How does PayPal make money?

Question
UmaimaMalik 235 views

Answer ( 1 )

  1. It’s amazing just how inaccurate most of the people answering the question are.
    When you use a credit card, the majority of the 3.2% being paid actually goes to the credit card company, not paypal.
    Paypal makes it money from two areas.

    1. Any money left in a paypal “Account” is used by them to earn them interest and the like.
    2. When you use your balance, they still charge the merchants the same amount as if it were being processed by a credit card company. The same is true if you have it hooked up directly to a bank account.

    In effect, paypal has set itself up to be a bank/credit card company without the same level of oversight or legal responsibilities that those corporations have.
    Paypal grew leaps and bounds by being tied into the the ebay infrastructure which destroyed the option for people to use normal checks and made it very, very hard for any other epayment processor to come into existence. You don’t even see google payments as an acceptable option to use as an alternative and they scared google off of forcing the issue by threatening to stop using the platform for advertising. If you are a merchant you can use your own credit card processor, but its set up to be a bigger hassle for the customers who default to paypal.

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