by Anjan Roy

Created on: November 22, 2008

PayPal has recently become the most widely used mode of money exchange over the internet. It is safe, secured and fast. The advantage of using PayPal is that it acts as a shield between your financial institution details and the internet.

The first step in starting your transactions is to setup a PayPal account. Setting up an account is free and all it requires is to have a valid e-mail address. The next step is to add bank accounts. You can add any number of bank accounts, but you should have one of them listed as Primary'. The primary bank account is used as a default account for all the transactions. As an added method of safety, PayPal performs a small transaction into your bank account by depositing a very small amount of money (usually a few cents). In order for you to start using your bank account, you are required to Confirm' the bank account by entering the exact amount of transaction. Once the amount matches with the transaction amount, you can start using your bank account on PayPal. This step adds extra protection to your account in case someone else is trying to use your bank account.

After you have setup your bank account, you can either add funds (i.e. take money from your bank account into your PayPal account) or withdraw funds (deposit money from your PayPal account to your bank account). Basically PayPal will act as another bank account for you from now on. PayPal does not charge you any service fee to add funds. However, there are various options that you can choose from in order to start getting paid and withdraw funds. For starting users, the recommended option is PayPal's Standard pricing which ranges from $2 to $3.5 transaction fee per $100 of transaction. The exact price depends on your average monthly income and there is no monthly fee or setup fee. You only pay once you get paid.

Once you have money in your PayPal account and you want to transfer that into your bank account, there are several options available. You can do an online transfer which is free and takes 3 to 5 business days. If you are transferring money in the US, the online transfer must be greater than $1. You can also request a check from PayPal, but that takes anywhere between 5 to 10 weeks and there is a $1.50 service fee. You can also apply for a PayPal debit card and use it for purchases anywhere you want. You can even withdraw cash using your PayPal debit card by just paying a $1 fee.

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