What Is PayPal? A Guide for Small Businesses

PayPal is the parent company of many payment processing operations, including Braintree and Venmo.
Roberta Pescow
By Roberta Pescow 
Edited by Claire Tsosie

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PayPal is a digital payments company founded in 1998. Known for creating the world’s first digital payments platform, PayPal streamlined the way people and businesses send and receive funds with its user-friendly solution.

While still best known for its familiar payment platform, PayPal has grown by leaps and bounds since its launch and now has a family of companies that includes Braintree, Venmo, Honey, Zettle, Hyperwallet and Simility. It also has over 40 partnerships with major banks, financial institutions and credit card companies including Visa, Bank of America, Banorte, Barclays, Citi, HSBC, JPMorgan Chase, Shinhan Card, Wells Fargo, American Express, Discover, Mastercard, FIS, Paymentus and Synchrony.

Who uses PayPal?

Anyone can use PayPal by opening a free personal or business account. The company has over 300 million active account holders in over 200 markets worldwide. Once your account is active, you'll be able to send and receive digital payments on the PayPal platform.

Is PayPal secure?

PayPal is secure for both personal and business use. With two-step verification, end-to-end encryption and email confirmations for every transaction, PayPal protects sensitive information from hackers. Additionally, since transactions require only a login and password, merchants accepting PayPal don't store bank account and credit card numbers.

PayPal also offers seller protection to its business customers to keep chargebacks and claims at a minimum. This protection includes merchant fraud prevention, 24/7 monitoring and dispute resolution that keeps funds on hold until the issue is resolved.

Does PayPal work outside the U.S.?

Yes. You can buy and sell internationally with PayPal, which currently converts numerous currencies and processes transactions in over 200 countries worldwide.

Do I need to change my whole online checkout to start accepting PayPal?

No. Once you open a PayPal business account, you can include PayPal as a payment option for your customers. To do so, just add a PayPal button to the existing online checkout page on your business website. All you need to do is copy a prebuilt code and paste it next to the item or service you’re selling. There’s no need to hire a developer, and you can even change the button’s color, alignment and shape on your own.

If merchants use PayPal to accept payments, do customers need a PayPal account to pay?

No. PayPal Checkout lets customers pay through PayPal Pay, PayPal Credit, credit and debit cards, and Venmo.

Can I accept PayPal payments in person?

Yes. If your business operates in the field or in-store, PayPal Zettle (PayPal’s mobile payments system) allows you to accept payments in person from debit and credit magstripe and chip cards, as well as contactless payments. Zettle also offers business tools like inventory management and reporting.

Can I use PayPal to make business payments?

Yes. PayPal links securely to your bank account, and you can use it to make business purchases, send money to other PayPal users, pay suppliers and more.

What does PayPal cost?

Your cost to use PayPal will depend on the types of payments you process and the specific options you choose.

A PayPal business account is free to open and has no monthly fees or contracts. The business account includes the PayPal Checkout feature, which allows you to add a payment button to your existing website, and basic tools like reporting, analytics and cash management. You pay the processing costs for the payments you receive only.

PayPal product

Per-transaction rate

Per-transaction fee


Digital payments (invoicing, checkout, pay with Venmo and other commercial transactions)



Send/receive money for goods and services



Standard credit/debit card payments






Charity transactions



Alternative payment methods



PayPal Here (legacy offering for in-person payments)

Card present or QR code


No fee.




Zettle (for in-person payments)

Card present or QR code






QR code transactions

Over $10



Under $10



Online card payment services

Advanced credit / debit card



Per transaction rate is 3.5% for AmEx.

Payments Advanced



$5 monthly fee.

Payments Pro



$30 monthly fee.

Virtual terminal



Per transaction rate is 3.5% for AmEx. There is also a $30 monthly fee.

Some of PayPal’s many options, such as Payflow Pro (a more customizable gateway), do have monthly fees. And be aware that whichever solution you choose, you’ll have to pay a fee for chargebacks and instant transfers.