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Originally Posted by imhim  how does paypal accrue interest...? thats one thing i fail to understand... they arent exactly a bank.
can someone shed some light, please... | 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 (and millions of others) have placed into their accounts, but not spent yet.
Think of it this way: PayPal has roughly 50 million members. If each member left $10 in their account for a year, PayPal would start with around $500 million dollars as principal. Even at an interest rate as low as 1.75 percent, PayPal would be earning $8,750,000 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.
Read more: Finding Out How PayPal Works - For Dummies  | 
