How PayPal makes money
Paypal has been around for quite sometime now. Paypal is a “middleman service” used in online purchasing. A lot of people are using this nowadays. Just like a bank, PayPal makes money off the “float” of the funds they manage. In other words, PayPal is earning interest against the money that you have placed into their accounts, but not spent yet.
Take for example if Paypal has 10 million members and each member has $1 in their account within a year. If each member left $1 in their account for a year, the accrued interest would total around $10 million dollars. Even at an interest rate as low as 1.75 percent, PayPal would be earning $175,000 every year, just for letting the money sit there!
Additionally, PayPal makes money by charging transaction fees for Premier and Business accounts: There’s no charge to send money, but when you receive money, PayPal takes a percentage of the amount (between 1.9 percent and 2.9 percent) plus a 30-cent USD transaction fee.
