How PayPal credit card processing works for your business.

May 17 2019 | PayPal editorial staff

PayPal facilitates online payments for hundreds of thousands of ecommerce ventures. Explore why you should use or pay with PayPal and how it can work for you.
How PayPal works.
If you sell goods online, you’ve probably heard of PayPal. We offer an online payment service that enables you to accept bank or credit card payments for the items you sell. When a customer pays for his or her purchases, we process the payment and transfer the funds to your PayPal account.

PayPal facilitates online payments for hundreds of thousands of e-commerce ventures, as well as traditional brick-and-mortar companies with an online presence. Read on to learn how it can work for your business, too.

A step-by-step guide to PayPal.
PayPal’s mission is to “build the web’s most convenient, secure, cost-effective payment solution.” But what is it that PayPal does, exactly?

A typical PayPal transaction sequence:
1. The transaction starts when a customer (let’s call her Mary Ann) comes to your website. Let’s say Mary Ann finds a sweater she wants to purchase and clicks the Buy button on the product page. At this point, PayPal gets to work behind the scenes.

2. Mary Ann sees a shopping cart or checkout page next. Depending on the type of PayPal service you choose, she might see a shopping cart page integrated with your website. In other instances, she’ll see a shopping cart or checkout page hosted at the PayPal site (branded with your business’s logo).

3. After reviewing the checkout page, Mary Ann clicks the Pay Now button. This directs her to a payment page, hosted by PayPal. If you choose PayPal Payments Standard, your customer will be taken to the PayPal site to complete the transaction. With PayPal Checkout or PayPal Payments Pro, that process is integrated into your site, so Mary Ann never leaves it.

4. If she has a PayPal account of her own, Mary Ann can simply enter her username and password, and the rest of her personal information – address, phone number, etc. – is retrieved from our database and automatically entered onto the payment form. (If Mary Ann doesn’t have a PayPal account, she can create one.)

At the PayPal login, she’ll also see the option to “Stay logged in for faster purchases.” Called One Touch, this feature keeps her logged in on the device she’s using, so if she comes back to your site or another site using PayPal, buying is even faster and easier.

At this point, her PayPal transaction is complete. If she chooses to pay with a credit or debit card, she’ll continue through the following steps.

5. If Mary Ann chooses to pay with a credit or debit card, she’ll enter her contact and card information in the web form and then click the Pay button to authorize payment. Behind the scenes, Mary Ann’s credit card information is encrypted and transmitted to PayPal, and then we contact the issuing bank for Mary Ann’s credit card. Assuming that her credit line can cover the purchase, the issuing bank authorizes the transaction, and the sale is approved. This process only takes a few seconds.

Note: All PayPal transactions take place on web pages that utilize Secure Sockets Layer (SSL) encryption. This protects your customer’s personal data from prying electronic eyes and identity thieves.

6. Mary Ann sees a confirmation page with a message (sent by us) that says her purchase has been completed. At that point, we’ll notify you of the purchase via email.

7. Once notified of the purchase, you can start processing the order. You can also opt to send a confirmation email of your own, letting Mary Ann know the purchase has been put into your system and notifying her of the approximate ship date.

8. When the funds are confirmed from the credit card company, they’re deposited into your PayPal account – minus applicable fees (2.9% + $0.30 per transaction). This infographic  has an easy-to-understand breakdown of how exactly the money gets to you.

9. Once the money reaches your PayPal account, which usually happens within minutes of making the sale, you can leave it in your account for use in paying business expenses or withdraw it to your bank account (which usually takes 2-3 days).

The whole process is easy for the customer to understand and navigate, which means buying from you is a great experience. And it’s easy for you to use, too, so you can keep driving your business forward. 

 
The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision.

Was this content helpful?

Frequently asked questions.

PayPal and Facebook make it easy for people to support your eligible business with donations. You’ll get the benefits of secure and fast payments by PayPal, along with the power of Facebook to generate awareness. You can include an optional gift voucher as a token of your appreciation, too.
 
How do I get started?
First, set up your personalized donation link which will be hosted by PayPal, so you don’t need a website or do any coding. You can share your unique link by email, text, social media, chat, and more.
 
How does the optional gift voucher work?
You can include a gift voucher for a discount on a future purchase, a complimentary product or a gift with purchase. Your gift voucher will be described in your donation link and donors can redeem it when they next make a purchase. If you choose to include a gift voucher, your donation link will be eligible for Facebook programs to support local businesses.
 
How are gift vouchers redeemed?
You can decide how redemption will work best for your business. For example, they could show their donation receipt or reference the PayPal transaction ID with their next order. When you set up your gift voucher, you’ll include instructions for how donors can redeem their gift voucher.
 
How do I include my donation link in Facebook programs to support local businesses?
If you include the optional gift voucher in your donation link, we’ll automatically submit it to Facebook. Allow 48 hours for the donation link to be available in Facebook. The inclusion and presentation of the gift voucher is subject to Facebook policies.
 
What information do you share with Facebook?
We share your business name, location, and logo with Facebook.
 
Mine is a for-profit business. Can I accept donations?
Donations may be treated as income. Reporting requirements vary by location, so be sure to check with your tax authority for more details. You’ll want to consult with an accounting professional for specific guidance.
 
How do I know if I receive a donation?
The donations will be processed by PayPal and typically show up in your account within minutes. Sometimes, to make sure transactions are secure, it may take longer to get your money and you can read more about why this may happen. You’ll receive the normal transaction notice by email and you’ll see the details in your account with PayPal.
 
Will I know who has made a donation?
The names and email addresses of your donors will be part of the transaction details.
 
Are the donations subject to PayPal transaction fees?
Yes, you’ll pay your normal transaction fees on donations. Read more about fees.
 
What if I don’t have a logo to use in my donation link?
If you don’t have a logo, you can use a photo of a featured product or of an employee or business site that donors would recognize. The key is to use an image that will help your donors recognize your business.
After filing a claim for unauthorized use of your PayPal account, please allow up to 10 business days for us to conduct an investigation. If the claim is decided in your favor, all unauthorized transactions and fees will be refunded to your account.

Here's how to check the status of your claim:
  1. Go to the Resolution Center.
  2. Select Cases being reviewed by PayPal from the "View" menu, or select Closed cases (last 15 days) if your case has recently been closed.
  3. Click Details next to the claim.
We'll never ask you to reveal your password. There are no exceptions to this policy. If anyone claiming to work for PayPal asks you for your password, do not provide it.
As a PayPal customer, you may be eligible for one of several PayPal card products.


PayPal Credit


PayPal Credit is a digital line of credit that allows you to shop everywhere PayPal is accepted. PayPal Credit is for online purchases only; you won’t be provided a physical card. You can apply for PayPal Credit online. Learn more about PayPal Credit.
* PayPal Credit is subject to credit approval.


PayPal Cash Card


The PayPal Cash Card is a Debit Card that’s used with a PayPal Cash Plus account. The PayPal Cash card allows you to cash a check, load cash, do a bank transfer, and direct deposit. Learn more about the PayPal Cash card. Apply now for the PayPal Cash card.


PayPal Business Debit Mastercard



The PayPal Business Debit Mastercard is a Debit Card that works with your Business PayPal account. Learn more about the PayPal Business Debit Mastercard. Apply for PayPal business debit Mastercard.


PayPal PrePaid Mastercard


You can order a PayPal Prepaid Mastercard online or purchase a temporary card at retail locations. Once you receive your card you can load funds and start shopping. Learn more about the PayPal Prepaid Mastercard.


PayPal Extras Mastercard



The PayPal Extras Mastercard is a credit card that allows your to earn points for the purchases you make every day. The points can be used for gift cards, travel vouchers and more. Learn more about the PayPal Extras Mastercard and the benefits it offers. Apply for the PayPal Extras Mastercard.


PayPal Cashback Mastercard



The PayPal Cashback Mastercard is a credit card that allows you to earn 2% cash back on every purchase. Learn more about the PayPal Cashback Mastercard and the benefits if offers. Apply for the PayPal Cashback Mastercard.


 

Get started with PayPal Credit

Other PayPal Credit questions


Get Started with the PayPal Cash Card

PayPal Cash Card transactions 

Get Started with the PayPal Business Debit Mastercard

Card information 

Get Started with the PayPal Extras Mastercard

Card information



Get Started with the PayPal Cashback Mastercard


 

Get Started with the PayPal Prepaid Mastercard

Add PayPal as a payment option to any checkout with PayPal Checkout (formerly known as Express Checkout). It can be set up in minutes and offers the convenience and security of PayPal, turning more shoppers into buyers.

How does it work?
With PayPal Checkout, your customers can complete transactions in just a few steps, using their shipping and billing information already stored securely at PayPal to check out so they don’t have to re-enter it on your site. When PayPal Checkout is configured with the default settings, customers must have a PayPal account to complete a payment.

PayPal Checkout is available to any merchant that has API access, and any customer with a PayPal account can use Checkout for their purchases. PayPal Checkout has many options that support many different checkout flows. See our Developer website for more information.

We’ll use cookies to improve and customize your experience if you continue to browse. Is it OK if we also use cookies to show you personalized ads? Learn more and manage your cookies