69% of smartphone users prefer using an app over a mobile site to transfer money to an individual. And, with so many money transfer apps on the market, consumers ultimately have a lot of choices when it comes time to download a finance app that will help make money transfers safe and easy.
It’s never been easier to send and receive money straight from your phone without having to worry about carrying physical cash. From splitting the dinner bill to paying your friend for your share of the rent, there’s a lot you can do with a transfer app like Zelle, Venmo, or even PayPal.
This week, in our series of money transfer apps, we’ll be exploring some of the most popular ones and all of their features and functions. What is PayPal? How does PayPal work? Is PayPal safe? We’ve got all of the answers for you.
What is PayPal?
Founded in 1998, PayPal is easily the world’s most popular third-party payment platform in the world. In fact, there are currently more than 295 million accounts in use worldwide. In short, PayPal is a financial service that allows you to pay for goods, send money to other people, and accept payments. It’s most widely used for online purchases, acting as a bit of a payment processor for large and small businesses. However, it’s also a popular money transfer app, too.
To sum up, PayPal lets you make a payment to a friend or retailer without them having to know or in any way handle your credit card or bank account information. In this way, it’s more similar to Apple Pay or Stripe than it is to other money transfer apps such as Zelle or Venmo. PayPal is actually the parent company of Venmo.
How Does PayPal Work?
You actually don’t technically have to enter banking information straight away to create a PayPal account in some instances. To create a PayPal account, you simply have to provide your email address, create a password, and then fill out your personal information. Then, you’ll be asked to verify your account through a series of actions. And, finally, they’ll provide you with instructions on how to add a credit card, bank account, or some other form of financial information for sending and receiving payments.
PayPal also has a mobile app that you can download to make money transfers on your phone even easier. Through the PayPal app, funds go quickly into the recipient’s account. And, you’re able to track your payments and monitor movement within your account.
Why is this helpful? Well, since most people use PayPal for online purchases, it’s actually a bit safer than entering your credit card information into each retailer’s checkout page. PayPal encrypts your transactions, which helps keep your payment information secure. They also usually offer something called Purchase Protection, which further protects you against fraud and other financial mishaps.
Which Banks Work with PayPal?
Unlike Zelle, which is a payment transfer app that was created by a group of 30 major US banks as a way to enhance the peer-to-peer payment process, PayPal is a third-party platform that works with nearly every bank in the United States. What’s different is that there are specific banks that allow you to engage in their Instant Transfer option.
Usually, when you receive funds, you have the option to leave it in your PayPal account (similar to a Venmo balance) or transfer it to your bank or to your debit card. Choosing to deposit the funds straight to your bank ensures that the money will arrive nearly instantly.
Here are the banks that currently support Instant Transfer from your PayPal balance to your bank account:
- Bank of America
- BNY Mellon
- JPMorgan Chase
- Wells Fargo
If you’d rather connect a credit card instead of the debit card from your bank, PayPal supports a large number of credit cards, too. This includes all of the major ones, such as Visa, MasterCard, American Express, Discover, JCB, Diner's Club, and EnRoute.
What About PayPal Fees?
Transactions between friends and family are free with PayPal. This is where the platform acts similarly to other money transfer apps such as Venmo or Zelle. If you need to chip in for pizza, pay your friend back for a night out, or want to send money to your mom for part of your college tuition, you can do so on PayPal for free. However, this only works within the United States.
When sending payments for free via PayPal, you will need to check the Personal option, which incurs no extra fees. If it is for something more official, you will select Purchase, which takes a 2.9% fee plus a $0.30 transaction fee from the amount you’re sending to the recipient.
It’s important to note here that, if you’re shopping via an online store and the checkout process requires you to checkout with PayPal, you don’t bear the brunt of those fees, the merchant does. The fees mentioned above are only for sending or receiving money, whether it’s for personal reasons or something more official (such as sending money to your landlord’s property management company, for example).
In terms of transfer limits, PayPal certain reigns supreme. If your account is verified, there's no limit on the total amount of money you can send from your account. You can send up to $60,000 for certain accounts but might be capped out at $10,000 per transaction. f you don't have an account, the PayPal transfer limits go up to $4,000 for a one-time payment.
What Currencies Can You Use with PayPal?
When signing up for PayPal you’ll note that the primary currency you’ll receive money in is automatically set to the primary currency of the bank account or card you’ve connected to your PayPal account.
Currently, PayPal is accepted as a method of payment in more than 203 countries and regions. However, when it comes to currencies, the payment platform currently only supports 25 different regions.
It’s important to note, however, that while the payments are accepted in over 200 countries, customer service isn’t always available in the local language. You can change your own PayPal homepage to display your preferred language, but when it comes to customer service, you’ll find that PayPal doesn’t offer comprehensive support for all languages in their supported countries.
What About the PayPal Debit Card?
Recently, PayPal introduced the PayPal Cash Mastercard, the platform’s new debit card that allows you to easily use the money in your balance to shop online and in-stores everywhere Mastercard is accepted. You can also withdraw cash at ATMs worldwide.
This PayPal debit card comes with no monthly fee, no minimum balance, and no credit check. However, there are other fees associated with the card, such as a $2.50 domestic and international ATM withdraw fee, a 2.5% foreign transaction fee, and up to $4.95 for utilizing their cash reload service.
If you’re more interested in a credit card, PayPal also offers those, too. Like the debit card, PayPal credit cards are both with Mastercard. They currently offer the PayPal Cashback Mastercard or the PayPal Extras Mastercard. The latter is better for rewards while the cashback card is better for, well, cashback offers.
For new accounts with the PayPal Cashback Mastercard, the APR is 21.49%, 25.49%, or 28.49%. For new accounts with the PayPal Extras Mastercard, the APR is the same.
Is PayPal Safe?
In general, PayPal is very safe. As mentioned, it’s a great way to checkout without having to enter your credit card information on every online retailer’s checkout page that you visit. This avoids you running the risk of having your information stored and stolen.
On top of that, PayPal offers a 100% guarantee of protection against unauthorized payments from your account. Every transaction is confirmed by email to the PayPal account holder. And, if you notice a transaction that you didn’t make, you can contact the 24/7 PayPal customer service line and receive immediate attention to dispute the transaction.
Linking a Savings-Optimized Debit Card
Transferring money to and from friends and other people is made easy with money transfer apps such as PayPal, Zelle, and Venmo. And, while you can link and pay with numerous different kinds of debit and credit cards, it’s best to set up your PayPal account with a debit card that’s optimized for savings.
Why not pay with the Cheese Debit Card every time you use PayPal? It allows you to earn cashback on all spending, not just with select retailers. No banking fees, high cashback rates, and even the chance to earn multiple Cheese Rewards? It’s as good as it sounds. Sign up to join our waiting list today.
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