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Home > Personal Finance > Integrating Paypal into Your Finances

Integrating Paypal into Your Finances

January 25th, 2010 Leave a comment Go to comments

Go back in time to 1999. Internet startups were flush, and banking online was a new idea with few implementations. Enter X.com, one of the first virtual only banks. It was cool. Instead of using paper statements and interacting using a phone, you could see your account and manage it using an internet browser.

Security took a back seat, as the company admitted there were flaws. It was possible to link to anyones checking account since all that was required was the routing/account information found on any check. While X.com was floundering, they merged with another service, Paypal.com. Paypal had more mature software and was growing fast. 

The service had two new features, among others: bank account verification which was more secure than X.com, and a secure payment service. One of the innovations of the payment service was that it allowed you to buy products online using a credit card, without giving your credit card information to the vendor. Eventually, X.com was changed into paypal.com and the original plans to become a full service bank were dropped. Ebay later bought Paypal.com.

After years of having a Paypal account, I have settled into using it for a few things. 

  • Using it as a savings account to plan for holiday/gift online purchases.
  • Using it to pay for products I buy on Ebay auctions.
  • Using it to send money to relatives or friends.

A few tips about using Paypal:

  • The money you leave in Paypal is invested in money market funds, so it pays a relatively good interest rate compared to a bank savings account. So, you can get quick access to buy goods online without giving up interest.
  • For personal accounts, you will have to pay a fee to accept money from other people if they used a credit card. Cash transfers between personal accounts are not charged fees.
  • Transferring money from a bank account to Paypal takes a few days. Keep this in mind if you plan to make purchases. 

 

 

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