PayPalEnabling Individuals to Accept Electronic Payments

PayPal Enabling Individuals to Accept Electronic Payments

Payment processing systems such as PayPal (http://www.paypal.com) have enabled individuals to accept electronic payments over the Web. This capability has led to a dramatic increase in individuals, including small-scale entrepreneurs, and small businesses doing business over the Internet.

PayPal's transactions are performed via credit card. Every user is allowed to sign up for a PayPal account at no cost. The account binds users' identities with their credit cards. Users simply use their e-mail addresses to refer to their PayPal accounts. Assume that a user named Mallory wants to make a payment to a user named Jill who has a PayPal account. Jill's PayPal account is simply referred to by her e-mail address, [e-mail]. If Mallory wants to make a payment to Jill, Mallory first has to sign up for a PayPal account. To do so he creates a PayPal account and assigns his credit card to the account. To make the payment, Mallory signs onto PayPal and initiates a payment to the [e-mail] account. PayPal uses Mallory's credit card to credit Jill's account with the specified amount. An e-mail is automatically sent to Jill stating that she has received money from Mallory.

PayPal offers three types of accounts: personal, premium, and business with different features and facilities customized for individual users, individual users with high volumes of payment receipts, and small businesses, respectively. Facilities such as receiving direct credit card payments, using an ATM or a debit card connected to the PayPal account, handling mass payments, and the like are provided by PayPal.

Some fifteen million individuals and small businesses currently use PayPal, enabling them to carry on business online. PayPal is the number one method of accepting payments on auction sites such as eBay. PayPal also encourages the "shareware" software market. Shareware is based on the concept of "try before buy." Software developers distribute their software at no cost and give customers an option to purchase copies if they like it and want to continue using it. PayPal allows individual software developers to accept payments via credit cards from such customers who use their software. Interestingly, PayPal is also used extensively by the Internet pornography industry, which has now enabled individuals to accept payments for pornographic content.