Finding Out How PayPal Works
Like many great ideas, the fundamentals of PayPal are pretty easy to grasp. Your PayPal account is much like any savings or checking account, except PayPal was designed specifically for online transactions. Before you can start using PayPal, the first thing you need to do is open a PayPal account. Consider starting with a Personal account, because you have no fees associated with sending or receiving money. After you get your feet wet, you can always upgrade to a Premier or Business account.
You are required to upgrade from a Personal account to a Premier or Business account if you send payments totaling $2,000 or more. This limit may vary, depending upon whether you have a U.S. or International account. There may also be limits on how much money you can transfer from your PayPal account to your bank account. To see what limits apply to your account, click the View Limits link, located to the right of your account balance box, on your Account Overview page.
Money makes the (PayPal) world go 'round
Okay, you're convinced and you opened a Personal account. Now what? An account without funds is like a cone without ice cream — what's the point? You need to get money into your PayPal account before you can start doing anything.
You add funds to your PayPal account in one of three ways:
- By receiving payments from other PayPal members
- By linking a savings or checking account to your PayPal account and using Electronic Funds Transfer (EFT)to transfer money
- By getting interest payments on the funds that are in your PayPal account
When you make a payment with PayPal, you have several funding sources from which to choose to finance the transaction. These sources include the following:
- If you have enough funds in your PayPal account to cover the payment you want to make, the funds are deducted directly from your PayPal account.
- If you have linked a checking or savings account to your PayPal account, the funds can be deducted directly from your bank account in the form of an eCheck.
- If you link a credit card to your PayPal account, the payment amount can be deducted from your credit card after you've depleted the funds in your PayPal account balance. The payment shows up on your monthly credit card bill.
The process for buying a good or service using PayPal is very straightforward:
1. After winning an auction or purchasing an item, if you opt to use PayPal for payment, PayPal deducts the amount of your purchase from funds in your PayPal account or authorizes payment from the credit card you have linked to your PayPal account.
2. PayPal credits the seller's account with the funds deducted from your account (less any applicable transaction fees). Fees only apply to sellers with Premier and Business accounts.
3. PayPal generates e-mails to you (the buyer) and the seller to confirm the transaction and the transfer of funds.
The actual transfer of funds is no more complicated than if you were to pay for an item with a check from your checking account.
How PayPal makes money
Just like a bank, PayPal makes money off the "float" of the funds they manage. In other words, PayPal is earning interest against the money that you (and millions of others) have placed into their accounts, but not spent yet.
Think of it this way: PayPal has roughly 50 million members. If each member left $10 in their account for a year, the accrued interest would total around $500 million dollars. Even at an interest rate as low as 1.75 percent, PayPal would be earning $8,750,000 every year, just for letting the money sit there!
Additionally, PayPal makes money by charging transaction fees for Premier and Business accounts: There's no charge to send money, but when you receive money, PayPal takes a percentage of the amount (between 1.9 percent and 2.9 percent) plus a 30-cent USD transaction fee.

Blogging & Social Networking Glossary
archive
1. (noun) A list of previous blog posts, in chronological order. 2. (verb) To place files or blog posts in a safer place (on DVD or another server) for longer-term or backup storage.

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attribute
Used in an HTML tag to give an instruction to a Web browser. For example, in This link goes to <a href="http://www.google.com">Google</a>, the <a> tag gets an attribute (href) and a value ("http://www.google.com") to go along with the basic tag. In this case, the attribute indicates to the browser that what comes next is a hypertext reference — in this case, a Web page.

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blacklist
An often-centralized list of e-mail addresses, URLs, and IP addresses used by spammers that are then forbidden in any blog post on your blog. With an up-to-date blacklist, a lot of spam is stopped before it becomes a comment.

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block
To stop all contact with a MySpace user. He can’t comment on your blog page or send you any message that you actually receive.

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blog
A combination of the words Web and log. Bloggers (individuals, groups, or businesses) post a chronological log of information. Content is determined entirely by the author(s) of the blog; many are personal journals.

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blog post
An entry in a blog, possibly containing text, images, and other media.

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blogger
The author of a blog.

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blogging policy
Outlines what you’re allowed to post in your blog.

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blogging software
Technology that enables you to blog. Can be either hosted or nonhosted.

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blogroll
A collection of links used or recommended by a blogger.

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cookie
A short piece of computer code, stored on your computer, that enables Web sites to remember certain settings and information the next time you visit that site.

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Dashboard
A kind of control panel in Blogger that shows you the blogs you’ve set up, giving you access posting, using help resources, or even creating another blog.

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definition list
A type of HTML list that gives a term and then its definition and has built-in spacing to lay out those elements properly.

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disk space
Amount of room available on your hard drive.

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domain
A domain is the address, or main URL, that people type in the browser to get to your Web site. The domain name you choose can’t be used by anyone else.

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domain registrar
A service that enables you to register a domain name.

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entry
An single posting in a blog containing text, images, or other media, or any combination of those things.

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Facebook
A social-networking service that enables you to keep in contact with families and friends via the Web.

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Flickr
A Web site that allows you to share, organize, edit, and otherwise manage your photos.

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Friend List
Your virtual online address book in MySpace. You can become someone’s friend by either sending a fellow MySpacer a Friend Request or by being on the receiving end of a Friend Request from another MySpace user.

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hosted services
Manages the data, software, and Web hosting of a blog; the blogger just manages the content.

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HTML
The computer coding used by Web designers to create Web pages.

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hyperlink
A navigation tool that allows a user to go from one Web location to another by clicking. Hyperinks (or just links) are typically underlined.

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hypertext reference
In HTML, the address that a hyperlink connects to when clicked. For example, in This link goes to <a href="http://www.google.com">Google</a>, the hypertext reference (href) is http://www.google.com. Hyperlink references can also jump to new positions on the same page, open a new e-mail message, or begin a file download.

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link
Short for hyperlink, a navigation tool that allows a user to go from one Web location to another by clicking. Links are typically underlined.

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Mom test
A self-test that flags inappropriate blog posts. If you’d let your mom read the post, then it’s probably passed the Mom test. Specifically, don’t blog about topics you think will hurt others; don’t blog about others without their permission, even about topics you consider inconsequential; and don’t identify friends and lovers by name without their permission.

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MySpace
A social-networking service that enables you to keep in contact with families and friends via the Web.

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MySpace profile
Your MySpace identity. It can contain as much or as little information about you as you’d like.

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news aggregation
The ability to aggregate news by using RSS feeds. Having a news aggregator included with your blog package allows your site to pull in information from another blog.

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nonhosted service
Blog software that you set up on your own Web server. It allows you to take on all responsibilities related to maintaining your blog.

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ordered list
Contains items that must be listed in a particular order, such as a list of ranks or preferences. It may also indicate a list of steps for the reader to follow.

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pinging
An automated notification system for search engines and newsreaders, letting those services know that your blog has been updated. A ping occurs when one computer asks another whether it’s there; the second computer confirms its presence.

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post
1. (noun) An entry in a blog containing text, images, other media, or any combination of these. 2. (verb) The act of creating and/or uploading a blog entry.

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private profile
A MySpace profile that’s limited on who can view it, such as only people on your Friend List.

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public domain
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social network
A service, such as Facebook or MySpace, that enables to keep in touch with people you know — and meet people you don’t know.

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spam
Unsolicited electronic messages sent in bulk that may be commercial, nonsensical, or malicious. In addition to e-mail spam, blog comments and blog forums can be targeted by spammers.

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tag
A relevant keyword associated or assigned to a piece of information, such as an image, a blog entry, or a video clip. Tags are usually chosen informally by the content creator or by the online community; they help give content to nontext media and organize information for ease of searching.

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Trackback
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transparent
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unordered list
unordered list is a series of bulleted items and is used for lists that don’t require numbering.

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video blog
A blog consisting of video files, or the practice of placing a video file in a blog post.

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video-sharing service
A service, such as YouTube, that enables you to share video with others.

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Web host
The Web server where you software, graphics, and other files live online.

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Web server
Technology that looks at what Web page is requested and then feeds the browser the appropriate file. It does most of the hard work of serving Web pages to visitors coming to your Web site.

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whitelist
A list of preselected users who are allowed to comment on your blog.

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YouTube
A video-sharing service.
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