If you use PayPal, this is what you should know

PayPal is one of the simplest and most convenient ways to transfer money to and from virtually any destination in the world.

It is now also one of the most widely used electronic payment systems. The company has just under 200 million customers worldwide, and last year registered a total payment volume of US $282 billion.

To open an account on PayPal is a straightforward and uncomplicated exercise. All that is required is an email address, and a bank account or a credit card. The entire process does not take more than a few minutes.

One of the advantages of PayPal is that you can transfer money via PayPal even if the beneficiary does not have a PayPal account. As long as you have the intended recipient’s email address it is possible to transfer sums through PayPal. The company will send the person a link to open an account.

Using PayPal, you can send money to 202 countries, and services are available in 25 currencies.

There are no fees at all when you make a payment locally in Singapore using funds from your bank account. But if you use any other payment method, including credit or debit card to fund the payment, a fee of 3.9% of the amount will be levied in addition to a fixed charge of $0.50.

Sending payments abroad costs a little more. Even if you use funds from a bank account for the overseas payment, you are required to pay a fee of 0.5% of the amount that you are sending. In the event you are using another payment method such as a debit or a credit card, there is a 3.9% fee in addition to a fixed fee of $0.50.

Currency conversion fees from Singapore dollars to any other currency will be charged to the sender when sending money overseas. This amounts to 2.5% above the wholesale exchange rate.

Of course, you have the option of paying through PayPal with foreign currency from your bank. While your bank will certainly charge conversion fees for sending money overseas using Singapore dollars from your Singapore account, they will normally be lower than PayPal’s conversion fees.

You can double check both rates, but as a general rule, PayPal is more expensive than a bank, so it is advisable to pay in the foreign currency (converted by your own bank) to avoid the extra charges that PayPal levies.

For those getting paid via PayPal, there are many different charges and fees to receive the money. Usually the beneficiary will end up paying at least 3% of the transaction charge before any conversion fee, and withdrawing the money will incur further charges. You can get more details about the fees that PayPal charges here.

Personal, Premier, and Business accounts at PayPal

PayPal gives users the option of choosing from three different types of account. The Personal account is suitable for individuals who shop and pay online.

Premier and business accounts are for those with higher transaction volumes. The former accounts are for casual sellers, and for non-businesses that buy and sell online.

Business accounts offer several additional features, including the facility of operating under a company or a group name. This account can be set up to allow up to 200 employees to get limited access to the account.

Protection for buyers

If you buy an item online and it does not arrive, PayPal will reimburse you for the full amount of the item, plus shipping costs if you meet their eligibility criteria.

It is important to bear in mind the following if you plan to approach PayPal for reimbursement:

- You have to raise the issue within 180 days of sending the payment.

- You should maintain copies of all documentation regarding the transaction as it may be required at a later date.

- This protection does not apply to certain payments, particularly large ticket items. For example, if you purchased a vehicle, you will not be eligible to ask PayPal for reimbursement.

- This facility is not available for items that you collected personally after purchase.

If a buyer files a claim, the seller will be given an opportunity to provide information regarding proof of shipment or proof of delivery. During this period, however, a temporary hold on the seller’s funds will be in place.

It is hard to beat PayPal for convenience

Since its establishment in 1998, PayPal has enjoyed exponential growth. Today it is practically a household name, with millions of customers using its facilities every day.

There are a number of reasons for the company’s phenomenal success, including:

- Opening an account is very simple. There is no need to furnish any paperwork. The entire procedure is completed online with a minimum of time and fuss.

- PayPal can be used in conjunction with Visa, MasterCard, Discover, or American Express, in addition to most regular bank accounts.

- There are no charges for opening a PayPal account.

- As with a bank account, more than one PayPal account can be opened. An individual is entitled to have a personal account in addition to one premier or business account. But each PayPal account must be linked to its own bank account.

While the advantages of using PayPal are numerous, there is one crucial disadvantage. For transactions in excess of a few hundred dollars, it can be extremely expensive, and PayPal may ask for further paperwork from the account holder. Ideally, usage should be restricted to small sums.

(By Celia Farnon)

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