Paypal is an elegant system for making and receiving secure, instantaneous payments through Internet e-mail. Every account is insured against unauthorized transactions up to $100,000.
You can use Paypal to send money to friends, e-commerce Web sites, Internet auctions or anyone with an e-mail address.
How to start
You create a Paypal account by providing your personal data, such as your credit card and/or bank information, and by verifying your e-mail address.
To send money, just go to the Paypal site, enter information, such as a person's name, e-mail address and amount you want to send. The payee receives the cash in his/her Paypal account at the speed of e-mail, billed to your Paypal account (which is tied electronically to your credit card, debit card or checking account).
The payee can ship you the item you bought right away, with no need to wait for the mail to arrive and for the check to clear. And they never see your credit card or bank account number.
You can even send money to someone who does not have a Paypal account, though that person will have to sign up with Paypal to collect it.
Helpful for home businesses
If you run an auction or a small Web site selling homemade items, you can request payment via Paypal. Just fill in the payment information, and send it out like a bill.
To pay a bill, the customer confirms the transaction, and the money appears instantly in your Paypal account.
Paypal will electronically transfer the money to your bank account or mail it to you in the form of a check. (Paypal does not charge to send the money to your bank, but some banks do charge to receive these payments. Check with your bank.) Or you can leave the money in your Paypal account to make more Paypal payments.
Safe for auctions
The Paypal service has become more common on auction sites because it's fast, easy and gives you some additional protection against being ripped off by unscrupulous auctioneers.
Paypal promises to investigate any Paypal sellers who do not ship what was promised, and will give dissatisfied customers any money it can recover. Paypal accounts are not insured by the government the way banks are, but Paypal insures them up to $100,000 against unauthorized withdrawals.
The Paypal site has a growing list of e-commerce Web sites that accept Paypal payments, including some charities. Paypal will even give you $5 for signing up (with $100 in your account) and another $5 for each new person you refer to Paypal.