How Does PayPal Work? - YouTube

Hey, welcome back to the Six Figure Mastermind. Marianne DeNovellis here. Happy

to see you again. Today, we're going to talk PayPal again today.

PayPal is a huge platform, everyone uses it but not if it would no has out but

not everyone knows how it works so today we're gonna go through the A to Z steps

on how PayPal actually works and functions for your business. Stay tuned.

So PayPal has been around for a long time and if you're not using it for

small business, I highly recommend that you do, it's an easy platform to send and

receive money but a lot of people don't exactly know how PayPal works. You know,

PayPal was a forerunner to what we now currently know as cryptocurrency, it's

not cryptocurrency, don't get confused, don't get me wrong but it functions in a

similar way so let me just walk you through the basics of how exactly PayPal

works. Most of PayPal operates in USD, meaning US dollars but it doesn't have

to. There's a lot of currencies out there in the world that can operate through

PayPal and PayPal will take all of them, okay, and what will happen is that you

have a bank account whether that's a checking account, whether it's a savings

account, even a credit or a debit card. Someplace where you're keeping your

whatever form of currency that you keep, okay. What happens then is PayPal will

act as a digital wallet and when you need to send money to someone, what will

happen is that money will come either from the debit account, that credit

account, that savings account, that credit union account, basically any bank account

or entity that has money will take that money and give it to PayPal. Now you can

do that or on your own, you can take your own money and put it in your PayPal wallet

or you can pay a bill from someone and that money will go from your account

to the PayPal wallet. Once it's in that, the PayPal wallet, it can do one of two

things.. It can be paid out to someone directly

into their PayPal wallet or you can just keep it in your PayPal wallet and what

happens is that PayPal money, it's still USD or whatever currency you you brought

into it will go from one PayPal Wallet to another and once it goes into the

other person's PayPal wallet, then they can take that money and through a

transaction time of between three and five business days, that money can be put

into their bank or their credit card or whatever it is that they..

their debit card or credit union and whatever it is that they do so what

happens with PayPal is if you are talking bank to PayPal for it to PayPal

to bank and it's a savings or a checking account,

there aren't any fee associated with that. Now if you do have

a merchant account or an a credit card that using, there are what is called

merchant fees and anytime you have a credit card transaction, merchant fees

are part of that. You typically don't have to pay for merchant fees as a

customer but as a service provider or a product provider, you're definitely

paying merchant fees and it can range up to three, four, five percent depending on

the credit card that you're using. Visa is usually the cheapest, Discover card,

American Express can get up there as far as merchant fee goes so what happens

when you use a credit card on PayPal, where do those fees get

taken out? Let's say that you are a vendor on PayPal, you've created an

invoice and you've sent it off to your client, that client gets that invoice and

they're going to pay it with a credit card so they open up their email, they

say the invoice from you, if they say great, I'm looking forward to fulfilling

this invoice, they reply to that email or click on the link in the email and

decide to pay with a credit card. Now they don't have to have a PayPal account

to do that but they can, either way will work. If they have a PayPal account, they

can just pay with the money in their PayPal wallet or use the backup of the

credit card as the funding source. Now let's say the invoice was for $50, you

send that over and they're gonna pay with a credit card.

When they pay that invoice with the credit card, they are going to pay $50 so

their credit card will have $50 charge on it however, you will only receive

about $47 $48 because of the merchant fees so when that invoice goes

to them and they pay it, before that money comes to you, there's this third

party called a merchant account that's going to take out a certain percentage

so when you get that money into your PayPal account, yes, they'll have to pay

the invoice in full but you will have a transaction fee removed from that from

the merchant, okay. So let's break it down into simple terms.. you've got a bank

credit debit credit union, whatever you have you have, PayPal Wallet where all

those transactions are taking place on the other side, you've got another

person's bank account when you bring that money in, it goes into your PayPal

wallet, you can sit there as long as it wants or you can transfer it out

directly to your account. When that money is sitting there in that PayPal account,

it needs to go somewhere if you're paying for some so it's either going to

go to someone else's wallet directly from your wallet or it's going to go

from your to their wallet to their bank account,

they can choose where that money goes. Alright, so it's from bank account to

PayPal wallet, from PayPal wallet to the other PayPal wallet and then from PayPal

wallet to their bank account and the same works in reverse, it's basically a

digital coin system. Again, very much like cryptocurrency is operating right now

but PayPal is the middleman, cryptocurrency for example doesn't have

a middleman, it's directly from person to person but PayPal will secure all of

their transactions with encryption and make sure that the buyer and the seller

are both taken care of. Hey, thanks for tuning in today, I hope that video is

helpful for you. What questions do you have some at PayPal? Post them in the

comments below, I'd love to hear them. Hit the subscribe button, give the bell a ring.

I'll see you tomorrow.