How PayPal Works

If you're a millennial or older, you're likely familiar with PayPal's role in the world of digital commerce. Now, PayPal is much more than a button on checkout, with a mobile app capable of storing your money, paying for purchases online or in stores, making donations to charities, investing in cryptocurrencies and much more.


P2P Pay

Around since the turn of the century, PayPal was one of earliest means of exchanging money with others electronically, from helping facilitating payments on eBay to enabling charitable donations by Walter Jr. in the popular TV series, Breaking Bad. Since then, it's revolved into one of the most robust digital wallets available.


To get started with PayPal, you'll need to supply an e-mail address and phone number, the latter of which can pull in your contacts for easily finding recipients during future payments. You have the option of adding a personalized payment link in the form of PayPal.Me. To begin making payments, you must add funding sources through one of three means:

  1. Linking your bank using the same username and password credentials you use to log into your account

  2. Entering card information for a debit or credit card

  3. Entering the routing and account number for your bank account


To make a payment to a friend or family member, simply tap the "Send" button at the bottom of the main screen and find your contact. Then, enter the amount and ensure that "Friends and Family" is selected for the payment type. If your payment actually reflects the purchase of goods or services from a business, you'll want to instead select that option as the payment type, which will require the seller to pay a small fee. Follow the same process to request money.

While younger generations balk at the app's lack of social finesse, PayPal does include the modern preference of QR codes for adding payment recipients as well as GIFs, animations and emojis when wishing to add levity to your payment. As a point of differentiation from Gen Z's beloved Venmo, PayPal tends to have higher daily and weekly send limits.


PayPal Wallet

No review available yet


PayPal Pay in 4

When you need to pay later for online purchases, PayPal can hook you up with one of several point-of-sale financing products, including PayPal Credit, which allows you to pay back purchases in monthly installments or over six months at no interest. But, if you're looking for a shorter-term installment loan that won't affect your credit score for applying, PayPal's new Buy Now Pay Later (BNPL) product, dubbed "Pay in 4," is the way to go.


Unlike many other BNPL products, PayPal's Pay in 4 is only available at checkout of partnering retailers, instead of as its own BNPL shopping experience inside the PayPal app. For this reason, there is no option inside the app to request a virtual credit card to use at retailers where PayPal isn't already accepted.


To use Pay in 4 on e-commerce sites, you'll simply select PayPal at checkout and log into your account. From there, if Pay in 4 is an option for your purchase (for basket sizes < $600), you'll see it beside your other forms of payment inside the PayPal Wallet, along with a reference to the bi-weekly payment amount that your purchase will be broken into.

After clicking on the Pay in 4 radio button, you'll see a preview of its four-installment payment plan and have the chance to edit your contact, billing and repayment information that will be included in the loan application. Upon submission of the application, PayPal will then inform you whether you've been approved for the loan and then route you back to the retailer's checkout page to complete your order.


PayPal will send you reminders when a payment is upcoming as well as confirmation e-mails when a payment was successfully received. Inside the PayPal app, you can view your outstanding loan by navigating down to the "Pay in 4" tile on the home screen.


PayPal Mastercard

No review available yet

NOTE: This review was based on Version 7.42.3 of the PayPal iOS mobile app. PayPal is expected to unveil its new "super app" in late 2021.