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.

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Frequently asked questions.

PayPal powered by Braintree makes it easy to accept payments. Our payment gateway is similar to the credit card terminal you swipe your card through at the grocery store. We'll make sure your customer's payment information gets to the right place and stays secure.

Integration with a PayPal powered by Braintree merchant account is available through many of our eCommerce and shopping cart partners via a single application process. Several of our partners even allow you to create a trial or provisional account which requires minimal information to get started. Once you have a merchant account you will have access to your new payment gateway via the PayPal powered by Braintree Control Panel. Completing the application process will allow you to receive payments to your bank account.

Merchant Account
A merchant account is what PayPal powered by Braintree uses to route payments from your customers' accounts to your bank account. A merchant account is similar to a line of credit, so you'll need to fill out an application. Until your application is complete, you'll be given a provisional merchant account.

Provisional Merchant Account
If your partner supports it, PayPal will provide you with a provisional merchant account until you complete your full application. You can accept up to $2,500 USD or 25 transactions from customers. You won’t receive your funds to your bank account until your account is fully approved. Approval usually takes just 1 business day if we don't need to request any additional information from you. After approval, there are no processing or disbursement limits.

Control Panel
The Control Panel will give you access to monthly statements and reports to assist with reconciliation. In addition, a Disputes portal, where you can manage your chargebacks, retrievals, and pre-arbitrations on credit card transactions. If you choose to accept other payment types such as PayPal you can see and report all of your transactions from the Control Panel.

PayPal account
Accepting PayPal alongside credit cards is easy. As part of your full application, you'll either link your merchant account with an existing PayPal account or create a PayPal account. Either way, you'll be able to manage your PayPal processing settings and disputes from your PayPal account.

Need more help?
I received a chargeback on my Braintree control panel, what do I do?
How do PayPal powered by Braintree disbursements work?
Why am I receiving reminder emails from Braintree?
How do I void a payment through my PayPal powered by Braintree control panel?
How do I enable fraud filters on my PayPal powered by Braintree account? 
How do I refund my customer through my PayPal powered by Braintree account?
If your payment is on hold or not available right away, we’ll notify you via email or an alert on your Summary page.

Delaying funds availability is a common industry practice we implement to help ensure the secure use of PayPal by both buyers and sellers. By placing your payment on hold, we’re trying to make sure that there’s enough money in your PayPal account to resolve any issues that may arise with your account such as chargebacks or disputes. When subject to a hold, the money is temporarily not available to use.

If there aren’t any issues with your transaction or account, the payment will typically be released within 21 days after receipt. After your hold is released, it may take until midnight (but it's usually sooner) for the money to appear in your PayPal account.

Here are some reasons your funds may be temporarily on hold or unavailable:

1. You’re a new seller with PayPal or you’re an established seller but have opened a new account.
When you’re a new PayPal seller, it takes time to build up enough history to demonstrate a pattern of positive buyer-seller transactions. The good news is you can usually move out of this status by confirming your identity and building up a history of positive selling activity.
If you’re an established PayPal seller, but opened a new account, that account will be eligible for holds until a good history is established.

2. You haven’t sold in a while.
When your selling activity has been dormant for a long time, it will also take time to rebuild a history of positive buyer-seller transactions.

3. Multiple customers filed for a refund, dispute, or chargeback.
If multiple customers file for a refund, dispute, or chargeback, or if you receive a large number of refunds, disputes or chargebacks in a short period of time, it can delay the availability of your funds. The best way to resolve this is to work directly with your customers to prevent, or solve, disputes and chargebacks.
Sometimes it’s possible that your customer filed for a refund, dispute, or chargeback because someone illegally used their PayPal account to buy something. We ask that you hold off on shipping any items when this happens.

4. Your selling pattern appears unusual or has changed.
Unusual sales activity includes: an increase in sales or a change in average selling price, business platform, or type of item being sold.

5. You’re selling higher risk items.
Higher risk items can include tickets, gift cards, consumer electronics, computers, and travel packages.

How do I get my money sooner for a transaction on hold? provides information on how you may be able to get your funds released early.
Why is my payment from a sale on eBay on hold? provides information on eBay holds and how to contact eBay.
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

Your account security is important to us. 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.