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How Does PayPal Business Work?

8 min read

You might already use a PayPal account for buying stuff online, or sending money to friends and family. But if you want to start selling products on the internet, setting up a specialized PayPal business account can be super the easiest way to get started.

To get an idea of how PayPal business accounts can make ecommerce easier, let’s look at the basics of how the system works and how it can help you.

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Streamlining the Payment Process for Ecommerce

The main difference between personal PayPal accounts and PayPal business accounts is the target user. While personal PayPal accounts are meant for online shoppers, PayPal business accounts are designed for ecommerce business owners—allowing them to accept PayPal payments with ease.

For platforms like eBay, you can still use a personal account to get paid by customers, but you’ll miss out on some important ecommerce features. Most notably, PayPal business account holders can accept credit or debit card payments from almost everyone—even if the customer doesn’t have a PayPal account. This is a big deal since a more accessible payment system gives you access to more shoppers and allows you to grow your customer base.

PayPal business accounts are also really helpful for selling on your personal website or through Ecwid. With Ecwid, you can connect your PayPal business account directly to your store, giving customers a simple purchasing process and giving you the benefits of an all-in-one transaction system. But how does that transaction system work?

How Does a PayPal Business Account Work During Transactions?

Making sure your customers have a smooth checkout process is vital. Thankfully, no matter what platform your customer is shopping with, the PayPal payment process generally looks like this:

  1. Your customer adds an item to their cart and clicks Buy
  2. The PayPal payment system kicks in and directs the customer to log in to their PayPal account
  3. If they don’t have one, the PayPal business account lets them pay directly by credit or debit card
  4. The shopper confirms the purchase

Yep, it’s that simple.

Once the order has gone through, you’ll be notified so you can start getting the product ready for shipment or pickup. PayPal business accounts also let you send a personalized email confirmation to your customer so they know everything is good to go.

No Monthly Fees and Detailed Financial Reports

Is there a monthly charge for PayPal business accounts? Nope.

With a PayPal business account, you won’t pay any monthly fees or be required to meet any minimum processing requirements. This means that even if you don’t make a sale for a month, you won’t owe PayPal anything.

However, the platform does charge a small fee per transaction.

  • For online transactions within the United States, there is a 2.9% fee plus a flat 30 cent premium.
  • If online funds come from other countries, PayPal gets 4.4% plus a flat fee that varies based on currency.

These fees aren’t for nothing though. If you accept payments through PayPal, you’ll get access to a variety of financial reports that can help you understand how your business is doing and give you important insights when tax season rolls around. Plus, PayPal business accounts let you customize your reports so you get the exact info you need.

How Does a PayPal Business Account Work When Transfering Money to Your Bank?

Once a sale is complete, the customer’s money will be waiting in your PayPal business account. From there, you have two options: keep it on PayPal or send it to your bank. If you decide to keep the money on your account, you’ll be limited to spending it at places that accept PayPal payments. A lot of websites and even some brick-and-mortar stores accept PayPal payments, but your spending/saving is still a bit limited compared to a traditional bank account.

Depositing money in your bank

To send PayPal funds to your bank account, you can either use instant deposit for a small fee or wait a few days and get the cash transferred for free. If you go the instant deposit route, 1% of transfers below $1,000 goes to PayPal—meaning the fee maxes out at $10.

In most cases, instant deposits are, well, instant. However, sometimes you’ll have to wait about 30 minutes for the money to show up in your bank.

If you go with the free deposit option, your money should show up in about 3 days.

PayPal withdrawal limits

Your PayPal account will also have daily withdrawal limits—so while the money in your PayPal account is yours, you may have to wait to actually transfer it to your bank.

Instant transfers using a bank account are capped at $25,000 per transaction. If you use a card, you’ll be capped at $50,000 per transaction and $100,000 per day. But hey, hitting those limits sounds like a good problem to have.

Connecting Your Team

As your business grows, you might need to give another team member access to your company’s PayPal account.

  • With a PayPal business account, you can connect up to 200 other users
  • PayPal lets you create a unique set of login info for each user
  • The account owner has control over what other users can do and access

By supporting multiple users, a PayPal business account works more like a hub for your business’s financials than just a customer transaction system—which can be especially helpful for small businesses as they grow.

How Do You Get Started With a PayPal Business Account on Ecwid?

Getting your PayPal business account connected to Ecwid is simple. When you set up an Ecwid account, we’ll walk you through the process.

If you don’t have a PayPal account, we’ll help you get one started so you’re ready to accept payments as soon as possible.

And that’s it. After connecting your account, you’ll be able to accept PayPal payments and be on your way to a successful ecommerce business.

 

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About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.

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