Accepting and processing credit card payments

How PayPal works for small businesses

If you sell goods online, you've probably heard of PayPal. We offer an online payment processing service that enables you to accept bank or credit card payments for the items you sell.

When a customer pays for their purchases, we process the payment and transfer the funds to your PayPal account. When you accept credit card payments with PayPal, you unlock the ability to reach more customers and grow your revenue.

PayPal facilitates online credit card processing for hundreds of thousands of e-commerce ventures, as well as traditional brick-and-mortar companies with an online presence. Read on to learn how credit card processing works with PayPal so you can see how it can work for your business, too.

Setting up online payment processing

Any business can set up online payment processing. Here is what you'll need to do:

• Set up a PayPal merchant account. With this account, PayPal can accept payments from customers on your behalf and then deposit the money into your business merchant account. PayPal provides all the technology and services required to process payments from credit cards, debit cards, and other payment methods.

• Link your PayPal merchant account to your payment form. Once you've signed up for an account, use PayPal's payment gateway to connect your merchant account to your website. This lets customers use their credit card information or other payment information to make a payment.

How does PayPal process credit card payments?

Ready to accept online payments? Here's what the typical PayPal transaction process looks like in action:

• Depending on which PayPal service you choose, customers will either see their shopping cart or a checkout page when they hit the Buy button. The shopping cart or checkout page can either be integrated into your website, or you can send them to a page hosted on the PayPal site that is branded with your logo.

• After the customer reviews their order, they click the Pay Now button. This action will redirect them to a payment page that is hosted by PayPal.

• If the customer already has a PayPal account, they can log in to automatically retrieve and enter their payment information. If they have PayPal One Touch activated, they can stay logged into PayPal to make payments across different sites.

• If they choose to pay with a credit or debit card, PayPal will process credit card payments too. Customers simply enter their credit card details and click Pay to authorize payment. This encrypts and transmits the information to PayPal, which we then use to authorize the payment with the issuing bank.

• Once the payment is authorized, the customer receives a confirmation that the purchase is complete. You'll also get a notification so you can start processing the order internally.

• The funds will be transferred from the credit card company to your PayPal account within a few minutes, minus applicable fees. (Wondering what the average processing fee for credit cards is with PayPal? Read about fees here.)

• You can then leave the money in your PayPal account to pay business expenses or transfer it to your business account.

The benefits of using PayPal for processing credit cards

Using PayPal for processing credit card payments helps you speed up transactions and build customer trust. Doing so may even help you reduce fraud. Benefits include:

• Convenience. PayPal One Touch makes it simple for customers to stay logged in for faster checkout.

• Security. PayPal leverages integrated encryption to protect customer information, while Seller Protection protects you from losing money to claims, chargebacks, and reversals (limits apply).

• Simplicity. PayPal’s e-commerce integration solutions make it simple to add payment buttons and checkout processes to your existing e-commerce site.

How PayPal credit card processing can help customers make secure payments

Customers depend on you to keep their financial information safe when you’re taking card payments. Encrypted website payments through PayPal help you keep transactions secure by processing all PayPal transactions on web pages that utilize SSL encryption. Encrypted payments help you reduce the likelihood of identity theft while helping you meet your PCI compliance requirements.

Using PayPal for small business

Processing a credit card payment doesn’t have to be difficult. PayPal for Business makes it simple and secure to accept payments and grow your business. With the ability to accept a wide variety of online payments with ease, PayPal lets you offer a seamless checkout experience to customers around the world.

In addition, PayPal can help you expand the power of payments to do everything from sending an online invoice to accessing financial services to improving your risk management. Learn more about PayPal for Business.