Pros and Cons of Paypal – Is it Worth it? Guide & FAQs

It is no secret that PayPal has become the leading service that helps you transfer money around the globe. The extensive network of PayPal accounts has transformed the shape of every business online.

But is it really as good as people suggest? What are the major benefits and downsides of using a PayPal account for your online business? In this article, we will discuss all these things.

PayPal Money Transfer 

In the past, using a bank account has been the standard procedure around the world. However, with the growth of the internet, things have changed and improved a lot.

Businesses have moved their business account for recurring payments from hard cash to digital currency. It removes the tedious task of moving and managing huge sums of money.

But, why is PayPal linked to all this?

To simply put it, PayPal was the catalyst to move towards a better and rather secure online environment to transfer money. 

Many people didn’t like the idea of online transactions that do not involve any physical interaction. But over time, PayPal has proved to be one of the most reliable ways to handle funds.

Why is PayPal so popular among individuals and businesses?

The reason behind the popularity of PayPal payments and the service as a whole is its versatility. You can choose the payment option that suits you best for sending money.

Another reason why PayPal is preferred over many services available for money transfer is its Fraud Protection Mechanism. 

Online payments were notorious for fraud in the past. People would steal credit card information and use it to their own advantage. 

So, how does PayPal tackle this?

PayPal protects customers’ data with its utmost priority. Your every personal and business transaction is recorded and kept safe for future reference. 

Furthermore, PayPal uses multi-step verification with its Android apps and PayPal iPhone to make sure everything is in order.

PayPal also sends emails for every activity whether it is a domestic or international transfer. 

What activities does PayPal monitor?

PayPal notifies you about your online purchases, sending money, receiving money, bank transfers, and new logins. 

You can even request details of your payment history to keep track of everything. 

Let’s see how PayPal works in regard to different bank accounts to send and receive payments.

How does PayPal work?

PayPal, at its core, is just like a normal bank account. You can send money and receive money over long distances. 

But you might be thinking, where does PayPal store the funds?

That is the neat part of using a PayPal account. PayPal itself does not store money. It just acts as a ledger that keeps track of funds being moved from one account to the other.

Every single PayPal account has a back-end bank account linked with it. However, it acts as an independent service. 

How is it different from a traditional bank service?

PayPal uses a bank account to conduct payments because bank services and credit card services are two different things. 

It uses your bank details instead of your card details because it is easier for them to maintain a check and balance structure.

But once you’ve linked your bank account, the related bank doesn’t interfere with funds placed in your PayPal account.

How can I create a PayPal account?

It is quite easy to create a PayPal account. You can follow the step-by-step procedure below to create your own PayPal accounts.

1. Go to the PayPal official website.

2. Click on the Sign-Up button located in the top right corner.

3. Select what type of account your want to create.

4. Select your Country/Region.

5. Add your phone number and make sure to double-check it.

6. Add your credentials in their respective slots.
7. You can then choose to link your credit/debit card or your bank account.
8. Once you have done that, confirm your email and you are good to go.

Let’s take a look at the features you get for using a PayPal account.

Features of PayPal

PayPal has rolled out a bunch of different features over the past few years to accommodate the PayPal users in their daily trading.

Let’s take a look at them one by one.

Account Type

The first and foremost thing you will notice when using PayPal is that it separates personal accounts and merchant accounts. 

You can choose your desired preference when signing up for PayPal. Each of the account types has its own perks and benefits.

Can I change my account type?

Yes, you can change your account type at any given time but you have to pay a fixed amount to carry out the procedure and it takes around 30 business days to change.

What is the main difference between personal and merchant accounts?

The main difference lies in the additional fees you have to pay over every transaction. Personal accounts don’t have to pay an extra amount along with the total price for their online purchases. 

On the other hand, merchant accounts for large and small businesses get a discount on tools like Currency Conversion.

Verification System

As a money transfer business, PayPal has implemented a lot of safety checks to make sure that online payments are safe and secure.

PayPal has three different verification steps for every transaction. Moreover, the PayPal API used for the app is secured by a two-way verification as well.

What are the three different verification steps?

PayPal uses email, text, and bank verification for every payment that you conduct from your account. 

It can be a normal fund transfer or an online purchase. Besides that, PayPal encrypts every payment to keep it from the reach of hackers.

All your information is kept hidden from everyone. Even when you transfer funds from one account to the other, online your account name is mentioned.

Credit Rating

Just like different card companies like MasterCard and Visa, PayPal also provides the option to earn good and bad points based on your online activity.

You can build a good credit score by using PayPal for any purpose. It allows you to take out loans for a new business or personal use without any trouble. 

Can I use PayPal to create a new credit rating?

No, you cannot use PayPal to create a new rating. However, you can use PayPal to improve your previous credit card rating. This is highly beneficial if you are running a small business. 

Besides that, PayPal also adds to the credit card rating when using online shopping cart systems. 

Currency Conversion

Another useful feature of PayPal is the currency conversion tool. This tool is designed for users with a PayPal business account. 

Since business accounts deal with domestic and international transactions on a daily basis, doing conversion manually is time-consuming. 

PayPal has embedded this tool into their mobile and desktop apps to streamline the money conversion between two different regions.

Now, let’s look at some of the pros and cons of using PayPal.

Pros of using PayPal

• Multiple payment options.
• Affiliated with top world banks.
• Multi-step security verification
• Detailed activity history.
• Cross-border transactions.
• Separate account types.
• No hidden fees.

Cons of using PayPal

• Monthly fees as service charges.
• Payment fees for international transactions.
• Additional fees for currency conversion.
• Higher exchange rate for international funds transfer.
• Slower money payments with credit card companies.

Let’s see why PayPal is useful for a business like Online Course Selling.

PayPal for Small Online Businesses

PayPal is designed to cover digital goods of all sorts. It goes from digital services to materials. You can pay for whatever you want as long as it is linked with PayPal.

PayPal is suitable for small businesses line Online Course Selling because of its fraud prevention. 

How does it prevent fraud?

Sometimes people pay for an online service and then claim a dispute from their card company in order to avail of a service and get their money back.

PayPal prevents this completely by being an independent money transfer service. Their policy implies that if you verify any payment from your account, you cannot dispute it. 

And if someone decides to dispute it, their account will be put on freeze for 90 days before they can use it.

How does that help me as an online course seller?

It removes the worry of getting scammed by someone. Since online course creation takes a lot of time and resources, getting scammed can negatively impact your business. 

By using PayPal you can completely eliminate this risk. On the other hand, card companies like MasterCard and Visa are notorious for disputes and claims like this.

Customer Feedback

Following are some of the www.g2.com reviews from different types of users.

People mentioned the trustworthy network and the privacy around their account activity. They also mentioned that it is quite easy to send money from one PayPal account to a different bank.

Now let’s take a look at some of the PayPal alternatives you can use.

Alternatives for PayPal

Even though PayPal is full of features and endless utility, there are some handy alternatives you can use for personal and business purposes.

These services are given below.

• Google Pay
• Skrill
• Amazon Pay
• Payoneer
• Venmo

All of these alternatives are quite similar to PayPal in their operations. Each of these services can be used to send money around the globe.

Frequently Asked Questions

Can I accept PayPal payments from my bank account?

Yes, you can receive money in your bank account via PayPal. You just have to share your bank details with the sender.

Can I use Google Pay to transfer money to my PayPal account? 

No, you cannot transfer funds from Google Pay to your PayPal accounts. Currently, PayPal has no motive to move in that direction.

Which service is the biggest competitor of PayPal?

As of now, Google Pay and Skrill Online Wallet are the two biggest competitors of the PayPal Money Transfer service. This is due to their low transaction fees.

Is Venmo owned by PayPal?

Yes, PayPal purchased the rights to ownership of Venmo a while back. Even though both are operated by the same infrastructure, PayPal is rather secure and fast in its operations.

Final Thoughts

After carefully reviewing every aspect of PayPal’s money transfer service, we have concluded that it is absolutely worth using for personal and business purposes. 

PayPal provides a secure payment method without the risk of fraud, breach, or a potential hack. All of your information is saved and kept hidden from other users. Besides that, PayPal has a bunch of tools at your disposal to make your day-to-day payment process easier.

We hope this article proves to be informational for you.

Do let us know about your thoughts on PayPal and its impact on online transactions. You can also take a look at other payment setups you can have your online courses by clicking HERE.