The simplest way to receive money through PayPal
To receive payments through PayPal, you need a PayPal account and a way for customers to send you money. The easiest route depends on what you're selling and how often you receive payments. If you're selling items online, PayPal can generate a payment button for your website. If you're receiving one-off payments or invoices, you can send a payment request directly to a customer's email. If you run a physical store or take payments in person, you can use PayPal's mobile app to accept card payments on your phone.
The account itself is free to open. PayPal charges you a fee only when money actually arrives in your account — you don't pay anything upfront, and you don't pay if no one sends you money.
Key Takeaways
- A basic PayPal account is free, and you only pay fees when customers send you money, not before.
- You can receive payments through a payment button on your website, an invoice sent by email, or a mobile card reader for in-person transactions.
- PayPal holds new accounts for a review period before releasing funds, which usually takes a few days but can take longer.
- The fee PayPal charges depends on the payment method your customer uses and whether you're a business or individual account.
- You can see all incoming payments in your PayPal account dashboard and transfer the money to your bank account whenever you want.
Opening a PayPal account and confirming your identity
Start by going to PayPal.com and clicking "Sign Up". You'll choose between a Personal account and a Business account. A Personal account is simpler if you're just starting out — you can still receive payments for goods and services. A Business account gives you more tools for invoicing and reporting, but you don't need it to begin.
PayPal will ask for your name, email address, and a password. Then you'll confirm your email by clicking a link PayPal sends you. Next, PayPal asks for your date of birth, address, and the last four digits of your Social Security number. This is how PayPal verifies you're who you say you are — it's required by law for any account that receives money.
Once you've entered this information, PayPal will review your account. This review usually takes a few minutes, but can take up to 24 hours. During this time, you can browse PayPal's features, but you won't be able to receive or send money yet.
Adding your bank account so you can withdraw money
After your account is confirmed, PayPal will ask you to link a bank account. This is where PayPal will send your money when you ask it to. Go to your account settings, find "Linked Banks and Cards", and click "Link a Bank Account". PayPal will ask for your bank's routing number and your account number — both appear on the bottom left of any check from that account.
PayPal will then send two small deposits to that bank account, usually within one to two business days. These deposits are just a few cents each, and they have reference codes attached. Once you see them in your bank account, you'll log back into PayPal and confirm the amounts. This confirms that you own the bank account.
Until you complete this step, PayPal will hold any money you receive in your PayPal balance. You can spend it through PayPal (to pay other people or buy things online), but you can't move it to your bank. Confirming your bank account unlocks that ability.
Choosing how customers will send you money
PayPal offers several ways to receive payments, and you can use more than one at the same time. The right choice depends on your situation.
Payment buttons for your website: If you have a website or online store, PayPal can create a button that customers click to pay you. You log into PayPal, go to "Tools", and select "PayPal Buttons". You enter the item name, price, and what you're selling it for. PayPal generates a code you paste into your website. When a customer clicks the button, they're taken to PayPal to complete the payment, then returned to your site. This works whether you use a website builder like Wix or Squarespace, or a full store platform like Shopify.
Invoices sent by email: If you're billing a customer for a service or one-time project, you can send them an invoice through PayPal. Go to "Tools", select "Create an Invoice", and fill in the customer's email, what you're charging for, and the amount. PayPal sends them an email with a button to pay. They click it, pay through PayPal, and the money lands in your account. This is common for freelancers, consultants, and service providers.
Payment requests for quick one-off payments: If you just need someone to send you money without an invoice, you can request payment directly. In your PayPal app or website, select "Request Money", enter the person's email and the amount, and send it. They get a notification and can pay you when ready. This is faster than an invoice and works well for splitting bills or collecting money from friends.
In-person payments with a card reader: If you take payments face-to-face, PayPal sells a small card reader that plugs into your phone. Customers swipe or insert their card, and the payment goes straight to your PayPal account. You can order this reader from PayPal's website, and it arrives within a few days.
Understanding PayPal's fees and how money reaches your account
PayPal charges a fee each time someone sends you money. The fee is a percentage of the payment plus a fixed amount, and it varies depending on how the payment is made. If a customer pays with a credit or debit card, the fee is higher than if they pay from their PayPal balance or bank account. PayPal shows you the exact fee before you accept any payment, so you'll always know what you're paying.
When a customer sends you money, it arrives in your PayPal account balance when ready. However, PayPal may hold the money for a review period before you can transfer it to your bank account. For new accounts, this hold can last several days or longer — PayPal is checking that the transaction is legitimate and that you're not involved in fraud. Once the hold period ends, you can transfer the money to your linked bank account whenever you want. Transfers to your bank usually take one to two business days.
You can see all your incoming payments in your PayPal dashboard under "Activity" or "Transactions". Each payment shows the date, the customer's name, the amount, and the fee PayPal charged. You can read this information as a report for your records or for taxes.
Keeping your account find and following PayPal's rules
PayPal monitors accounts for unusual activity, and they may freeze your account if something looks wrong. To avoid this, keep your account information accurate and up to date. If you move or change your phone number, update it in your settings. If you receive a payment that seems suspicious — for example, someone paying you for something illegal — report it to PayPal when ready.
PayPal's user agreement prohibits certain types of transactions. You cannot use PayPal to receive money for weapons, drugs, gambling, or services that are illegal in your area. You also cannot use it to receive payments on behalf of someone else without their knowledge. If PayPal discovers you've violated these rules, they can close your account and hold your money for up to 180 days while they investigate.
Use a strong password for your PayPal account — at least 12 characters, mixing letters, numbers, and symbols. Enable two-factor authentication in your security settings, which requires you to enter a code from your phone whenever you log in from a new device. This makes it much harder for someone to break into your account and steal your money.
Moving money from PayPal to your bank account
Once PayPal's review period ends and your bank account is confirmed, you can transfer money whenever you want. Log into PayPal, go to "Wallet", and click "Transfer Money". Select "Transfer to Your Bank", choose the bank account you linked, enter the amount, and confirm. The money leaves your PayPal balance and arrives in your bank account within one to two business days.
You can also set up automatic transfers so PayPal moves money to your bank on a schedule — for example, every Friday, or whenever your balance reaches a certain amount. This is useful if you receive payments regularly and don't want to manually transfer each time. Go to "Settings", select "Transfer Preferences", and choose your schedule.
PayPal does not charge you to transfer money to your own bank account. The only fees you pay are the ones charged when customers send you money in the first place.
Frequently Asked Questions
How long does it take for money to show up in my PayPal account after someone pays me?
Money appears in your PayPal balance when ready. However, PayPal may hold it for a review period before you can transfer it to your bank — this can be a few days for established accounts, or longer for new ones. You can see the money in your account the whole time; you just can't move it out yet.
What happens if a customer disputes a payment or says they didn't authorize it?
PayPal will contact you and ask for proof that the transaction was legitimate — for example, a receipt, invoice, or email confirming the order. If you can provide this proof, PayPal sides with you and you keep the money. If you can't, PayPal refunds the customer and the money comes out of your account.
Can I receive payments in a different currency?
Yes. PayPal can receive payments in many currencies and will convert them to US dollars at its current exchange rate. You'll see the conversion fee PayPal charges before you accept the payment. The money arrives in your account in dollars.
What if I want to close my PayPal account?
You can close your account anytime from your settings. Make sure you've transferred any remaining balance to your bank first — PayPal will not send it to you automatically. After you close the account, you can no longer receive payments through it, but you can open a new one later if you change your mind.
Do I need to report PayPal income to the IRS?
Yes. PayPal income is taxable income, just like money from any other source. Keep records of all payments you receive, and report them on your tax return. PayPal will send you a tax form if you receive more than a certain amount in a year — the threshold changes annually, so check PayPal's website for the current limit.