What you need to set up PayPal payments

To accept payments through PayPal, you need a PayPal Business or Premier account — a personal account cannot receive payments from customers. The account itself is free to open. You provide PayPal with your legal name, address, tax identification number (usually your Social Security Number or EIN), and bank account details where PayPal will deposit the money you receive.

PayPal verifies your identity before you can accept payments. This typically takes a few minutes to a few days. Once verified, you can start accepting payments when ready. You do not need a separate merchant account or payment processor — PayPal handles both the transaction and the deposit to your bank.

The only cost to open the account is zero. You pay fees only when you actually receive a payment, and the fee structure depends on which type of transaction it is.

Key Takeaways

  • You must open a PayPal Business or Premier account, which is free, and provide your legal name, address, and bank account information.
  • PayPal verifies your identity before you can receive payments, a process that usually takes a few minutes to a few days.
  • You can accept payments through a PayPal.me link, an invoice, a payment button on your website, or in person with a card reader.
  • PayPal charges a fee on each transaction — the amount depends on whether the payment is domestic or international, and whether it comes from a customer or a transfer between accounts.
  • Money deposited to your bank account usually arrives within one to two business days after PayPal receives the payment.

The four ways to receive money through PayPal

PayPal.me link is the simplest method. After you create your account, you get a unique URL like paypal.me/yourname. You share this link with customers, they click it, enter the amount they want to send, and complete the payment. No invoice, no setup — just a link. This works for one-off payments, tips, or splitting costs with friends.

Invoices are for formal transactions. You create an invoice in PayPal with the customer's email, the amount owed, a description of what they are paying for, and a due date. PayPal emails the invoice to them. They can pay directly from the email or log into PayPal to pay. You can track which invoices have been paid and which are still outstanding. This method is standard for service providers, freelancers, and small businesses.

Payment buttons embed a "Pay Now" button directly on your website. You generate the button code in PayPal, paste it into your website, and customers click it to pay without leaving your site. This requires basic website access but no coding knowledge — most website builders have a PayPal integration built in. The button can be for a fixed amount or allow customers to choose the amount.

In-person payments use PayPal's card reader, a small device that plugs into your phone or tablet. A customer swipes or inserts their card, and the payment goes through PayPal to your account. This is useful for pop-up shops, service calls, or any situation where you meet the customer face-to-face. You need to read the PayPal app and order the reader, which PayPal ships to you at no cost.

PayPal's fee structure for different payment types

PayPal charges different fees depending on the type of transaction. For domestic payments from customers (a customer in the US paying you in the US), the fee is 2.2% of the amount plus $0.30 per transaction. So a $100 payment costs you $2.50 in fees, and a $1,000 payment costs you $22.30.

International payments cost more. If a customer outside the US pays you, or you receive money in a currency other than USD, the fee is 3.49% plus $0.49 per transaction. A $100 international payment costs you $3.99.

Transfers between PayPal accounts — when someone sends you money from their PayPal balance or linked bank account to your PayPal account — are free. No fee applies. This is why some businesses ask customers to pay via PayPal balance rather than credit card: it saves both parties money.

PayPal deducts the fee from the amount you receive. If a customer sends you $100 via credit card, your account is credited $97.50, and PayPal keeps $2.50. The customer always pays the full amount they intended; the fee comes out of your side.

How to send money to your bank account

Money sits in your PayPal account balance after a customer pays you. To move it to your bank account, you initiate a transfer in PayPal. Log into your account, go to Wallet, select your bank account, and choose Transfer to Bank. You can transfer all your balance or a specific amount.

Standard transfers take one to two business days. PayPal also offers when ready transfers for a small fee — usually $0.25 per transfer — if you need the money faster. when ready transfers arrive within 30 minutes on weekdays and within a few hours on weekends.

You can set up automatic transfers so PayPal moves your balance to your bank account on a schedule you choose — daily, weekly, or monthly. This removes the step of manually transferring each time and ensures money flows to your bank regularly.

What happens if a customer disputes a payment

If a customer claims they did not authorize a payment or did not receive what they paid for, they can file a dispute in PayPal. PayPal then contacts you and asks for evidence that the transaction was legitimate. This might be a receipt, a confirmation email you sent, a tracking number for a shipped item, or a signed agreement.

You have a set time — usually 10 days — to respond with your evidence. If you provide clear proof the payment was authorized and the customer received the goods or service, PayPal sides with you and the dispute closes. If you do not respond or your evidence is weak, PayPal refunds the customer and deducts the amount from your account balance.

To protect yourself, keep records of every transaction: emails confirming what the customer ordered, receipts, delivery confirmations, or signed contracts. The stronger your documentation, the easier it is to win a dispute.

Security and account protection

PayPal encrypts all transactions and uses fraud detection to flag suspicious activity. You should enable two-factor authentication on your account — PayPal will send you a code via text or email when someone tries to log in from a new device. This prevents someone from accessing your account even if they have your password.

Do not share your PayPal login with anyone. If you need to give someone else access to your account — a bookkeeper or assistant — use PayPal's permission system instead. You can grant them specific rights, like the ability to send invoices or view transaction history, without giving them your password or the ability to transfer money out.

Review your transaction history regularly. PayPal shows you every payment received, every fee charged, and every transfer to your bank. If you see a transaction you do not recognize, report it to PayPal when ready. Unauthorized transactions are usually refunded within a few days.

Frequently Asked Questions

Can I accept payments without a business license?

Yes. PayPal does not require a business license to open a Business account. You provide your Social Security Number and personal information, and that is sufficient. However, if you are operating a business, you may be required by your state or local government to have a license — that is a separate legal requirement, not a PayPal one.

What if a customer pays me with a credit card and then disputes it?

PayPal handles the dispute through its own system first. If the customer files a dispute in PayPal, you respond with evidence as described above. If the customer disputes it with their credit card company instead, the credit card company investigates separately. Either way, keep your documentation — receipts, emails, tracking numbers — to prove the transaction was legitimate.

How long does it take to get verified so I can start accepting payments?

Most accounts are verified within a few minutes to a few hours. In some cases, PayPal asks for additional information — a photo of your ID, a utility bill, or details about your business — which can extend verification to a few days. You will see the status in your account settings and receive an email when verification is complete.

Can I accept payments in currencies other than US dollars?

Yes. PayPal can receive payments in over 100 currencies. The money arrives in your PayPal account in the original currency, and you can convert it to USD or keep it in that currency. Conversion happens automatically if you transfer to your bank account, and PayPal charges a conversion fee on top of the transaction fee.

What if I do not have a bank account to link to PayPal?

You need a bank account to withdraw money from PayPal. Without one, money sits in your PayPal balance but cannot be transferred out. Some people use prepaid debit cards or online banks like Chime or Wise, which PayPal accepts. You will need to set up a bank account before you can move money out of PayPal.