How does PayPal work in Canada? – Forbes Advisor Canada

Simply put, PayPal is an online payment system. It allows you to make payments online, as well as send and receive money. Founded in the United States in 1998, PayPal has grown into one of the world’s most popular digital payment platforms. It is a secure and easy-to-use tool for personal and business transactions. You can link your PayPal accounts to your bank accounts, credit cards or debit cards, making it easy to transfer money between friends and family at home and abroad, as well as make online purchases worldwide.

In Canada, PayPal works similarly to other countries. You can open a free PayPal account by linking your debit card, credit card or bank account.

If you set up a personal account, you can use PayPal to pay for goods and services or send money to friends and family. The funds will then be debited from the linked account. When you receive money through PayPal, you can keep the money in your PayPal account or transfer it to your linked account.

If you’re a business owner and plan to use PayPal primarily to sell goods or services, you can use your business name on a business account, even if your business isn’t incorporated. You can then accept debit cards, credit cards, and other payment methods for goods or services. However, business accounts aren’t eligible for “personal transactions” and are subject to different fees than a personal account.

Whether you have a personal or business account, PayPal allows you to manage multiple currencies at once and perform currency conversions for a fee, making it a convenient option for anyone who needs to transact in multiple currencies.

Many online retailers, businesses and service providers, from Walmart to Lululemon, accept PayPal, as do numerous smaller online stores. Users can look for the PayPal logo during checkout to see if it is an accepted payment method.

When making an online purchase in Canada, PayPal acts as an intermediary between the buyer and the seller. After selecting PayPal as your payment method, log in to your PayPal account, confirm the payment details, and complete the transaction. PayPal then transfers the money from your account to the seller, protecting your financial information.

Some transactions may be covered by PayPal’s Buyer Protection program, which provides you with peace of mind in the event of damaged or missing items.

Sending money through PayPal is straightforward if both parties have a PayPal account. You can send money to other PayPal users by entering the recipient’s email address or mobile number. You can then choose to transfer money from your PayPal account, bank account, or a linked card. The recipient will then be notified by PayPal via email and can access the funds immediately.

How to cancel a PayPal transaction

Canceling or changing a payment is generally not an option if a transaction has already been completed. The best way to resolve the issue is to contact the recipient and request a refund. If that doesn’t work, you can report the issue to PayPal’s online dispute center to see if your transaction is covered by PayPal’s Buyer Protection program.

PayPal’s fees vary depending on the type of transaction. For personal transactions between friends and family or when shopping, PayPal generally does not charge a fee if the funds come from a PayPal balance or linked bank account. However, there may be a small fee when using a credit card and a higher fee for international payments.

Unlike personal transactions, which are often free, PayPal charges fees for most commercial transactions. This means that with a business account, you’ll likely be charged a fee when you receive payment for goods or services. These fees can depend on factors such as the currency used and the type of account, so businesses should be aware of the potential costs. Customers should be cautious when businesses ask them to mark an upcoming commercial transaction as “friends and family” to avoid the goods and services fees charged by those businesses. Marking a commercial transaction as “friends and family” will not qualify you for Purchase Protection if the transaction goes wrong.

Advantages:

• Comfort: PayPal makes it easy to send, spend and manage money.
• Security: PayPal offers strong security features, including encryption and fraud protection.
• Widely accepted: Many people and businesses in Canada accept PayPal, making it a popular payment option.
• PayPal Buyer Protection Program: PayPal offers some buyer protection through its Buyer Protection Program.
• International transactions: Multiple currencies can be held simultaneously in a PayPal account.

Disadvantages:

• Fees: PayPal charges fees for certain types of transactions, which can add up, especially for small businesses or international payments.
• Inactivity fee: In Canada, PayPal charges a $20 inactivity fee for accounts that have been inactive for 12 consecutive months. However, accounts with a zero balance are not charged.

Setting up a PayPal account in Canada is a simple process:

1. Visit the PayPal website or download the PayPal app.
2. Click “Register” and choose whether you want a personal or business account.
3. Enter your email address and create a password.
4. Enter the required personal information, such as your name and address.
5. Link a bank account, credit card or debit card to your PayPal account.
6. Confirm your email address and account information.

Once your account is set up, you can use PayPal to send and receive money, make purchases, and manage your finances.

While PayPal is a popular option in Canada, there are several alternatives that may better suit certain needs:

• Interac E-Transfer: Interac e-Transfer is very popular in Canada and allows users to transfer money directly from one bank account to another via email or SMS. However, money can only be transferred between participating Canadian banks.
• Stripes: Stripe is an enterprise-focused payment processing platform and offers robust features for online payments, especially for e-commerce businesses.
• Way: Wise has a loyal international following and is known as a low-cost option for international transactions and currency conversions.
• Google Pay: Google Pay allows users to make payments and transfer money using their Google Account and is seamlessly integrated with other Google services.