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Simple, free money transer

April 2000

[Note: some of this information is now outdated, but the general gist may still be accurate]

One of the downsides of the popular Internet auction sites and any sort of person-to-person commerce on the Internet has been payment. It's been hard to achieve convenience and security--until now. PayPal has stepped into the gap and has come up with a system that is simple, straightforward, secure--and as easy as sending e-mail. It's quickly become the most popular means of conducting transactions among individuals.

It works like this: you fill out a simple, one-page registration form that asks for your e-mail address and your mailing address. Once you have an account set up, you can start paying people by adding money to your account. Easiest is to simply give them a credit card number. When you pay someone, your credit card is debited. You can also add funds to your PayPal account by having money transferred directly from a bank account or by sending them a personal check.

I needed to give a colleague $50 for a dresser he'd sold to me. In minutes I set up an account, gave my credit card number, and then sent him payment. It didn't make any difference that he hadn't yet set up a PayPal account. To send payment you simply type in the person's e-mail address and the amount. You can send money to anyone in the U.S. who has an e-mail address.

Almost instantly my credit card was debited and a message sent to my colleague that he had $50. And instantly a new account was created for him. To get the money, he must log on and finish creating an account by giving his name and street address. Then he can choose to withdraw the money by giving a bank account number or by having PayPal send a check to his street address.

The cost for this service? Everything is free--always. Is it secure? It's probably more secure than sending a check through the mail. And it definitely beats giving out credit card or bank account numbers to third parties that you're not familiar with. Using PayPal, you can keep these numbers private (though it does entail entrusting PayPal with them, and they guarantee privacy and security).

The service has limits. Until they have sent you a mailing to verify your street address, you can only debit your credit card a maximum of $500. And once you have verified your street address, the maximum credit card transaction is $2,000, with a maximum of $5,000 over a six-month period. If you need to exceed that limit, you can simply use one of the methods of payment other than a credit card.

© 2000 by Jim Karpen, Ph.D.

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