View Full Version : how does paypal make money?

03-26-2003, 08:03 AM
i'm kinda new to paypal, and i was wondering how they make money. i know they have some fees for business accounts and overseas transactions, but for "regular joes" like me, it seems there are no fees to send or receive money. not that i don't mind using this sevice for free, but why don't they charge a small fee for all transactions?

here is a link to their listed fees:

i haven't become "verified" by paypal yet, so if i'm correct, i can only send a certain amount of money before doing so,and i can't receive money, i think.(?):confused:

i've heard some horror stories from some who use paypal, like some people having their accounts and funds frozen, or sending money to the wrong person and paypal refuses to correct the mistake, but so far i have had no problems. anyone have any interesting stories?


OK, now i see how they make money. you have to have a premeir account to receive credit card payments,and those cost .30 cents plus .7%.

03-26-2003, 08:37 AM
Okay...paypal is an Ebay business. They probably make money through ebay transactions. A percentage of your Ebay posting costs probably go to paypal. So in turn supporting Ebay and selling funds Paypal. I could be wrong, but thats what I think.

03-26-2003, 08:41 AM
they were recently bought by ebay, which was a good idea, since most of their auctions were paid for with Paypal.

They also limit the amount of transactions you can have with a free account.

03-26-2003, 10:22 AM
They also take forever to process a payment! I clicked on "Pay Now" last Thursday and it only left my account today!

03-26-2003, 12:03 PM
Actually, any delays aren't really any of their fault. My "pay now" and withdrawals to my account only take a day or two at max. It depends on your bank and all that jazz.

I always thought paypal made money by going into our accounts and sending money to themselves. Guess i was wrong. :D

03-26-2003, 03:33 PM
The primary way they make money - and how they were able for so long to offer free $5 to anybody who signed up and never charge fees - was by using the money you leave with them to make interest. Basically, whenever you give a bank or Paypal money to hold onto that is actually yours, even 1 day in their hands makes them money via interest. While it may only be pennies a person, 100,000 people leaving their money with Paypal every day, that's a quick profit. And since a lot of people leave their money in their Paypal account for an extended period, even a few bucks pays off - since Paypal isn't paying you this interest, the profit stays with them.

However, as Paypal gets bigger and bigger, they need to hire a larger and larger staff and computer systems to handle the traffic, so now they charge fees for receiving most types of payments.

03-28-2003, 02:02 AM
They take a small percent of any money taken into your account. For instance ... if you sell something on eBay ... they will take a small bite out of your total. (Which means if you sell something on eBay and then receive payment via PayPal ... you get nailed twice. Once for the listing fee and once for PayPal's cut.) As well, yes ... like JT said, they make interest off of your money if it sits there. On an oddly positive note ... I recently received a $2.00 "discount for using direct deposits". My bank considers money deposited from my PayPal account a direct deposit.

03-28-2003, 02:32 AM
JT, I noticed that they now give the $5 signing bonus only after you deposit a certain amount into your acount. :)

Well, right now they are making money off of me for a transaction a seller did not make good on. :mad: I won't go into too much detail, but one of their verified members took me for a ride on a deal . . . and I will soon begin "aggressive negotiations." :D

I'm curious to see how they deal with my complaint since I did not give them the full 6 weeks (for a complaint investigation) before contesting it with my credit card company.

Other than this one issue, I have nothing but positive things to say about PayPal ! :)

03-28-2003, 01:46 PM
They also will charge you for VERIFICATION puropses to make your transactor "more comfortable" with the sale. It was less than a buck but still, I didn't read it cost anything????:frus: :rolleyes: