Is PayPal Safe?

Is PayPal Safe?

PayPal is safe with its set of security measures for both sellers as well as buyers if the specific security protocols are followed by them. The two-factor verification method, the security measures offered by PayPal for the customer base are to be thoroughly followed to be safe.

PayPal definitely believes that it is indeed safe for its users to transmit money through its platform. “Yes, we keep all your information safe”, states the company on its website. It also further explains that PayPal does not send any sort of financial information that is sensitive to the recipient such as their bank account number or credit card details. Therefore, there are no worries when you are paying somebody you do not personally know.

Paypal offers the service known as PayPal Purchase Protection. If a buyer receives an item which is “not as described” by the specific seller and reports the transaction to PayPal immediately, PayPal also arranges for a complete refund. There are other “backstop” programs as well that secure companies and individual users who use the services of PayPal for their transactions.

How is PayPal safe for its users?

Data Security

Setting up your Paypal account depends on what you are using it for. If you're going to use Paypal for online shopping and transferring/receiving money from your friends and family, you will need a Paypal personal account. Paypal Personal account is super easy to set up and is the ideal account for most users.

Paypal business is the other account and as the name suggests, it is specifically catered towards businesses. A business account enables you to sell products online and accept card payments, albeit with a fee! A business account also allows upto 200 employees to access the account. You can set permissions according to how much access you want to give them.

Is PayPal Safer Than Credit Cards?

Paypal is actually even safer than your bank’s credit cards while making a purchase. In Paypal, all the financial data gets stored in one single “vault” online, whereas it is not the same with credit card or net-banking transmissions. In fact, even cheques are not that safe because they could be compromised easily by frauds, who will then need just the bank account number to be able to crack into one’s account and that could lead to some serious damage.

Disputed Charges

For sellers who use the PayPal platform, the main risk usually is the chances of disputed charges. Customers may claim the product(s) never reached their doorstep, or that the ordered and promised goods were not delivered, further disputing or reversing the transaction. In such a case, you will need solid proof in order to get help from PayPal.

Is your money insured by FDIC?

Your money on PayPal is not FDIC insured. PayPal has explored a number of ways in order to offer the pass-through protection for its customers but the coverage, however, is not available broadly. PayPal, for a certain number of selected accounts, uses Wells Fargo for depositing funds to its customers.

This means that if PayPal were to become insolvent at any given point in time, you would lose your PayPal balance. Therefore, you may want to keep the balance low and transfer the funds as soon as you can to your bank account.

You need to remember that PayPal cannot be a replacement of your fully-functional bank account.

What precautions should be taken?

If you are wondering about the precautions that you could take to keep your money secure and safe, be careful about your sellers or buyers. To be extra careful, here are a few things that you need to keep in mind:

  • Shipping should be made to verified addresses only, in order to get rid of delivery scams.
  • Use UPS or other similar shippers in order to have proof of delivery, to have PayPal on your side.
  • Take signatures for the product deliveries. PayPal insists on taking signatures especially for the expensive ones.
  • Communicate with yours customers politely and promptly - both happy and unhappy ones


PayPal is a reputed company with consumer protection and data security features which makes it safe for its users. They’ve been around since 2002 and they operate in about 200 countries, which makes it important for them to uphold their security standards, as their reputation relies heavily on it.

See also: List of Top 10 Alternatives to PayPal