How does PayPal work for online payments?
The shopper chooses PayPal at checkout and is redirected to PayPal. There they log in, choose how to fund the payment and approve it. Stripe’s documentation lists the funding choices as the PayPal wallet, a linked card or bank account, or buy now, pay later. After approval the shopper returns to the merchant’s site, and the merchant receives an immediate notification of success or failure.
PayPal supports a two-step flow. The merchant can authorise the payment first and capture it later, for example after checking stock. PayPal’s developer documentation says an authorisation places a hold that is valid for 29 days, and that the merchant should capture within a 3-day honour period. After those three days the merchant can reauthorise, which creates a new authorisation and restarts the honour period, as long as it stays inside the 29 days.
Refunds and repeat charges are supported. Stripe allows PayPal refunds, full or partial, up to 180 days after the original payment. Recurring payments are available too, although Stripe notes they might need approval first.
Where and how do shoppers use PayPal?
PayPal is global. Its country list covers markets across Africa, Asia, Europe, the Americas, the Middle East and Oceania, and Stripe describes the customer locations for PayPal as worldwide. Stripe offers PayPal in 14 presentment currencies, including EUR, GBP, USD, AUD, CAD, CHF, the Nordic currencies, PLN and CZK.
It is strongest in Europe. In the EHI Retail Institute’s retailer panel, PayPal took 28.7% of online revenue in Germany in 2025, up from 28.5% in 2024, the largest share of any method. Purchase on invoice followed at 26.1%. Across the euro area, the European Central Bank’s SPACE 2024 study found that cards made up 48% of online payments by number and e-payment solutions, a category that includes PayPal and other wallets and apps, made up 29%. That category reached 46% in Germany and 33% in Portugal, and 38% of online payments under EUR 5.
PayPal also appears among the leading checkout options in the Omno country guides for the United States, the United Kingdom, France, Spain, Austria, Greece, Australia and several smaller EU markets.
What rules and costs should merchants know?
Buyers have a formal dispute route. Under PayPal’s UK Buyer Protection Program, last updated on 12 October 2026, a buyer can open an Item Not Received dispute within 180 days of paying. A Significantly Not as Described dispute must be opened within 30 days of delivery or within 180 days of payment, whichever is sooner. If buyer and seller do not agree, the dispute must be escalated to a claim within 20 days or PayPal closes it. A buyer cannot run a PayPal claim and a card issuer claim for the same payment at the same time.
Seller Protection has conditions. PayPal’s UK programme covers Unauthorised Transaction and Item Not Received claims on eligible sales. The item must be a physical good that can be shipped, apart from cases covered by separate intangible goods rules. It must go to the shipping address on the transaction details page, with valid proof of shipment or delivery. PayPal also requires sellers using its checkout to pass the buyer’s browser session and device data, and gives 60 days’ notice to fix a broken integration before removing protection for unauthorised transactions.
Fees depend on the market. PayPal’s UK fee page, updated on 1 October 2026, lists 2.9% plus a fixed fee for most domestic commercial transactions, with a fixed fee of GBP 0.30 or EUR 0.35. International payments add 1.29% from the EEA and 1.99% from other markets. Card chargebacks on payments not made through a PayPal account or guest checkout carry a fee of GBP 14, and PayPal may also charge a dispute fee.
How would Omno handle PayPal?
- One checkout: PayPal would appear in the Omno hosted checkout next to cards, Apple Pay, Google Pay, local methods and crypto. Merchants with their own payment screens would use Direct Links on their own buttons.
- Routing rules: The merchant would set rules by country, currency or amount that send PayPal payments to a connected provider that supports PayPal. Omno connects through those providers; it is not an acquirer and does not hold funds.
- Cascading: In the hosted checkout, if the chosen provider is unavailable or rejects the request, the payment would move to the next provider in the rule that supports PayPal, until one accepts.
- Status: The final result would reach the merchant by webhook.
What should merchants plan for?
Send the right data. Seller Protection depends on shipping to the address PayPal holds, keeping proof of delivery and passing device data from the checkout.
Capture on time. If you authorise first, capture within the 3-day honour period or reauthorise before the 29-day hold ends.
Answer disputes inside PayPal’s windows. Item Not Received disputes can arrive up to 180 days after payment, so keep tracking records at least that long.
Price for cross-border fees. A PayPal payment from another market costs more than a domestic one, so check the international rates for the countries you sell to.
Keep cards next to the button. PayPal is a large share of online payments in Germany, but cards still lead across the euro area.