If I transfer money between my bank account and someone else's bank account, the process is that my bank sends the money to the other bank account directly (nobody but bank A and bank B involved). But how exactly does PayPal work? I never signed any direct debit agreement that I remember, so they can't be pulling it via that, keeping it for some time themselves, then sending it on to the recipient. What law/rule allows Paypal to pull funds from my credit card account?
Please don't say because I opened a PayPal account, because I realise that. What I want to know is why my bank accepts PayPal's word that I said they could do that, and how my bank knows that I said it was ok for PayPal to take any one particular amount at any one particular time? What, if anything, stops PayPal charging whatever they want whenever they want to my credit card account?
My reason for wanting to know this is to understand what risk I am at if either PayPal, or someone that has hacked PayPal, decides to charge some huge amount to my credit card account?
I'm in the UK, if that matters.