you need to have a recurring payment of $30 per month, in addition to the standard fee if you choose to use PayPal Payments Pro as your checkout tool.

Ways to Get in Touch With PayPal's Customer Service

You can get in touch with PayPal customer service via their phone number 1-402-935-2050.

PayPal also offers several ways to help and support its customers.

You can visit PayPal's Community Forum online where you can get advice and clear your doubts from other PayPal merchants or users.

You can find almost all the questions and answers related to PayPal with its self-help guide available on its site.

PayPal's Resolution Center is one way to solve your transactions and account related issues. 

If all else fails, tweet @AskPayPal

Customer Reviews

Paypal Customer Service

One of the main reasons for PayPal's wide use is because of its easy set-up and secure transactions. The company offers a variety of payment options ideal for small to medium-sized merchants. Sending money online abroad or within a country is easy and affordable through money transfer services like Venmo and Xoom.

However, there are reports of inconsistent customer support over the phone or issues with account stability.


PayPal's recent announcement with its cryptocurrency services in the U.S. is indeed a game-changer in the fintech world. The popularity of digital payments and e-commerce in today's climate is another reason for PayPal's better outlook in the coming years. Overall, PayPal is a reputable digital payment company, immensely popular with millions of online buyers/sellers.

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