How does PayPal work?

PayPal is an international payment system used by users in more than 200 countries over the world for more than 20 years. It offers solutions for both individual use and business, in particular to pay for online purchases and accounts, to send and accept money transfers. The main essence of PayPal is that the account holder can bind his bank card to it and freely withdraw funds. However, this service, like a number of others, is not available in all countries. The problem remains the issue of the use of Pay Pal by Ukrainian entrepreneurs. That is why before starting a business it is necessary to familiarize in more detail with the current situation of functioning of the payment system in the jurisdiction you are interested in.

Pay Pal for Business in Ukraine

The range of payment system services for citizens of Ukraine has always been limited. Previously, the Send Only system operated for individuals – Ukrainians could only deposit funds into a PayPal account, pay for goods online, but could not withdraw funds. Thus, in March 2022, Pay Pal announced the launch of the expanded program in Ukraine, which enabled to make p2p payments (person to person) and withdraw funds to personal accounts in UAH. Unfortunately, this time the payment system has passed the Ukrainian business, because legal entities cannot open corporate accounts and use the tools of Pay Pal in their work.

How to bypass PayPal territorial restrictions?

If, after all, you want to work with PayPal, you should consider registering a company in a foreign jurisdiction where the payment system is fully operational. The most popular countries without PayPal restrictions are the USA, Australia, and the countries of the European Union. In addition, in each of them, the payment system has received a license to carry out financial/banking activities, so you do not need to worry about the safety of funds on PayPal accounts.

Therefore, if a company is registered in a foreign country, its owner can freely open a business account in PayPal, bind to it a corporate bank account or account of another payment system and at any time withdraw funds. For Ukrainian citizens who want to do business using PayPal, this is the only option to circumvent the restrictions.

PayPal business function

As mentioned above, PayPal offers solutions for both individuals and businesses. First of all, it is worth noting that the relevant activities for this payment system are e-commerce and marketplaces. Therefore, it is not worth using PayPal if your company is engaged in logistics or accounting, because the functions of the system will not meet the needs of the company.

Why is PayPal right for e-commerce? First, you will be able to integrate it on your own website, allowing the buyer to quickly pay for your goods/services and you to get paid for them. In addition, it is possible to send customers an invoice or a link to pay directly to their email. Business account owners can also set up subscription functions, automatic payments, and payment in installments. Secondly, if you want to work on well-known marketplaces (eBay, ecrater, Etsy), you cannot do it without registering a PayPal account, because without it you will not be able to receive funds for your goods/services placed on these marketplaces. And finally, all money from business activities, accumulated in one account, can be withdrawn at any time to the company’s corporate accounts.

What currency does PayPal support?

Since PayPal is a global payment system, it is possible to activate an account in 26 world currencies, including EUR, USD, GBP, PLN and a number of others. In addition, PayPal provides its users with a multi-currency service, that is, the seller can receive funds from the sale in the buyer’s local currency. Thus, the business has the opportunity to attract additional customers who prefer to make payments in their currency. Also, this tool helps you avoid managing multiple accounts, as one PayPal account can support multiple currencies at the same time. For example, a corporate account holder in England can integrate PayPal on their website and receive funds from buyers in the following currencies – AUD, CAD, CHF, CZK, DKK, EUR, GBP, HKD, HUF, JPY, NOK, NZD, PLN, SEK, SGD, USD. If a certain currency is not supported by this account, then the transaction is calculated in the seller’s local currency.

Disadvantages of Pay Pal

Unfortunately, a common problem is that PayPal accounts are often targeted by fraudsters. They can spoof e-mails on behalf of the seller and direct buyers to fraudulent websites asking for PayPal account details/passwords.

As PayPal is subject to financial/banking legislation, it is required to hand over user data to regulatory authorities. In fact, this problem applies not only to PayPal, but also to other payment systems and banks. The reason for this is CRS – the international process of exchanging financial information to combat tax evasion. Currently, more than 90 countries are participating in this process, including Ukraine, which is already preparing a regulatory framework for the implementation of the CRS agreement.

Thus, if you plan to engage in e-commerce and use PayPal in your work as a tool for receiving payments for goods and services, you should think about registering your company abroad. Only then you will be able to take PayPal’s full range of services and integrate it into your own website. For example, if your company will be registered in Great Britain, USA, EU countries, you will be able to receive funds for goods from more than 200 countries to a multi-currency account, thereby attracting additional sales markets. Pay Pal enables its users to withdraw funds to the company’s corporate account in a bank/other payment system. The specified Pay Pal tools can be used in working with international business. However, when choosing a payment system, always be guided by the needs and goals of your company.

Our team of professionals will help you open an account with PayPal and advise on any issues related to opening accounts in payment systems.