An Introductory Guide to PayPal Accounts & Services

Joel Lee 31-03-2016

I’ve been a regular PayPal user for several years now despite all of the horror stories about frozen accounts, hackers, and scams How Scammers Target Your PayPal Account & How To Never Fall For It PayPal is one of the most important accounts you have online. Don’t get me wrong, I’m not a huge PayPal fan, but when it comes to your money, you don’t want to play around. While... Read More . Why? Because it just makes it so convenient to buy stuff online How To Set Up a Paypal Account To Pay For Anything I have to admit that Paypal has become my own vehicle of choice for conducting business online. It has become the most common vehicle that clients prefer for sending in payments for work. This makes... Read More . It’s straightforward, accepted by almost every merchant, and I’ve personally never had any issues.


But PayPal gets a bit more complicated when you start looking into some of their other services. Sending money is easy, but receiving money comes with a few quirks How to Set Up a PayPal Account and Receive Money From Anyone Think receiving payment with PayPal is difficult to set up? Here's how to send and receive money with a PayPal account. Read More . Not only that, but PayPal has a handful of lesser-known features and services that you may not know about.

So if you’re still using PayPal in this day and age, it would do you well to catch up on everything they offer. Here’s an overview of what you can expect.

PayPal Account Types


PayPal has had multiple account types for a while now. Each type is meant to cater to a specific type of user — buyers, sellers, and businesses — but they’re all pretty much the same at their very core. The differences are simple and worth learning because the right account type can make your life easier.

Each person is allowed to have one Personal account and one separate Premier/Business account.


Personal Account

The Personal Account is the “standard” account type. You can load money into it and use that money to buy things online or send it to friends and family members. It’s very useful for things like shopping on eBay, repaying friends for dinner, and sending your sibling a Christmas gift.

Premier Account

The Premier Account is for anyone who wants to sell stuff online as a one-person operation, whether in a hobby or professional capacity. Owners of Premier Accounts can receive PayPal payments on eBay, accept debit or credit payments from anyone, and receive the PayPal Debit Card (more on this below).

Business Account

The Business Account is for anyone who wants to sell stuff online under the name of a company or organization. In addition to Premier benefits, Business Accounts can accept bank transfers (with a per-transaction fee), grant limited access to up to 200 employees, and utilize special features like Express Checkout.

Student Account

The Student Account is a limited account that’s meant to ease adolescents (ages 13 and up) into the whole concept of managing money 10 Interactive Financial Websites That Teach Kids Money Management Skills Talking to kids about money can be difficult, but these interactive websites make it easier and more fun with games, activities, and quizzes. Read More . Student Accounts come with a provided debit card that the student can use anywhere that MasterCard is accepted.


Furthermore, Student Accounts are linked to a parent account (the account type can be any of the ones discussed above), allowing the parent account to monitor all activity and set spending limits. A parent account can have up to four Student Accounts tied to it.

Account Verification

As with most online interactions that involve money, PayPal scammers are not uncommon — and they exist on both sides of the line as buyers and sellers. If you’re buying, you want to know the seller is legitimate, and vice versa if you’re the seller, right?


That’s where account verification comes into play. To verify your account, you’ll need to complete two of the following three tasks:

  • Link and confirm a bank account.
  • Link and verify a credit card or debit card.
  • Provide your social security number.

Not only does verification increase your credibility, but it also removes the account withdrawal limit. As of this writing, the limit is $500 per month.

Transaction Fees

All account types are free to create and only require your real name, your home address, your phone number, and your email address.

All account types are subject to the same exact fee: 2.9% + 0.30 USD per transaction. This fee can be paid by the sender or the receiver. The fee also applies if you request payment from someone using the Invoice feature.

Note: You can actually send money to friends and family without any fees, but doing so waives any buyer protections offered by PayPal, so it’s best not to use this as a loophole when dealing with actual purchases. We recommend either Venmo or Google Wallet for personal transactions Venmo vs. Google Wallet: Send Money to Friends Easily Forget about trying to pay friends back in cash -- that's what you have a smartphone for! Read More .


PayPal Cards


As a PayPal user, you may be eligible for a card that you can use with your account. There are three types that you need to know about.

PayPal Debit MasterCard

The PayPal Debit MasterCard [Broken Link Removed] is a debit card that’s only available if you have a Premier or Business Account. You must apply for it, and we highly recommend that you get one if you receive and move a lot of money through your account. The card allows you to spend money from your PayPal balance anywhere online or in a store.

Benefits include:

  • No annual fee.
  • Withdraw money from any ATM.
  • Connect a bank account for backup funding.
  • Unlimited 1% cashback on purchases.
  • Zero liability for fraudulent purchases.

Note that PayPal Debit MasterCard transactions are limited to $3,000 per day in purchases and $400 per day in ATM withdrawals. Some fees may also apply, such as for ATM transactions.

PayPal Extras MasterCard

The PayPal Extras MasterCard is a credit card that’s provided by Synchrony Bank and allows you to make purchases on credit rather than spending the balance directly out of your account. You must apply for it and a credit inquiry will determine your eligibility.

Benefits include:

PayPal Smart Connect Card

The PayPal Smart Connect Card [Broken URL Removed] is another credit card that’s provided by Synchrony Bank, but can only used for online purchases. It also has a higher interest rate than the PayPal Extras MasterCard. Between the two, you may only have one or the other.

Benefits include:

  • Tied directly to your PayPal account.
  • Accepted anywhere PayPal is accepted.
  • Zero liability for fraudulent purchases.

Other Features & Services


In addition to the above, PayPal offers a handful of other smaller services and products that you might find useful.

Mass Payments

If you have many payments to send out at once — such as for paying out affiliates or clients — then you will love Mass Payments. With it, all you’ll need is a list of email addresses and payment amounts. PayPal will then email the recipients with instructions on how to receive their money.

The real benefit, however, is that you pay a much smaller fee for Mass Payments: 2% per transaction up to a max of $1 within the United States. For Mass Payments made outside the U.S., the fee is 2% per transaction up to a max of $20. You’ll need a verified Premier or Business Account to use this feature.

PayPal Credit

Don’t confuse PayPal Credit [Broken Link Removed] with the credit cards discussed above. PayPal Credit (formerly known as Bill Me Later) is offered by Comenity Capital Bank and provides a credit line as part of your account What Is PayPal Credit and Where Can You Spend It? What exactly is PayPal Credit? Here's how PayPal Credit works and whether it's the right payment option for you. Read More . You must apply for it and a credit inquiry will determine your eligibility.

Benefits include:

  • No annual fee.
  • Send money to friends and family.
  • Special “no interest” promotions.
  • Zero liability for fraudulent purchases.

Note: You won’t be eligible for PayPal Credit if you already have a PayPal Extras MasterCard or a PayPal Smart Connect Card.

PayPal Here Card Reader

One of the cooler services offered is PayPal Here, a card reader that connects to any Android or iOS mobile device. There are two kinds: the Mobile Card Reader only deals with credit and debit cards, while the Chip Card Reader can also handle chip cards Heads Up, Americans: Here's How Credit Cards Are Changing in 2015 Chip credit cards have been standard for years in the world outside of the USA. Now they're coming to the US; here's everything you need to know. Read More , NFC, Apple Pay, and more.

It’s one of the best and easiest ways to get paid if you’re selling or providing a service offline. To get started, all you need to do is order one, then download the free mobile app. Fees for transactions include

  • 2.7% per U.S. card swipe;
  • 3.5% + $0.15 when typing card numbers;
  • 2.9% + $0.30 when invoicing;
  • 1.0% to transfer across country borders.

There are no fees for setup or cancellation, no monthly fee, and no processing minimums.


Even if you aren’t a merchant, you can still use PayPal to accept donations and raise funds for whatever endeavors you’d like to pursue. Depending on what the donations are for, PayPal has a few different guidelines.

For personal fundraising, there is a 2.9% + $0.30 fee per transaction. Payments go directly into your account balance. You can use PayPal Here to take donations in person, add a Donate button to your website, or even send out emails for donation requests and fundraising updates.

For nonprofit fundraising, there is a 2.2% + $0.30 fee per transactions. You must first confirm your 501(c)(3) nonprofit status to qualify for the discount. Again, you can use PayPal Here, but PayPal also provides Express Checkout in addition to the standard online payment methods.

For education fundraising, there is a 2.9% + $0.30 fee per transaction. PayPal provides an online storefront that funnels all payments and donations to a single account that can be easily managed by a single staffer or volunteer. PayPal also offers free training for the storefront.

For political fundraising, there is a 2.9% + 0.30 fee per transaction. PayPal provides extra services and tools to help you reach more donors, along with campaign finance reports that make it easy to comply with Federal Election Commission requirements.

How Do You Use PayPal?

I have to admit, I didn’t know about some of these prior to writing this post. As it turns out, PayPal has a lot of cool stuff that you can take advantage of, whether you’re a buyer or a seller.

On the other hand, despite all of these features and services, I know that some of you absolutely hate PayPal and turned to alternative payment processors The 8 Best PayPal Alternatives for Making Online Payments PayPal is the biggest online payment provider, but it's not the only one. Here are the best alternatives to PayPal you can try. Read More . That’s okay! Feel free to share your experiences with us.

Whether you’re a fan or a foe, tell us what you think of PayPal and how you use its services down in the comments below!

Image Credits: Denys Prykhodov via Shutterstock, Artfamily via Shutterstock, BillionPhotos via Shutterstock, littleny via Shutterstock.

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  1. Rk
    May 9, 2020 at 3:41 am

    I had pinned this article and apparently MUOF complained. Why don’t u disable that if you have issues with pinning? What was the big deal anyway? I never pin anything where it says pinning is not allowed. I respect each author’s/site’s wishes and always do the right thing! So pls disable instead of complaining after someone pins!

  2. lori hall
    May 10, 2016 at 11:39 am

    I don't have a bank account so in order to withdraw money from my account I have to wait for a check to be issued.

    • Joel Lee
      May 14, 2016 at 12:00 am

      Unfortunately that's how it is. Nowhere else for the money to be sent. :( At least the check option is there!

  3. Anonymous
    April 1, 2016 at 1:46 am

    I do have a couple of reservations on PayPal, firstly they are not keen on you moving about. I saw a good value item when I was away from my home ip address and tried to purchase it. The account was frozen for security reasons. Secondly you can only link accounts in your home country and the US so should you move away this can lead to problems or expense.
    The plus side is they enable international payments to be received and made and I like the security of not handing out my card details.

    • Joel Lee
      April 12, 2016 at 10:41 pm

      I don't really travel much so wasn't aware of those problems. That sounds like a big pain! Sorry to hear you had to deal with that. :(

  4. Anonymous
    March 31, 2016 at 5:26 pm

    I have heard that you don't necessarily need an account to use PayPal to buy something online. Is that true? If so, can you expand on that a bit, please?

    • Joel Lee
      April 1, 2016 at 1:37 am

      If the merchant only accepts payments through Paypal, yes you can still purchase even if you don't have a Paypal account. You'll still need a credit card. At the end of the checkout process, you'll be asked if you want to create a Paypal account, but you can choose NO and that's that.

      Here's more info on it: [Broken Link Removed]
      Hope that helps!