Tip One: Send and receive rental payments and deposits with PayPal

About PayPal

The simple idea behind PayPal -- using encryption software to allow people to make financial transfers between computers -- has turned into one of the world's primary methods of online payment. PayPal now boasts more than 100 million accounts worldwide.

In this article, we'll show you how to use PayPal, and how to make transactions online. Let's start with the basics.

PayPal is an online payment service that allows individuals and businesses to transfer funds electronically. You can use it to pay for online auctions, purchase goods and services, or to make donations. For the rental property owner, its main use is to send and receive cash payments.

A basic PayPal account is free. You can send funds to anyone with an e-mail address, whether or not they have a PayPal account. They'll get a message from PayPal about the funds, and then they just have to sign up for their own account.

Funds transferred via PayPal reside in a PayPal account until the holder of the funds retrieves them or spends them. If the user has entered and verified their bank account information, then the funds can be transferred directly into their account. Other ways to withdraw your funds are listed below:

Signing up for PayPal

Signing up for PayPal is quick and doesn't even require you to enter any bank account information, although a bank account or credit card is required to use many of PayPal's features. From the PayPal homepage, just click on the "Sign Up Now" button. At the next page, you'll choose whether you want a personal, business or premier account.

If you just plan to use PayPal for the occasional eBay auction or online purchase, a personal account is the right choice. As you intend to use PayPal to accept payments for your own business, then a business or premier account is more suitable. However, if you select a personal account, you can upgrade in the future.

From there, you will go to a page that asks for your basic personal information -- your name, address, telephone number and e-mail address. You will also be required to enter two security questions in case you lose your password, and you have to enter a randomly generated series of letters and numbers, which help prevent fraud. Once you confirm your account by following instructions you'll receive via e-mail, the sign-up process is done.

Adding a valid, current credit card to your account will allow PayPal to confirm your address (if it matches where you receive your credit card statements). Having a confirmed address shows both buyers and sellers that you are less likely to be a scammer.

If you want to add funds to your PayPal account from your bank account, or vice versa, you need to enter and verify your bank account with PayPal. When you enter your account number and routing number, PayPal will make two micropayments to that account. These payments are usually about 5 cents. PayPal will then ask you to enter those amounts in order to verify the account (they'll show up on your bank statement). After you enter them, your bank account will be ready for use.

Choose a 'Premier' account

Personal accounts give you access to the core features, but that's all. There are no transaction fees for personal accounts, though there are fees for some other features, such as currency exchange. The main issue for property rentals owners is that Personal accounts are subject to volume limits of $500 per month. If you receive more than that, you will need to upgrade to a Premier or Business account (or deny the transfer that would have put you over the limit).

Premier and Business accounts are almost the same. The main difference is that a Business account must be registered with a business or group name, while a Premier account can be registered with a business, group or individual. Business accounts can also be set up for multiple users.

Business and Premier accounts allow access to all of the core features, plus the ability to accept:

• Unlimited Credit Card Payments
• Payment Receiving Preferences
• Subscriptions
• ATM/Debit Card
• Mass Payments

Business and Premier Accounts also get a toll-free customer service number and extended customer service hours.

These extra features come at the cost of transaction fees. Sending money is still free, but 2.9 percent is charged for funds received. Extremely high-volume accounts get a break -- after $3,000 has been received in a month, the percentage drops to 2.5 percent. Above $10,000, it goes to 2.2 percent, and money in excess of $100,000 received in a single month is only charged at 1.9 percent. (We should be so lucky). In addition, all transactions in which money is received, regardless of volume, have a $0.30 fee added.

Receiving payments with PayPal

Rental Property owners who want to use PayPal to accept payments have a wide range of options available. For basic payments, you can simply provide buyers with their e-mail address, and buyers can make the appropriate payments to your PayPal account. Or you can send a request directly to your new customer, using their email address.

PayPal also provides extensive services for owners with property websites. Prior to services like PayPal, someone who wanted to accept credit card payments online had to set up a merchant account through a credit card company. Creating a Web interface to use this account could be confusing and difficult. PayPal bypasses this problem. Business or Premier PayPal accounts can set up a Buy Now button, which allows you to paste a small piece of HTML code into your site, creating a button for buyers to click when they want to purchase an item. This takes the buyer to a secure payment page, where they enter their credit card information and shipping address. Once the transaction is complete, the money, minus PayPal's fees, is transferred directly into your account.

Related resources

• Winning pictures
• Writing a rental contract
• Email etiquette