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What is a PayPal Account? All You Need to Know

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PayPal has become a standard name for digital payment apps. In Nigeria, it is common to hear people say, “Have you heard of XYZ? (Mentions a new digital payment app) It is like PayPal”. Since the service was established in 1998, it has increased its reach to over 360 million active users and become an accepted account for payment in over 200 countries. It is reported that in one quarter of 2020 alone, PayPal had facilitated 4 million payment transactions. The company is a moving force, and it is on its way to dominating the digital payment world. Here is some insight into all you need to know about owning a PayPal account, and why it is a top choice for many online shoppers.

What is PayPal?

PayPal is a digital payment system that facilitates secure online transactions. PayPal can be used in e-commerce transactions, and for sending and receiving money regardless of location. It plays the role of a middleman between your bank and online shopping platforms and other institutions that accept digital payment.

How Does PayPal Work?

To use the service, you have to sign up and create an account. You will also be required to link your bank account and credit or debit card to your PayPal account. When you need to pay for stuff online, you pay from your PayPal account instead of directly from your regular bank account. You can make payments to e-commerce platforms using PayPal Credit.

PayPal Credit is a virtual credit card that can be used to make payments from your PayPal accounts online. However, the platform must accept PayPal for the transaction to be successful. The PayPal credit is unique because it lets you defer payment transfers just like a regular credit card.

 At the initial time after creation, you need to fund your PayPal account from your regular bank account. However, subsequently, you may share your PayPal account number and have people send money to it directly. You can also transfer money back into your regular bank account from your PayPal account when necessary. PayPal is perfect for sending and receiving money in foreign currencies, without going through the hassle of a regular bank.

 Advantages of Using PayPal

1. Extra Protection

PayPal is like a VPN for online payment transactions. When you pay for items in your cart using your PayPal account, the company hides sensitive information that may be accessible to fraudsters, to discourage cyber theft. They do so by employing several cyber security measures such as end-to-end data encryption and a two-step verification process. They also go a step further to ensure that you are the one making a payment by sending a confirmation e-mail for every transaction. Using a PayPal account reduces the chances of cybercriminals copying your financial data from your regular bank account credit or debit card.

2. It is Accepted as a Valid Payment Option on Nearly Every Website and E-commerce Platform

It is always frustrating to realize that you cannot get access to something on the internet because your payment option is not accepted on that platform. PayPal has been recognized as the 5th most universally accepted payment option. That means for nearly every payment you need to make on the digital space, you can use your PayPal account.

You also circumvent the stress of always searching for your Mastercard credit card whenever you need to make a payment online. With PayPal, you only need to log in to your account to send your money on that errand. All you need is your login details, no long 12-digit card number is necessary. It also lets you make payments on the go, replacing your physical credit or debit card with your smartphone.  

3. No More Bank Charges for Transferring Money to Family and Friends and Receiving Money

When you make money transfers to friends and family, PayPal does not charge you any extra fees, as opposed to a regular bank transfer. The company also does not charge any extra fees for making purchases on e-commerce platforms that do not require conversion to a different currency. With PayPal, you no longer have to worry about ATM maintenance and receiving money. There are no charges for opening an account either, all you need is a steady network and a good internet connection

Disadvantages of Using PayPal

Despite all the benefits, PayPal is not too good to be true. There is also some discomfort that comes with using this digital payment option.

1. There are Fees for Every other Type of Transaction

Although the company does not charge any extra fees for transfers to family and friends, it does charge a small token on other transactions. PayPal charges a fee for business transactions (for merchants and entrepreneurs). It also charges a 3% or 4% transaction fee for payments made to stores that trade in a foreign currency.

While there is no fee attached to domestic personal transactions, an international personal transaction attracts a 5% fee. Sending money using a debit or credit card also attracts a 2.9% fee for domestic transactions and a 5% fee for international transactions.

2. You have to wait Several Days for a Transfer to be Effected

PayPal does not charge a fee for transferring money from your regular bank account to your digital one, however, the process takes several days. The platform offers an instant access service where the money goes through in record time for a 1% fee. If you decide to withdraw using a check, however, you will be charged a small token for each withdrawal.

Why Should You Use PayPal?

Having a PayPal account comes in handy if you engage in a lot of e-commerce activity. It is also beneficial to freelancers and entrepreneurs who may have clients and paying customers from all over the world.

For e-commerce business owners, a business PayPal account is useful to keep a track record of all incoming payments. The business PayPal account allows business owners to receive money from customers regardless of if the clients have PayPal accounts themselves. The platform also includes a feature that lets entrepreneurs and freelancers send invoices directly to customers who have made a payment.

How to Create a PayPal Account

The process of account creation on PayPal is easy and stress-free. You can create the account directly on the website from your computer or mobile browser. You can also download the app on Google or Apple Play Store and register your account there. To create an account on the website:

  • Visit On your phone or desktop browser.
  • Tap on the Sign Up prompt.
  • Choose an account type – a personal or business account.
  • Type in your phone number and consent to be sent a text. The text will come with a code that serves as the pass to the next step.
  • Input your name, e-mail address, and password. Use a strong password – it should be at least 8 characters long and have a mix of uppercase letters, lowercase letters, and symbols.
  • Read through the company’s privacy policy and click on Agree.

How to Make Transactions Using PayPal

PayPal has a different pattern for each transaction, depending on the purpose of the transaction.

For Outgoing Transactions:

  • Tap on the send button on your account’s dashboard.
  • Input the relevant details of the receiver – name, phone number, email address, and PayPal QR code. If the receiver is not a PayPal user, they may need to create a free PayPal account.
  • Type in the amount of money you’d like to send across and include a short description if you like. A short note comes in handy if you are paying a vendor online for a service or product. You could also include a sweet message if you are sending money to a loved one.
  • Select what category the receiver belongs to. PayPal offers two options – Friends and Family, and Goods and Services. You should pick the latter if you are making payment on an e-commerce platform or to a vendor directly.

For Incoming Transactions

  • Tap on the Request button.
  • Input the giver’s details – email address and phone number – and select the most suitable option. You can create a PayPal.Me link you can share with the sender if he doesn’t have a PayPal account by clicking on the icon. There are also options to split a bill or create an invoice.
  • As soon as the money is deposited in your account, you will be notified via e-mail. If you have the app installed, you would also get a corresponding ping from the app.
  • You can choose to send the money to your regular bank account, or store it on the PayPal one.


Is PayPal Safe?

PayPal uses a lot of relevant cybersecurity measures in its operations so in the eyes of the law and UpGuard – a cybersecurity risk management company – it is relatively safe. Some of the security features include data encryption, a two-step verification process, OTP use, and e-mail confirmation for every transaction. PayPal keeps a close 24/7 watch on transactions and wastes no time raising alarm at any hint of suspicious activity.

 You may also be able to get a refund for payment made for goods that arrived damaged (regular banks don’t do that) if you submit the dispute within 180 days. After a thorough investigation, you would be refunded the full payment fee – shipping fee as well – if your claim is confirmed.

PayPal’s security system is a two-edged sword though. If the company suspects that you may be engaging in fraudulent activity, they immediately freeze your account and won’t grant you access to your money until your name is cleared.

Should I link my bank account to PayPal or just my credit card?

Whichever option you choose, your online financial transactions are still not entirely risk-free. However, using your credit card lets you enjoy consumer protection. When you link your bank account, you are at greater risk of losing all your finances if your account ever gets hacked.

Will I get my money back if my PayPal Account is Hacked and I get scammed?

While there are measures in place to refund you for damaged goods according to PayPal’s purchase protection policy, the company will not refund you on any other authorized transaction. Unauthorized transactions can be reported. You will get a refund in that case if you submit your report within 180 days of the transaction.

However, money that is intentionally sent (even if you scanned the wrong QR code) will not be refunded.

How can I avoid getting scammed on PayPal?

  • Stay on the lookout for phishing e-mails. Scrutinize all “confirmation e-mails” for loopholes. The most obvious loophole is a variation in the company’s name or e-mail domain. Your confirmation e-mails would always come from, and never a Gmail or Yahoo address. Also, “Dear esteemed customer” instead of “Hello John”? that’s phishing mail.
  • Report any suspicious e-mail to the company at [email protected].
  • Click responsibly. Investigate any e-mail advertising software, or that is directing you to a link for a “needed updated”.
  • Follow the two-step verification process.
  • Use a strong password, and don’t share it with anyone.


Conducting transactions online is risky because the internet is a free hub. However, it is nearly inevitable in today’s world. When you have to spend money online, do so via a digital payment option that you can trust. I hope you gained value from this article.

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Oputa Okwanuzor is a freelance writer skilled in the art of weaving words into stories for brand boost through copywriting, or make a soothing read using creative writing. In her free time, she loves to share personal development talks, fashion inspos and writing tricks on her blog.

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