Exchanging money has become simple in the digital world with companies like Paypal, Amazon and Square offering solutions from your computer or mobile device. These three allow the sender to make a payment to someone using a credit card, while others like Google Wallet don't yet allow a credit card provision. In order to complete the transaction, both the recipient and sender need to have an account with the respective company.
PayPal Send Money
PayPal is a leader in online money transfers and transaction payments. Both parties need a PayPal account. To send the money, obtain the email address from the recipient; confirm the email corresponds to the PayPal address. Log in to PayPal and select the "Send Money" option.
The next prompt asks if you are paying for goods or services or sending money to friends and family. Select the appropriate option and enter the email address of the recipient in the provided box and the amount you want to send. To ensure you are using the correct payment option, click on "Change Payment Method." If the credit card you want to use isn't listed, add it.
Confirm the details and send the money. You should receive a confirmation email from your PayPal account.
Fees Charged by PayPal
Payments to vendors carry a fee of 2.9 percent plus $0.30 per transaction. So for a $1,000 payment, PayPal collects $29.30. You have the option to pay this for the transaction or the recipient receives the funds less the amount. Friends and family transactions don't carry a charge.
Amazon Payments Program
Amazon Payments has a similar program to PayPal. Accounts are linked to bank accounts or credit or debit cards. As with all online cash payment systems, the first time you register an account, you must confirm the account before you can proceed. Ask the recipient for their Amazon "Recipient Name" and enter it into the box.
Confirm you have the correct person to send money to. Even though you are sending cash, don't select "cash advance," instead choose "goods and services," otherwise your credit card company charges you for a cash advance.
Fees Charged by Amazon
Amazon provides free transactions for payments up to $1,000 per month. This means you can send one payment of $1,000 or four of $250 without paying a fee. Anything over this amount is charged the same way PayPal does – at 2.9 percent plus $0.30 per transaction.
Square Cash Service
Square started as a mobile merchant but has evolved into a streamlined mobile money transfer service for consumers. The app is available on Apple and Android phones. After you download the app, link your credit card to the app account. With the phone number of the recipient, you can make a payment by simply tapping the "Pay" button. Enter an amount over $1 and then send. There is a three percent fee to use a credit card when making payments.
PayPal is a popular online payment system and payments app, and if you're new to using it, you might be wondering how to use a credit card on PayPal. The good news is you can easily use a credit card with PayPal. While you can link your bank account or a debit card to PayPal, you may prefer to use a credit card for some online purchases. Before making a payment, you'll need to link a credit card. Check out the information below to better understand how to use a credit card on PayPal.
How to add a credit card to PayPal
If you haven't used a credit card on PayPal before, you'll need to first link a card to your PayPal account. Here's how to do this on the PayPal app and on the website.
Adding a credit card on the PayPal app
- Download and open the PayPal app.
- On the bottom menu, the last button looks like a wallet. Tap on that button to open your PayPal wallet.
- Scroll to the "Banks and cards" section.
- Tap the plus button on the top right of this section.
- Tap on "debit and credit cards."
- Tap "Debit or credit card" to manually enter your details or select your card issuer and log in to your credit card account.
- Follow the instructions and confirm your card details.
Adding a credit card on the PayPal website
- Go to PayPal.com and log in to your account.
- On the top menu, click on "Wallet."
- On the left side of the screen, click "Link a card."
- Click "Debit or credit card" to manually enter your details or select your card issuer and log in to your credit card account.
- Follow the instructions and confirm your card details.
Once you do this, you'll be able to make payments with a credit card. You will see your newly linked card in your PayPal wallet and you can add more credit cards in the future.
How to use a credit card on Paypal
Here's how to use a credit card on PayPal to pay someone or to pay for goods and services.
How to pay with a credit card on the PayPal app
If you're paying a person or sending money to someone for payment directly:
- Open the PayPal app.
- On the bottom menu bar, tap the button with a money symbol.
- Tap "Pay."
- Enter the name, email address, phone number, or PayPal username for the person you want to pay.
- Enter the amount of money you want to send.
- You may be asked if you're making a friends and family payment or paying for goods and services. Select the payment type.
- You can select a linked credit card in your wallet or click the "+Link a bank or card" button to add a new credit card.
How to pay with a credit card on the PayPal website
If you're paying a person or sending money to someone for payment directly:
- Go to PayPal.com and log in to your account.
- On the right side of the screen, click the "Send" button.
- Enter the name, email address, phone number, or PayPal username for the person you want to pay.
- Enter the amount of money you want to send.
- You may be asked if you're making a friends and family payment or paying for goods and services. Select the payment type.
- Select a linked credit card in your wallet or click the "+Link a bank or credit card to add a different credit card" button to add a new credit card.
- Follow the instructions to finish the payment.
You can also use a credit card on PayPal when shopping online. When you're on a website that allows PayPal as the payment method, choose PayPal and log in to your account. You can then choose an existing credit card in your wallet or link a new credit card.
Learn more: The Ascent's PayPal Review
What to consider before you use a credit card on PayPal
Here's what you need to know before you pay with your credit card.
PayPal charges fees when using a credit card
Before using a credit card on PayPal, you should know you'll be charged a fee for doing so. This isn't unusual. Other payment apps like Venmo also charge users when they make a payment with a credit card. But the fees can add up -- especially if you're making a larger purchase. PayPal charges 2.9% plus a fixed $0.30 fee when paying with a credit card for domestic purchases.
Let's look at two examples to see how quickly those fees can add up:
| $50 | $1.75 | $51.75 |
| $500 | $14.80 | $514.80 |
Source: Author's calculations
Paying with a credit card on PayPal is a convenient option, but just be sure to keep the fees in mind.
Some cards may charge a cash advance fee
Some cards may charge a cash advance fee for using a credit card on PayPal. More recently, some card issuers have updated their terms and conditions to note that person-to-person money transfers may code as a cash advance transaction, meaning that the card user will also be charged cash advance fees.
Cash advance fees can be costly. Typically, they're 3% to 5%. While some credit card users may have PayPal transactions code as a cash advance, this isn't always the case. Check your card's terms and conditions or contact your card issuer to see if this is the case for your card.
Will you earn credit card points?
If you have a credit card that earns points, you may be able to earn credit card points when using a card on PayPal. This depends on the type of rewards card that you have. For example, if you have a card with rotating categories and PayPal is one of the current categories, you can earn points. Some cards with rotating categories do require you to opt in to be able to earn, so be sure to do that if you want to take advantage of that perk.
If your card earns at a flat rate for purchases, you can also earn points. But if your card only earns points on travel purchases or other categories that exclude PayPal, you likely won't earn points on your purchase.
If you'll earn enough rewards that carry a value higher than the fees you'll be charged, it may be worth considering using a credit card to make a payment on PayPal.
Should you use a credit card on PayPal?
It depends on your purchase and your credit card. To help decide if you should use a credit card on PayPal, consider these factors:
- The total fees that PayPal will charge you
- The total rewards points you'll learn when using your card
- Whether your credit card company considers PayPal payments to be a cash advance transaction
The bottom line
It's possible to use a credit card on PayPal, and now you know the basics of how to do it. But before you use a card for your purchase, make sure you understand what fees you may be charged. It might make more sense to link your bank account to your PayPal account to avoid extra fees. By doing this, PayPal will transfer money from your bank account to make the payment, and you might save some money.
FAQs
Yes. You can use your credit card to pay someone through PayPal. While this is an option, you will be charged a fee.
Yes, PayPal charges a flat rate fee of $0.30, plus 2.9% for each credit card transaction for domestic purchases.
Some card issuers may consider PayPal to be a cash advance transaction. If this is the case, they can charge a cash advance fee. That means in addition to PayPal's fees, you may have to pay additional fees to your card issuer. Always check before using a card on PayPal to see if this is the case.