CONSUMER - ONLINE PAYMENTS - 30.11.2010

PayPal, online and mobile

When buying something online, you’re quite often offered the possibility to pay using a system known as PayPal. How does it work, and what are the alternatives?

What is PayPal?

How does it work? PayPal (http://www.paypal.co.uk) is a safe system for online payments. After opening a free account, you should link it to your existing bank account. During registration you will be asked to provide some financial data, but afterwards - while making an online purchase, for instance - this is no longer necessary. PayPal acts as the middleman between buyer and seller and offers both parties adequate protection. Indeed, payments are made via a simple e-mail system: just complete the amount and the recipient’s e-mail address on a form. This amount is transferred from the buyer’s PayPal account to the seller’s. You can transfer money from your regular bank account to your PayPal account at all times (for instance before making a large purchase), whilst you can deposit the money that enters your PayPal account (for instance from a sale) into your existing bank account.

How much does it cost? Making payments via PayPal and transferring money to or from your bank account is free. It’s the seller who pays commission on the amount, plus 20p per transaction. Tip. When you receive amounts exceeding £2,000, it’s best to open a business account, which is subject to lower commissions - at the bottom of the homepage, click on Fees for details. Moreover, business accounts can be administered by several people within your business, and you can also link them to a system of credit-card payments.

Payments via your smartphone

PayPal is an easy and reliable service, and the combination with your smartphone makes the system even more attractive. All you need to do is install the free PayPal APP for the iPhone, Android smartphones or BlackBerry (see http://goo.gl/E6a8 for all details and links). This app can come in handy when you’re, for instance, having lunch at a restaurant and you decide to go Dutch. One person pays everything to the waiter whilst his table companions immediately transfer their contribution to his PayPal account via their smartphones. In this way, people need no longer go out and look for a cash dispenser or exchange account numbers, and they can’t “forget” to pay either! Note. A security leak was discovered recently for people using the iPhone application via an unprotected Wi-Fi network, so make sure you’ve installed the latest version (3.0.1) via the iTunes Store. Tip. We also like the “bump” function which was introduced since version 2.0 for iPhone and Android users: when one person literally bumps his smartphone against that of another person, the payment is effected automatically, at least when both are logged in. This “bump” function had also been announced for the BlackBerry, but at the time of publication it hadn’t arrived yet.

Paysafecard as an alternative?

Did you know there’s an alternative system which claims to be even safer than PayPal? Paysafecard (http://www.paysafecard.com/uk) works with prepaid cards which you can buy in one of the 300,000 sales outlets worldwide (check http://www.paysafecard.com/uk/buy/sales-outlets). Cards start at £10, and the pin code they contain can be used to pay on an alleged 3,500 websites. Such a prepaid system is very safe indeed, but apart from telecom sites such as Skype and JahJah, Paysafecard is currently accepted only on gaming and poker sites, so this is definitely no alternative for PayPal as yet.

PayPal is a safe and efficient payment system and is free for whoever makes the payment. Also install the free smartphone application for mobile use (iPhone, Android and BlackBerry).

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