How to Set Up PayPal to Receive Money From Other People
PayPal has three ways to receive money, and which one you use depends on whether you're selling something, getting paid by a business, or splitting a bill with friends
If someone wants to send you money through PayPal, you need a PayPal account first—that takes about five minutes to create. Once you have one, PayPal automatically gives you a way to receive money. The person sending it doesn't need to do anything special on their end; they just pick your email address or phone number and send the payment. Where that money lands depends on what kind of transaction it is and what you've set up in your account settings.
The three paths are: receiving money as a friend or family member (no fees to you), receiving money for goods or services (PayPal takes a cut), or using PayPal.me to share a link that lets people send you money without asking. Most people use the first or third option for personal transfers. Businesses and people selling items use the second.
Key Takeaways
- You need a PayPal account with a confirmed email address or phone number before anyone can send you money.
- Receiving money from friends or family as a personal transfer costs you nothing; PayPal takes a fee only when you receive payment for goods or services.
- PayPal.me is a shareable link you create once and can reuse to let people send you money without typing your email each time.
- Money received through PayPal sits in your PayPal balance first; you can leave it there, transfer it to your bank account, or spend it using a PayPal debit card.
- Disputes and chargebacks are more likely on goods-and-services transactions, so use that category only when you're actually selling or providing a service.
Creating a PayPal account and confirming your identity
Go to paypal.com and click "Sign Up." You'll choose between a Personal account (for receiving money from friends and family) or a Business account (if you're selling or invoicing). For most people, Personal is the right choice. You'll enter your name, email address, and create a password.
PayPal will ask you to confirm your email by sending you a link—click it within 24 hours. Then add a phone number and confirm that too. You don't need to link a bank account or credit card right away to receive money, but you will need one eventually if you want to move money out of PayPal and into your checking account. PayPal can verify your bank account by depositing two small amounts (usually under a dollar each) and asking you to confirm the numbers; this takes a few days.
The difference between personal transfers and goods-or-services payments
Personal transfers are for money between friends, family, or people you know and trust. When someone sends you money this way, PayPal charges them nothing and charges you nothing. The money arrives in your PayPal balance within minutes. This is the category to use for splitting rent, paying back a loan, or sending birthday money.
Goods-or-services payments are what you use when you're selling something, providing a service, or invoicing a client. PayPal takes a fee—currently 2.99% plus $0.30 per transaction for most personal sellers in the U.S., though the rate changes by country and account type. The buyer pays the fee, not you, but it comes out of what you receive. Use this category only if you're actually exchanging something of value, because PayPal can dispute or reverse personal transfers if the sender claims they didn't authorize it, but goods-and-services payments have stronger buyer protections that work in your favor.
Never ask someone to send you a goods-or-services payment for money that's actually a personal transfer—PayPal's terms forbid it, and if they find out, they can freeze your account.
Setting up PayPal.me for easy sharing
PayPal.me is a custom link you create once and can share as many times as you want. Anyone who clicks it lands on a page where they can type in an amount and send it to you. You don't have to give out your email address or phone number, and the sender doesn't have to know your PayPal username.
To create one, log into your PayPal account, go to Settings (the gear icon), click on "PayPal.me," and choose a username. It becomes paypal.me/yourname. You can share this link in a text, email, social media, or anywhere else. The person clicking it can choose whether to send it as a personal transfer or goods-and-services payment, so make sure they understand which one applies.
Where the money goes and how to move it out
When someone sends you money, it lands in your PayPal balance first. You can see it immediately in your account. From there, you have three choices: leave it in PayPal and spend it using the PayPal app or a PayPal debit card, transfer it to your linked bank account, or use it to send money to someone else.
To transfer money to your bank account, go to your Wallet, click "Transfer Money," select "Transfer to your bank," and choose the account. PayPal usually moves the money within one to three business days, though it can take longer depending on your bank. There's no fee for this transfer if you're moving money you received; PayPal only charges fees when you're adding money to PayPal from your bank or card.
If you want to spend the money directly, you can request a PayPal debit card, which draws from your PayPal balance. You can also use your PayPal balance to pay for things online at stores that accept PayPal.
What to do if someone sends you money by mistake
If you receive money that wasn't meant for you, don't spend it. Log into your PayPal account, find the transaction in your Activity, and click on it. You'll see an option to return the money. Click "Refund" and PayPal will send it back to the sender's account within a few minutes. If you've already transferred the money to your bank account, you can still refund it, but it will come out of your PayPal balance or your linked bank account.
If the sender disputes the payment and claims they didn't authorize it, PayPal will investigate. If it was sent as a personal transfer, PayPal is more likely to side with the sender and reverse the payment. If it was sent as a goods-or-services payment and you have proof of what you sold or the service you provided, you have a better chance of keeping the money.
Receiving money from businesses and invoicing clients
If you're self-employed or freelance, you can use PayPal's invoicing tool to bill clients. Go to your account, click "Tools," and select "Invoices." Create an invoice with your description of work, the amount owed, and a due date. PayPal generates a professional-looking document and sends it to the client's email. When they pay, it comes through as a goods-or-services payment, and PayPal takes its fee.
You can also give clients your PayPal.me link and ask them to send payment that way, which is faster and simpler for small amounts. For larger invoices or ongoing work, the formal invoice tool creates a record that's useful for taxes and disputes.
Frequently Asked Questions
Do I need a bank account to receive money on PayPal?
No. Money can sit in your PayPal balance indefinitely, and you can spend it using the PayPal app or a PayPal debit card. You only need a bank account if you want to transfer money out of PayPal into your checking account.
What if someone sends me money and then claims they didn't authorize it?
If it was a personal transfer, PayPal will likely reverse it and take the money back from your account. If it was a goods-or-services payment, you have a better chance of keeping it if you can show proof of what you sold or provided. Always keep receipts, messages, or photos as evidence.
Can I receive money on PayPal without giving out my email address?
Yes—create a PayPal.me link and share that instead. People can send you money by clicking the link and entering an amount. You can also give them your phone number if it's linked to your PayPal account.
How long does it take for money to show up in my PayPal account?
Money from another PayPal user usually appears in your balance within minutes. If you're receiving a transfer from a bank account or card, it can take one to three business days. Transfers from your PayPal balance to your bank account also take one to three business days.
Is there a limit to how much money I can receive on PayPal?
PayPal limits how much you can receive based on your account age and history. New accounts have lower limits, which increase over time. You can check your limit in your account settings under "Limits." If you hit your limit, you can request an increase, but PayPal will review your account first.