What is PayPal and How Does it Work in Canada?



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Many of us have either heard of or used PayPal in Canada as a payment solution for sending or receiving money or as a digital wallet. If you regularly shop online, the chances of having used PayPal is high.

PayPal is one of the most hassle-free, quickest and simplest methods to transfer funds, pay for goods, and receive payments in a secured and reliable atmosphere. PayPal enables its users to transact securely in multiple supported currencies for a small transaction fee.

There is no business without its flaws. So, let’s take a look at the services and operations of PayPal Canada to ascertain if it lives up to the hype.

What is PayPal?

PayPal is an online payment system designed for online money transfers and operates as a payment processor for online business merchants and commercial users.

The payment processing company operates entirely online and has remained at the forefront of digital payment since its establishment in December 1998.

PayPal leverages technology and globalization to make financial services and e-commerce transactions more affordable, accessible, and secure.

About PayPal Canada

With global online operations, PayPal was originally launched in the United States to serve as an alternative to cheques and money orders. PayPal was established in December 1998, but the first version of the PayPal electronic payment system was launched in 1999.

PayPal’s fundamental belief in creating access to financial services led to the democratization of financial services and people and businesses’ empowerment. The PayPal platform has empowered more than 325 million merchants and consumers in over 202 markets worldwide.

PayPal expanded its operations to Canada in 2006 and is widely accepted by millions of Canadians and businesses. The company allows its customers to send, receive money in more than 100 currencies, withdraw funds in more than 56 currencies, and hold balances in their PayPal accounts in 25 currencies.

How PayPal Works

PayPal allows you to send, receive, and store money digitally. PayPal acts as an intermediary for payments between two registered PayPal accounts. Its quick, easy, and secure payment method lets you send funds to an individual or retailer (merchant) without sharing your personal details or banking information.

For an easy online payment process, all you need is the email address of the fund’s recipient. You can also use PayPal to complete purchases in multiple currencies. With PayPal’s easy-to-use web platform, you can initiate a transfer of funds within a few minutes.

PayPal rates depend on how you plan to fund the transfer, the payment method, and the recipient’s country or location. For instance, if you send money to someone with your credit or debit card, there’s a fee of 2.9% plus 0.30 CAD.

PayPal Products and Services

PayPal is a simple online payment method for financial transactions. It offers a Personal Account and Business Account.

PayPal Personal Account

PayPal personal account is suitable for people who want to make online payments. With over 325 million active users who chose to pay online or on mobile, PayPal personal account lets you securely pay at millions of merchant stores and send money quickly to anyone using their PayPal email address or mobile number.

Features of the PayPal personal account include:

  • Free sign up process to have a PayPal account.
  • No monthly transaction fees, regardless of how you chose to pay, except for cross-border transactions.
  • With a single secure login, you can store all your financial information safe.
  • Shop globally on sites and markets of all sizes worldwide, in over 200 markets and 25 currencies.
  • With the online shopping feature, you can pay for digital retailers’ purchases without pulling out your credit or debit card.
  • Earn rewards, miles, and credit card points when you pay with PayPal by linking your preferred rewards credit card to your PayPal account.
  • Free transfer of money within Canada from your PayPal Canada balance or linked bank accounts.
  • Shop and make purchases with no PayPal balance.

PayPal Business Account

PayPal Business Account is suitable for people and businesses, including freelancers, who want to receive payments. With a business account, you can accept multiple types of payments.

Features of the PayPal business account include:

  • Get paid faster with online invoicing and PayPal checkout.
  • Make secure sales with PayPal seller protection.
  • Securely accept credit and Visa debit card payments without a monthly fee.
  • Receive payments regardless of whether your buyers/customer has a PayPal account or not.
  • Get access to PayPal business loans with hassle-free repayments.

How to Use PayPal in Canada

PayPal is a payment solution that operates online and on mobile. Typically, to use the PayPal service, you must be a registered user of the platform. Thereafter, you’ll need to fund your account and choose the recipient of the money.

How to Create a PayPal Account

How to Create a PayPal account

You can create a PayPal account on the web platform (computer or tablet) or mobile app. The account opening process is free, with little verification.

Step 1: Go to the PayPal Canada website and click Sign up for free.

Step 2: You’ll be prompted to choose your preferred account – PayPal personal account or PayPal business account.

Step 3: For Personal Accounts, you’ll be prompted to enter your phone number and confirm the code sent to your mobile phone. Provide your personal information, including your legal name, email, and password.

Step 4: For Business Account, provide your business information, including your email and password, business details, and phone number to create the account.

Alternatively, you can create your PayPal account via the PayPal mobile app. Open the app and tap on Sign Up. Provide your personal information and complete the account opening process.

How to Add Money to Your PayPal Account

To fund your PayPal account:

  • Go to the PayPal Canada website, and click Login.
  • Enter your login details – email address or phone number and password.
  • Click Wallet and Transfer Money.
  • Select add money to your balance and choose your bank account.
  • Enter the amount to transfer (in CAD) to your PayPal account and click Add to complete the process.

How to Send Money from Your PayPal Account

Sending money via PayPal is simple and straightforward. If the receiver doesn’t have a PayPal account, they can easily sign up for an account for free. You can send money internationally or within Canada. 

Go to PayPal’s website and login into your PayPal account. Click Send.

  • Enter the recipient’s email or phone number and the amount to be transferred in CAD.
  • Describe the transfer purpose.
  • Review the transfer fees, payment method, and other transaction details.
  • Click the Send Payment Now button to complete the transfer.

How to Request and Receive Money in Your PayPal Account

You can request money from anyone by sending a payment request with an email or phone number. When the person makes a payment to your PayPal account, PayPal will notify you through a text message or email. Thereafter, you can:

  • Withdraw the money from your PayPal account by transferring the money to your bank account.
  • Request a cheque by mail from PayPal.
  • Leave the money in your PayPal account balance for future PayPal transactions.

PayPal Canada Fees

The fees and rates charged by PayPal on sending and receiving money are determined by who and where you’re transferring the money to, the purpose of the transfer, and the recipient’s country.

Indications Rates
Payment for purchases or
commercial transaction
(no currency conversion)
Personal transactions via
PayPal balance or bank account
Personal transactions via
credit or debit cards
2.90% plus 0.30 CAD
International personal transactions
to Europe and the United States
via PayPal balance or a bank account
2.99 CAD
International personal transactions
to Europe and the United States
via Credit or debit cards
2.99 CAD + 2.90% + Fixed Country Rate
International personal transactions
to other countries via PayPal
balance or a bank account
4.99 CAD
International personal
transactions to other countries
via Credit or debit cards
4.99 CAD + 2.90% + Fixed Rate of the receiving currency

Note: Rates change from time to time. Check with provider for current rates and each country’s Fixed Rate.

PayPal Safety Regulations

As a payment gateway handling huge daily transactions around the world, you’d expect the PayPal platform to have the highest security for its users’ funds and information. PayPal encrypts the confidential data transmission between the platform users and the server, using standard SSL. Additionally, you can enable 2-factor authentication using a unique and secure password.

When you purchase items online via PayPal Canada, your PayPal transactions are secured and accounted for. PayPal protects buyers’ eligible transactions and sellers against fraudulent payments. Eligible purchases include items paid through your PayPal account, such as electronics, clothing, digital products, and services, etc.

PayPal Mobile App

PayPal provides a downloadable and easy-to-use comprehensive mobile app for its customers. The mobile app also works as a mobile wallet. You can use the PayPal mobile app to:

  • Send money quickly to anywhere in the world.
  • Manage all your money transfer methods.
  • Manage how you spend money or make payments in your PayPal account.
  • Receive money easily and effortlessly.

Also, there is a PayPal Business mobile app designed for merchants and PayPal business accounts. You can use the PayPal Business mobile app to: 

  • Generate and send invoices.
  • View customers’ information wherever business takes you.
  • Manage your account activities.
  • Receive payments faster.

You can download the PayPal mobile app and the PayPal Business mobile app on the Google Play Store (Android) and the Apple Store (iOS).

PayPal Digital Gift Cards

PayPal provides an opportunity to send digital gift cards to your loved ones. You can equally add customized messages for a personal touch. Some of the popular gift cards available on PayPal Canada include:

  • Best Buy
  • Sephora
  • Hotels.com
  • Cineplex Entertainment
  • Hudson’s Bay
  • Indigo
  • Canyon Creek

PayPal Canada Customer Care

For complaints, questions, account information, and transfer-related issues, you can reach out to PayPal Canada customer care via:

The Message Us form works as an SMS or note.

Phone: 1-877-569-1116

Mail: 661 University Avenue, Suite 506

Toronto, ON M5G 1M1, Canada

PayPal Canada Editor’s Review

PayPal has been in the business payments for a long time. It is trusted by several merchants and individuals for payment and money transfers due to its high security, wide-coverage, and no purchase fee features.

However, compared to its competitors, PayPal transaction fees can be very high and unbearable when initiating money transfers, especially international payments or large transfers.

PayPal FAQs

How do I request a refund on PayPal?

You can request a refund of a completed payment by sending the seller an email. Ask the seller to go to the Transaction Details page for your transaction and click Issue a refund. You can request a refund up to 180 days after you pay for your item. 

Here’s how to find the seller’s contact information to request a refund.

  1. On the Summary page, select the transaction you want to cancel.
  2. Use the contact information to send the seller an email.

How do I link a debit or credit card to my PayPal account?

Here’s how to link a debit or credit card to your PayPal account.

  • Click Wallet at the top of the page.
  • Click + Link a card or bank.
  • Click Link a debit or credit card.
  • Fill in your details and click Link Card.

How do I report unauthorized PayPal account activity?

If you notice a transaction that you didn’t authorize, let them know right away in the Resolution Center:

  • Go to the Resolution Center.
  • Click Report a Problem.
  • Click the transaction you want to report and click Continue.
  • Select, “I want to report a transaction that I didn’t authorize.”
  • Follow the steps to report the transaction.

On the PayPal app, tap the Settings icon on the top right, then tap Message Center

Once you have filed an unauthorized transaction dispute, PayPal will investigate the transaction. You’ll receive an email within 10 days to provide you with additional information.

How do I recover my Paypal password when I can’t access my email?

If you’ve forgotten your PayPal password, but you remember your email address, follow these steps to regain access to your account:

  • Go to the login page.
  • Click Having trouble logging in
  • Enter the email address you use for PayPal and click Next. (You’ll be asked to confirm your identity by selecting a verification method.)
  • Select how you want to recover your password and click Next. (You’ll be shown some options such as Have us call you, Receive a text, Receive an email, Answer your security questions or Confirm through Facebook Messenger.)

Can I cancel a payment that I’ve already sent via Paypal?

You can usually cancel a PayPal payment that is in a pending or unclaimed status. These payments will have a status of “Unclaimed” and will show in the “Pending” section of your PayPal account. This does not apply to an order you would like to cancel. Please reach out to the merchant to discuss options for cancellation and request a refund.

If the payment is completed, you won’t be able to cancel it. You’ll need to contact the recipient/seller and request a refund.

If the recipient/seller does not agree to refund your money, you may be able to open a dispute in the Resolution Center and communicate directly with the recipient/seller to resolve any issues.

You can only cancel a pending payment that has a “Cancel” link next to it. If the payment you sent is pending for 30 days, it will be cancelled automatically and refunded to you. If you sent the payment using a debit or credit card, the refund would be credited to the card you used.

From your PayPal app, here’s how to cancel a pending payment:

  1. Tap See Activity.
  2. Select the payment you want to cancel. Tap Cancel Payment.

From your computer, here’s how:

  1. On the Activity page, locate the pending payment.
  2. Click Cancel.
  3. On the next page, click Cancel Payment.

Do I need a bank account for PayPal?

No, you only need a PayPal Personal account. If you want to transfer the money you receive, add a bank account to your PayPal account.

What’s the difference between the PayPal (Consumer) app and the Business app?

Each of the apps best suits a particular customer’s needs.

The Consumer PayPal app is primarily for consumers. People use it to send and receive money either to or from friends and family or businesses.  

The PayPal Business app is for people who use PayPal to conduct business regularly. It’s the best way to manage your business on the go. 

Can I have a PayPal Personal and a Premier/Business Account?

Yes, PayPal users can have one Personal account and one Premier or Business account. Each account needs to have a unique email address.

How do I merge 2 PayPal accounts?

To merge or combine 2 PayPal accounts, you need to:

  1. Choose which account to keep and which account to close.
  2. Send any money from the account you are closing to the account you are keeping.
  3. Remove your bank account and credit card information from the account you are closing.
  4. Close the old account.

I can’t find the money I received via Paypal. Where is it?

Money received into your PayPal account is placed in your PayPal balance. Your PayPal balance shows how much money you have available in your account, in your primary currency. It doesn’t reflect pending payments, recurring payments, or orders that have not yet been completed. 

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Odeyemi O.


Avid researcher, freelance writer, and personal finance enthusiast passionate about financial education and literacy.

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Kareena Maya

Personal Finance and Travel Rewards Expert Contributor



Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.