How to Use PayPal’s Personal Payment Services for Your Online Business

By Greg Holden

PayPal was one of the first online businesses to hit on the clever idea of giving business owners a way to accept credit and debit card payments from customers without having to apply for a merchant account, download software, apply for online payment processing, or some combination of these steps.

PayPal’s person-to-person payment services are ideal for transactions. In this sense, PayPal is essentially an escrow service: It functions as a financial middleman, debiting buyers’ accounts and crediting the accounts of sellers and, exacting a fee for its services, which it charges to the merchant. The accounts involved can be credit card accounts, checking accounts, or accounts held at PayPal into which members directly deposit funds.

The person making the payment sets up an account with PayPal by identifying which account a payment is to be taken from. The merchant also has a PayPal account and has identified which checking or credit card account is to receive payments. PayPal handles the virtual “card swipe” and verification of customer information.

PayPal is best known as a way to pay for items purchased on eBay. eBay, in fact, owns PayPal. But the service is regularly used to process payments both on and off the auction site. If you want to sell items, you sign up for a PayPal Business or Premier account.

You get a PayPal button that you add to your auction listing or sales web page. The customer clicks the button to transfer the payment from his or her PayPal account to yours, and you’re charged a transaction fee.

Setting up a PayPal account is free. Here’s how you can set up a PayPal Business account:

  1. Go to the PayPal home page and click the Sign Up Now button.

    The PayPal Account Sign Up page appears.

  2. Choose your country of residence and your language, and click the Get Started button beneath PayPal for Business.

    The Choose a PayPal Payments Solution page appears.

  3. For this example, click the Get Started button beneath Standard.

    The Sign Up for PayPal Payments Standard page appears.

  4. Click Create New Account, verify your country and language preference, and click Create New Account.

    The Business Account Sign Up page appears.

  5. Follow the instructions on the two registration form pages and set up your account with PayPal.

    After you fill out the registration forms, you receive an e-mail message with a link that takes you to the PayPal website to confirm your e-mail address.

  6. Click the link contained in the e-mail message.

    You go to the Enter Password page.

  7. Enter your password in the Password box and then click the login button.

    You go to the my Business Setup page.

  8. Click the Merchant Services tab at the top of the my Account page.

  9. Click Create payment buttons for your website link.

    The PayPal Payments Standard: Setup.

  10. Click Create a Button; then provide some information about the item you’re selling, including

    • Enter a brief description of your sales item in the Item Name box.

    • Enter an item number in the Item ID box.

    • Enter the price in the Price box.

    • Choose a button that shoppers can click to make the purchase.

  11. When you’re done, click the Create Button button.

    You go to the You Are Viewing Your Button Code page.

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  12. Copy the code in the website box and paste it onto the web page that holds your sales item.

    That’s all there is to it. When you receive a payment through eBay, you receive an e-mail notification. When someone sends you money directly through PayPal, you see that, too. You can then verify the payment by logging in to your account on the PayPal website.

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You should realize that accepting money on PayPal is not free. Buyers don’t pay to use PayPal, but sellers do. For a purchase of about $23, PayPal takes about $1 in fees, for example. On the plus side, PayPal does make a debit card available that you can use to make your own consumer purchases with the money in your account.

The nice thing about using PayPal is that the system enables you to accept payments through your website without having to obtain a merchant account. The thing to remember is that both you and your customers place a high level of trust in PayPal to handle your money. If fraud is a problem, PayPal investigates it — or is supposed to, anyway.

Some former PayPal users detest PayPal because of what they describe as a lack of responsiveness, and they describe their unhappiness in great detail on sites such as www.paypalsucks.com. Be aware of such complaints to have the full picture about PayPal and anticipate problems before they arise.