Payment Apps 101: Is PayPal Safe?

PayPal has been around for more than two decades. It first launched in 1998 as Confinity and allowed people to send payments via email as early as 1999. By 2000, PayPal allowed people to make payments to eBay sellers and had around a million users. Today, 392 million people and businesses trust PayPal, sending more than a trillion dollars a year through the service.

A man wearing a baseball hat and a longsleeve shirt sits at his dining room table sipping on a coffee mug and looking at his cellphone.

If you’re considering joining the PayPal crowd—or even if you already have—you might wonder: Is PayPal safe and secure? Find out more about PayPal and how it secures your information below.

What Is PayPal?

PayPal is a way to send or receive money online. It’s grown over the past few decades to be a popular option for both consumers and businesses:

Send payments online to friends and family
Invoice through PayPal for goods or services provided
Receive payment from customers
Pay businesses or vendors
Sign up for a PayPal debit card that lets you pay directly from your PayPal balance anywhere Mastercard® is accepted
Potentially qualify for a PayPal credit card or line of credit

How Does PayPal Work?

PayPal offers a lot of features, including invoicing, lines of credit and loans, and automatic payments. But if you’re just looking to make or receive payments, it’s simple:

Is PayPal Safe?

PayPal is typically considered to be a safe online payment method. PayPal stores all user information in secure databases, and it encrypts data both when it’s stored and when it’s transmitted.

It also follows strong financial security processes, such as the Payment Card Industry Data Security Standard. That means highly sensitive information, such as credit card numbers, is encrypted so that even PayPal employees can never see the entire thing.

In some ways, paying with PayPal can be even safer than paying online with your own debit or credit card or bank account information. That’s because the vendor or other person never has to see or interact with your credit or bank account information when you use PayPal. PayPal also offers purchase protections that aren’t always available with other payment methods.

Alternatives to PayPal

PayPal may be the oldest kid on the online payment block, but it’s far from the only option. See how it stacks up against Venmo and Cash App below.

Tip: Check out our reviews of Venmo and Cash App.

App Name	PayPal	Venmo	Cash App
Parent company	PayPal	PayPal	Square
Need a bank account?	No, though some functions may be limited	No, you can also fund with a debit or credit card	No, you can use a credit card to fund purchases in some cases
Who can you pay?	Anyone who has a PayPal account or any vendor that accepts PayPal	Other people with a Venmo account	Anyone who accepts Cash App payments
Debit card available?	Yes	Yes	Yes
Can you hold a balance?	Yes	Yes	Yes
How much does it cost?	An account is free, though PayPal does charge fees for some activities and functions.	The app is free to download and use. Fees do apply to payments made with a credit card and for specific features, such as cash-a-check.	The app is free to use, though you may incur fees when paying with a linked credit card or taking advantage of some other features.
Any limits?	Unverified accounts have limits. Verified accounts have no limits on total amounts sent and can send up to $60,000 in a single transaction unless other limitations have been imposed by PayPal.	$299.99 per week for unverified accounts and $6,999.99 total weekly limit for verified accounts.	Send $250 every 7 days and receive $1,000 every 30 days for unverified accounts. Verified accounts have higher limits.

Another alternative to PayPal might be credit cards. While PayPal does offer some options for lines of credit, typically when you make a payment with PayPal, you’re using money you have. Credit cards let you make purchases on credit, which can increase your buying power.

What Are the Risks of Using PayPal?

No online payment method is completely without risk, and that includes PayPal. When you’re entering information online, you may be putting that information at risk. If you’re using a PayPal debit card to make online payments, for example, that card information could be at risk in a data breach. However, PayPal does have a lot of security measures in place to reduce that risk.

It’s always a good idea to keep an eye on your financial accounts, including PayPal. Report any odd activity or fraudulent payments immediately to help protect yourself and mitigate any losses.

The Bottom Line on PayPal Security

Ultimately, PayPal is a safe way to pay online. But in a digital world, your data is always at risk. Consider signing up for ExtraCredit and using the Guard It feature to keep an eye on your credit for a better chance at protecting yourself against fraud and identity theft in the future.

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