What is PayPal™?

PayPal™ is a business that utilizes e-commerce tools to enable individuals and businesses to securely process payments and transfer funds via the internet. It was created in 2000 when two companies, Confinity and X.com, merged to further develop their email payment programs. By 2002, the preference of eBay customers to use PayPal™ in lieu of eBay's in house payment processing program prompted the online auction giant to make an offer, and PayPal™ has been operating under the wing of eBay ever since.

PayPal™ enlists the aid of several protective measures, including data encryption and security tests to ensure the safety of customer information. All financial data is stored on secure PayPal™ servers, so customers can initiate financial transactions without ever providing the merchant or recipient with sensitive account information. Once a customer sets up an account, they need only supply an email address to process a payment. The information is sent to PayPal™, then PayPal™ sends the payment to the merchant, never exposing customer information.

Individuals can set up a personal PayPal™ account, which can be linked to a credit or debit card as well as a bank account. A personal PayPal™ account can be used to shop securely at online stores, send or request money from friends or family, and also to receive money. Thousands of online stores now accept PayPal™, and PayPal™ offers a virtual credit card number for those that don't. To withdraw funds accrued on an account, the individual may choose to transfer the funds to a bank account, use a PayPal™ debit card in stores, or request a check

Businesses have even more options. PayPal™ can be set up to receive website payments at an online store, or to request money by sending a detailed invoice. Email invoicing can be set up to receive just PayPal™ payments or the merchant may choose an account that allows direct payments from credit or debit cards. Each account type has different stipulations, but there is usually a small fee involved in accepting payments.

The ultimate PayPal™ option is the virtual terminal. This serves as an online alternative to credit card swipe machines used in stores. The virtual terminal allows vendors to accept payments over the phone and by fax as well. Merchants utilizing this service can expand their businesses beyond the virtual world and increase their customer base. The virtual terminal also generates automatic packing slips for shipping and creates reports for tracking sales and payments.

Source: Wisegeek