What happens when you send money through PayPal
When you send money through PayPal, you're moving funds from your PayPal account to someone else's PayPal account, or to their email address if they don't have one yet. PayPal holds the money in your account until you initiate a transfer, then delivers it to the recipient within minutes to a few business days depending on the method you choose. The recipient sees your name and the amount, and can accept or decline the payment.
PayPal charges different fees depending on whether you're sending money to friends and family or paying for goods and services. Sending to friends and family in the US costs nothing if you use your PayPal balance or a linked bank account, but costs 2.2% plus $0.30 if you use a credit or debit card. Paying for goods or services always costs the sender or receiver a fee — usually 2.2% plus $0.30 for domestic transfers.
Key Takeaways
- PayPal transfers from your account balance or linked bank account to a recipient's PayPal account or email address, completing in minutes to a few business days.
- Sending money to friends and family costs nothing if you use your PayPal balance or bank account, but costs 2.2% plus $0.30 if you use a credit card.
- You need the recipient's email address or phone number to send money, and they must accept the payment before you can see it as complete in your account.
- PayPal holds your money in an account balance that you can transfer to your bank account, spend at partner retailers, or send to others.
Setting up your PayPal account to send money
To send money through PayPal, you first need a PayPal account linked to a funding source. Go to paypal.com, click "Sign Up," and choose whether you want a Personal or Business account. Personal accounts are for individuals sending and receiving money; Business accounts are for people who run a business and want invoicing tools and higher transaction limits.
After you create your account, PayPal will ask you to add a payment method. You can link a bank account, debit card, or credit card. Linking a bank account takes one to two business days because PayPal deposits two small amounts into your account and asks you to confirm the amounts — this proves you own the account. Once confirmed, your bank account becomes your primary funding source and you can send money when ready.
If you want to send money right away without waiting for bank verification, link a debit or credit card instead. PayPal verifies these when ready. Keep in mind that sending from a credit card costs more in fees than sending from a bank account or your PayPal balance.
How to send money to someone
Log into your PayPal account and click "Send Money" at the top of the page. Enter the recipient's email address or phone number — they don't need to have a PayPal account yet. Type the amount you want to send and choose whether this is a payment to friends and family or a payment for goods or services. If you're paying for something, PayPal will ask you to describe what you're paying for.
Review the fee PayPal will charge, then click "Send." PayPal will show you a confirmation number. The recipient will receive an email or text saying money is waiting for them. If they don't have a PayPal account, they'll be prompted to create one to claim the money. If they already have an account, the money lands in their PayPal balance when ready.
You can see the status of your transfer in your Activity section. Transfers to existing PayPal accounts usually show as complete within minutes. Transfers to someone without a PayPal account may take longer because they have to accept the payment first.
Understanding PayPal fees and which payment method costs less
PayPal's fee structure depends on what type of transfer you're making. For sending money to friends and family within the US, there is no fee if you pay from your PayPal balance or a linked bank account. If you use a credit card, PayPal charges 2.2% of the amount plus $0.30. For example, sending $100 from a credit card costs $2.50.
Payments for goods and services always include a fee, whether you're the sender or receiver. The standard fee is 2.2% plus $0.30. This is why many small businesses ask customers to pay the fee or add it to the total. If you're receiving money for something you sold, the fee comes out of what lands in your account.
International transfers cost more. PayPal charges a currency conversion fee on top of the standard transaction fee, and the exact amount depends on which countries are involved. Before you send money internationally, PayPal shows you the total fee and the amount the recipient will receive, so you can decide whether to proceed.
What to do if a payment fails or the recipient doesn't accept it
If PayPal can't process your payment — usually because your funding source has insufficient funds or the card is declined — you'll see an error message and the money won't leave your account. Fix the problem by updating your payment method or adding funds to your PayPal balance, then try sending again.
If you send money to someone and they don't accept it within 30 days, PayPal automatically returns the money to your account. You'll see a notification that the payment was unclaimed. If the recipient accepts the payment after 30 days, you can contact PayPal to ask them to resend it, but PayPal doesn't may provide they will.
If you sent money by mistake — wrong amount or wrong person — contact PayPal when ready through the Resolution Center. If the recipient hasn't accepted yet, PayPal can cancel the payment. If they have accepted, you'll need to ask them to send the money back, and PayPal can't force them to do so.
How to receive money and move it to your bank account
When someone sends you money through PayPal, it lands in your PayPal account balance. You don't have to do anything to receive it — the money is yours once the sender completes the transfer. You can see it in your Activity section and in your account balance at the top of the page.
To move money from PayPal to your bank account, log in and click "Wallet" at the top. Click "Transfer Money," then "Transfer to Your Bank." Choose the bank account you want to send it to, enter the amount, and click "Transfer Now." PayPal usually deposits the money within one to two business days, though it can take up to three to five business days depending on your bank.
You can also use your PayPal balance to shop at partner retailers like eBay, or to send money to someone else. Some people keep money in PayPal for convenience if they send or receive payments regularly.
Security steps to take when using PayPal
PayPal uses encryption to protect your account information, but you're responsible for keeping your login credentials find. Use a strong password — at least 12 characters with uppercase and lowercase letters, numbers, and symbols. Don't reuse the password you use for other accounts.
Turn on two-factor authentication in your PayPal security settings. This means PayPal will ask for a code from your phone or email whenever you log in from a new device. It takes an extra 30 seconds but makes it much harder for someone to access your account even if they have your password.
Review your Activity section regularly to spot transfers you didn't make. If you see something suspicious, contact PayPal when ready through the Resolution Center. PayPal offers buyer and seller protection for certain transactions, but the protection only applies if you report the problem within the time limit — usually 180 days.
Frequently Asked Questions
Can I send money to someone in another country?
Yes, but PayPal charges a currency conversion fee on top of the standard transaction fee. The exact cost depends on which countries are involved. Before you send, PayPal shows you the total fee and the amount the recipient will receive in their local currency, so you can decide whether to proceed.
What's the difference between sending to friends and family versus paying for goods?
Sending to friends and family costs nothing if you use your PayPal balance or bank account, but costs 2.2% plus $0.30 if you use a credit card. Paying for goods or services always costs a fee of 2.2% plus $0.30, regardless of your payment method. Use friends and family only for personal transfers, not for purchases.
How long does it take for money to show up in my PayPal account?
If the sender has an existing PayPal account, the money usually arrives within minutes. If you're receiving money from someone without a PayPal account, they have to create one first, which can add a few hours. Once you accept the payment, it's in your account when ready.
What happens if I accidentally send money to the wrong person?
Contact PayPal right away through the Resolution Center. If the recipient hasn't accepted the payment yet, PayPal can cancel it. If they've already accepted it, PayPal can't force them to send it back — you'll have to ask them directly or pursue other options.
Is PayPal safe to use for large amounts of money?
PayPal uses encryption and fraud detection, but it's designed for everyday payments rather than large transfers. For amounts over $10,000, consider a bank wire transfer instead, which has stronger legal protections. PayPal also limits how much you can send in a single transaction if your account is new.