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Clarification about Paypal. This question doesn't really fall under Personal Finance.

Whether Paypal works as a virtual money holder ? Because every transaction made to (or) made from paypal to any e-commerce websites - Credit statement shows as Paypal transaction as merchandiser. And not the actual seller details.

clarification: For the purpose of book keeping, when we review the credit statements , transaction shows as Paypal as merchandiser.. this doesn't help much for us. as we are interested to have the actual merchandiser details..

  • So what's your question? Yes, Paypal acts as an intermediary when shuffling the money around. What about it? – Jay Apr 12 '18 at 21:38
  • For the purpose of book keeping, when we review the credit statements , transaction shows as Paypal as merchandiser.. this doesnt help much for us. as we are interested to have the actual merchandiser details.. – goofyui Apr 13 '18 at 1:39
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Yes, if you pay thru Paypal, there's the hassle that to track down where the money went, you have to take an extra step. If you buy something from, say, Foobar Company with a credit card, then the transaction will show up on your credit card statement as "Foobar Company". (Usually.) But if you pay with Paypal, it can show on your credit card statement as "Paypal", and then you have to go to your Paypal account and look at their transaction list to see where the money really went. And of course if you deposit money with Paypal and use that to pay bills, or if you use money that was paid to you with Paypal and that is sitting in your Paypal account, to pay bills, then there's no way for Paypal to connect a particular deposit or receipt to a particular payment. At that point you have to treat Paypal as a bank account and not simply as a flow-thru transaction facilitator.

If you use Paypal a lot, that's not a big deal. I briefly had a small business where most of my receipts came in to Paypal and then I paid bills from there, so I just treated it as a bank account and used information from their statements for my accounting and taxes and so on.

  • Thank you @Jay, !! Well explained. Though, Issue seems to be - Transactions through paypal will add up an additional work for having better book keeping. – goofyui Apr 13 '18 at 16:23
  • Sure. Paypal is an account with transactions and a balance, and not simply a facilitator of transactions. Having multiple accounts always creates more bookkeeping work. – Jay Apr 13 '18 at 16:25
  • Thank you Jay .. that was quick.. , You mentioned that you had a business and faced such issues.. how did you handle that - We can follow your steps.. – goofyui Apr 13 '18 at 16:33
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    I just considered the business to have three "bank accounts": A checking account, a credit card, and paypal. I put paypal into my accounting software as an asset account, just like a checking account. When I totaled up sales or expenses, I added numbers from all three accounts. Really from an accounting point of view, paypal looked just like a checking account with overdraft protection. – Jay Apr 13 '18 at 21:16

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