A PayPal account lets you send and receive money online without sharing your bank details with the other person

A PayPal account is a digital wallet that sits between your bank account (or credit card) and the people you want to pay or who want to pay you. Instead of giving someone your bank account number, you give them your PayPal email address. PayPal handles the actual money movement behind the scenes.

Think of it like a mailbox for money. When someone sends you cash through PayPal, it arrives in your PayPal account first. You then decide whether to leave it there, transfer it to your bank account, or spend it using PayPal's tools. The other person never sees your actual bank details.

You create a PayPal account for free on their website or app. To actually move money in or out, you link a bank account or debit card to your PayPal account — but you only do this once, during setup.

Key Takeaways

  • A PayPal account is a free digital wallet that lets you send and receive money using only an email address, without sharing your bank details.
  • You link your bank account or debit card to PayPal once during setup, and then you can send money to anyone with a PayPal account or email address.
  • Money sent to you lands in your PayPal account first, and you can transfer it to your bank account, keep it in PayPal, or use it to pay others.
  • PayPal charges fees for some transactions — usually when you send money to friends in other countries or when you receive money as a business — but not for basic peer-to-peer payments between friends in the same country.

How you set up a PayPal account

Go to paypal.com or read the PayPal app, then click the sign-up button. You will enter your name, email address, and a password you create. PayPal will ask you to verify your email by clicking a link they send you.

Next, you link a bank account or debit card. PayPal will ask for your routing number and account number (if you use a bank account) or your card number (if you use a debit card). This is how PayPal pulls money out when you send a payment, and how they deposit money when someone sends it to you.

You can add more than one bank account or card later if you want. For now, one is enough to get your free guide. The whole process takes about 10 minutes.

Sending money to someone else

Once your account is set up, sending money is straightforward. Open PayPal, click "Send," and enter the other person's email address or phone number. Type the amount, add a note if you want, and click send. The money leaves your linked bank account or card and arrives in their PayPal account within minutes.

If you are sending money to a friend in the United States for something like splitting rent or paying back a loan, PayPal does not charge you a fee. The other person receives the full amount you sent.

If you are sending money internationally (to another country), or if the other person marks it as a business payment, PayPal charges a fee — usually a percentage of the amount plus a flat dollar amount. PayPal tells you the fee before you confirm the payment, so you can see exactly what it will cost.

Receiving money from someone else

When someone sends you money through PayPal, it lands in your PayPal account. You will see a notification on your phone or email, depending on your settings. The money is yours to keep, move, or spend.

You have three choices: leave it in your PayPal account and use it to send money to others later, transfer it to your bank account (which usually takes one to three business days), or use PayPal's debit card or online checkout tools to spend it directly.

If someone sends you money as a business payment (not as a friend payment), PayPal may charge you a small fee — usually around 2.9% plus 30 cents. The sender chooses which type of payment to send, so you will know which applies.

What PayPal costs and what it does not

Creating a PayPal account is free. Sending money to a friend in the United States is free. Receiving money from a friend is free. Those are the most common uses, and they cost nothing.

You pay a fee only when you send money internationally, when someone sends you a business payment, or when you use certain PayPal services like their debit card or credit line. PayPal always shows you the fee before you confirm the transaction.

You do not pay a monthly subscription or account maintenance fee just for having a PayPal account. You only pay when you use a service that has a fee attached.

Security and what happens if something goes wrong

PayPal uses encryption to protect your information, which means your bank details are scrambled so that hackers cannot read them. You also set up a password and can turn on two-factor authentication — an extra security step where PayPal sends you a code to your phone before you can log in.

If someone sends you money by mistake, or if you send money to the wrong person, you can contact PayPal to report it. PayPal has a dispute process where they investigate and may be able to reverse the payment. This works better if you report it quickly — within 180 days of the transaction.

If your PayPal account is hacked or someone uses it without permission, PayPal's buyer protection covers certain transactions. Report unauthorized activity to PayPal as soon as you notice it.

PayPal versus other digital wallets

PayPal is one option for sending and receiving money online, but it is not the only one. Venmo, Square Cash, and Apple Pay are other digital wallets that work in similar ways — you link a bank account, then send money using an app.

The main difference is which services they offer beyond basic money transfer. PayPal also lets you pay for things online at stores that accept PayPal, and it offers a debit card. Venmo is designed mainly for splitting bills between friends. Square Cash focuses on simplicity. Apple Pay works best if you already use Apple devices.

For peer-to-peer payments between friends, all of these are free and take minutes. The choice often comes down to which one your friends already use, since you need both people to have accounts on the same platform.

Frequently Asked Questions

Do I need a credit card to open a PayPal account?

No. You can link a debit card or a bank account instead. A credit card is optional — PayPal accepts all three, and you only need one to get your free guide.

Can I send money to someone who does not have a PayPal account?

Yes. PayPal can send money to someone's email address even if they do not have a PayPal account yet. They will receive a notification and can claim the money by creating an account. If they do not claim it within 30 days, it returns to you.

What if I want to keep money in my PayPal account instead of transferring it to my bank?

You can. Money stays in your PayPal account until you move it. You can use it to send payments to others, or transfer it to your bank whenever you want. There is no fee for keeping money in PayPal.

Is PayPal safe to use?

PayPal uses encryption and fraud detection to protect your account. You should use a strong password and turn on two-factor authentication for extra security. Like any online account, it is safer if you do not share your password or click links in suspicious emails claiming to be from PayPal.

How long does it take to transfer money from PayPal to my bank account?

Standard transfers usually take one to three business days. PayPal offers faster transfers for a small fee — usually one business day or less — but the free option is the default.