PayPal

PayPal is a popular e-wallet used for transferring funds between friends and family as well as paying for goods and services. Many online brokers and trading platforms also accept PayPal deposits and withdrawals. This guide to trading with PayPal will review payment speeds, mobile compatibility, customer support and more.

Some of the best PayPal brokers in 2024 include eToro, XTB and Plus500.

What is PayPal?

the firm was founded in 1998 under the name Confinity and initially developed security software. A year after the launch, the company switched to providing digital wallets and facilitating online payments. Confinity was renamed PayPal in 2001 and in 2002, it was acquired by eBay – boosting its popularity with merchants and users worldwide.

Recently, the firm started offering cryptocurrency trading on Bitcoin, Bitcoin Cash, Ethereum and Litecoin. The company also has plans to introduce a stock trading platform and mobile investing apps. In the last two decades, the e-wallet has grown rapidly, with 377 million users spanning 203 countries.

How PayPal Works

Before you can fund your trading account, you first need to create an account and link it to your bank account via credit and/or debit card. Importantly, you do not need to deposit funds into your PayPal account to make a deposit. Instead, the payment solution offers seamless integration between your bank and broker.

While the service is not currently available on all trading platforms, most top brokers accept PayPal deposits and withdrawals, including Plus500, eToro and Pepperstone. With that said, it is worth noting that customers from certain regions cannot use the service. For example, only customers based in the UK, EEA and Switzerland can make deposits and withdrawals to Trading212 with PayPal.

Transaction Times

The e-wallet solution offers near-instant deposits, though this can vary between platforms. For example, Pepperstone deposits are processed immediately while at FxPro, transfers can take up to 10 minutes. Fortunately, it remains one of the fastest deposit options on most forex and CFD trading platforms.

On the downside, withdrawals usually take a little longer. Whilst the payment solution itself typically offers processing within one working day, some brokers have additional lead times. Many firms are required to complete Know Your Customer (KYC) checks and Anti-Money Laundering (AML) protocols before issuing funds. This means, on average, withdrawals take between one and three working days.

Pricing Review

PayPal Fees

The company does not charge to create an account or to transfer funds between your bank account and e-wallet. However, there may be a transaction fee, ranging from 4% to 12% of the payment value. The firm may also charge a currency conversion fee if you make payments to trading accounts with a different base currency.

Fortunately, some brokers absorb transfer charges so traders can make free finance deposits and withdrawals.

Broker Fees

As noted above, the best brokers offer free PayPal deposits and withdrawals. Of course, some providers, even major players such as eToro, charge for withdrawals. Rates are usually available on the broker’s website and are typically a percentage of the total transaction value.

It’s worth checking for payment charges before signing up for a trading account as fees can reduce profits.

Transfer Limits

When you initially open an account with PayPal, you are limited to transactions of $10,000. If you verify your account, this limit can be increased to $60,000. These limits are beyond the thresholds with most brokers so both beginners and experienced swing traders should be able to make payments in line with their cash requirements.

Security

PayPal is an established payment method with a reputation for prioritizing customer safety. There are multiple measures in place to help protect user accounts and transactions. Firstly, the firm’s Security Key offers two-factor authentication. Each time you log into your account, you will need to verify your request using a one-time code that is sent to your phone number.

Additionally, after every transaction made on your account, you will receive a confirmation email. This can help alert you to any payments made without your consent, which can then be raised with the support team. Finally, the firm ensures strict compliance with anti-money laundering regulations to help keep the platform safe for users.

How to Make PayPal Transfers

Deposits

• Sign in to your brokerage account
• Go to the funding page on the broker’s website or app
• Select ‘deposit’ to see the available payments methods
• Select ‘PayPal’ and enter the desired transfer amount
• You will then be directed to the e-wallet platform where you will need sign in to your account and confirm the payment. Select whether the funds are to come from your credit/debit card or your existing e-wallet balance
• Confirm the payment and wait for the deposit to be processed

Withdrawals

• Log in to your brokerage account
• Head to the funding page on the website or app
• Select ‘withdrawal’ and choose ‘PayPal’ from the available methods
• Input the amount you wish to transfer and the destination account. This will normally be your email address
• You may then be asked to confirm the withdrawal via two-factor authentication

Note, many brokers will only allow you to make a withdrawal using PayPal if it was used to make a deposit.

Pros of PayPal for Traders

Reasons to start trading with PayPal include:

• Multiple online platforms and brokers accepting PayPal
• Regulated, reliable and trustworthy
• Free to register for an account
• High maximum transfer limits
• Supporting investing services
• Near-immediate deposits
• Stock trading feature
• Mobile app available

Cons of PayPal for Traders

Drawbacks to forex and CFD trading through PayPal include:

• Currency conversion charges
• Potential deposit and withdrawal fees
• Unable to use the chargeback service for trading services
• Some brokers restrict the use of the e-wallet to traders in certain countries

Verdict

PayPal is a good payment option for swing traders. It can be used to make fast, secure and low-cost deposits and withdrawals to trading accounts. It is also a reliable service that can be used at many retail merchants. In addition, the company is moving into crypto investing and intends to release its own stock trading platform. See our list of top brokers with PayPal deposits to get started today.

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