Nowadays PayPal payment system successfully operates more than 78 million user accounts. Founded back in 1998, it became choice of more than 90% of online merchants worldwide, who accept payments for their goods only via PayPal Adaptive. So far user accounts in PayPal system are ensured by SafeWeb Insurance from unauthorized funds withdrawal for 100,000 US dollars.

Since its establishment the project almost immediately drew investors’ attentions. On that moment the virtual market urgently needed financial operator, that will assume the role of online bank and there was no similar project in the whole Internet area yet. The electronic payment system began to run in November 1999 and at once managed to attract even more investors. The swift growth of the Internet caused significant users inflow. Thus, in a very short time the amount of PayPal clients exceed a million and a half.

PayPal Adaptive: path to recognition

In October 2002 eBay purchased PayPal for $1,5 billion and announced the system as its basic payment tool. Today PayPal electronic payment system is the absolute and undeniable leader in field of electronic money transfers and none of its rivals managed even to come close in the number of users and turnover.

PayPal is a recognized forefather of virtually all existing payment platforms. But, like many other industry giants, their adaption to contemporary technologies has been rather slow. Fortunately, PayPal doesn’t need to own the split payments space, since they semi-recently acquired Braintree in September of 2013. Though, PayPal may offer its own set of APIs for split payments also known as Adaptive Payments.

So, what is PayPal Adaptive Payments?

Adaptive Payments allows to perform and process payments between a sender and one or more (up to nine) receivers. In most cases, customer initiates sent type of payment transaction and the seller initializes pay type of payment transactions. Adaptive Payments is a blanket term, which includes other APIs, such as parallel and chained payments. Setting up Adaptive Payments PayPal is not a big deal, but before you choose which one is right for your project, make sure to do thorough-enough research and learn how to use PayPal Adaptive Payments. The subtle differences are important.

Adaptive Payments provides a single comprehensive framework for third parties (who are often neither the buyer nor the seller) to build payment processing systems of just about any variety you can imagine – including transactions that involve multiple recipients. For example, in addition to implementing a simple payment in which a single sender sends money to a single receiver, Adaptive Payments usually allows you to use the very same API to transfer money from one sender to several receivers using what are also known under the name of chained and parallel payments. Handling preapprovals, refunds, currency conversions, and other advanced scenarios are also possible through the same flexible fabric exposed through the provided set of APIs.

It can’t be argued by anyone that PayPal Adaptive Payments APIs were designed to meet the most common requirements such as possibility to create deeply customized scenarios – from the simplest ones to the most complicated, guest checkouts (credit card payments outside PayPal account) with few restrictions, and many others.

Some most wide-spread e-commerce platforms have developed separate extensions in order to to enhance user experience. For example, Magento offers Magento Marketplace PayPal Adaptive Payments extension. And for WooCommerce PayPal Adaptive Payments, in its turn, separate extension can be used (you can find it here). Although it should be mentioned – you must have your PayPal account approved for use with Adaptive Payments before purchasing any extension, otherwise it won’t work with the unapproved account.

But despite all its numerous indisputable merits, PayPal Adaptive also has some features, that will make you think hard about its implementation into your system. Let’s look at them in more details.

First of all, it is worth noting that Adaptive Payments services may be conditionally divided into two types – standard and advanced. Their only difference is that standard services are available for everyone, whereas advanced services require specific permission from PayPal to use. You have to get permission to use any kind of this service when you submit an application to PayPal.

Chained payments belong to the group of advanced services, and thus, in case your application needs to perform this kind of payments, you have to request permission when you submit your application. Later, if you need to modify your application to support preapprovals, which is also an advanced service, you have to resubmit your application in order to obtain permission from PayPal to use the service.

By default, payments to receiver of any level in a chained payments are immediate. However, if you act as a primary receiver, you have possibility to choose option to delay funds sending to a secondary receiver. To complete the payment, you must explicitly perform it to secondary receiver(s) after the sender pays you. This type of Chained Payments is called Delayed Chained Payments. Learn scheme of interaction on a picture below. Explicit payment approval requires the sender to be logged in PayPal account to approve it. You can control the interaction of PayPal and your application by specifying redirection URLs in different situations. The sequence below shows of control for a payment that requires the sender to log in to PayPal to approve it (e.g. payment for shopping cart items within a web store).

Explicit payment flow includes the following steps:

  • 1. Firstly your device (or website) sends a pay-request to the PayPal on behalf of a sender.
  • 2. PayPal responds with a key that you use when you direct the sender to PayPal.
  • 3. You redirect your sender’s browsers to
  • 4. After the sender authorizes the funds transfer, PayPal redirects your sender’s browser to the location you have specified.

You’ve probably noticed the fact the cancel operation is not mentioned in the steps above.The cancel operation is not shown mentioned in the sequence above. Cancellation is handled by a separate cancellation URL to which PayPal redirects the sender’s browser any time the sender cancels while on

In addition to the steps listed above, PayPal notifies the payment sender and you.

Chained Payment: scheme of interaction between payment sender and primary receiver

PayPal Adaptive is very well known due to its Delayed Chained Payments. This payment type allows primary receiver to keep part of the funds and pay secondary receivers the remaining part. Delayed Chained Payment gives possibility to hold payment sending from sender to receiver for 89 days, and after specified period you can’t complete the payment as the part of the original chained payment. It is very useful thing for long-term delivery: using this type of payment, primary receiver has possibility to protect himself reliably from fraud and require some definite action (or multiple actions) from secondary receiver to e.g. waiting for return period expiration or goods shipping.

Chained Payment: scheme of interaction between primary and secondary receivers

But let’s imagine the following situation: you act as a primary receiver, and surely you need to protect yourself from cheating, and you draw your attention to Delayed Chained Payments. After learning that standard period of delay is equal 89 days your first intention will be setting payment hold longer than specified period, but, unfortunately, it is absolutely impossible. If shipping may take more than 89 days, or return period is longer than specified term – Adaptive Payment becomes pretty useless thing, otherwise, its implementation may cause vulnerability in payment process.

Another negative moment – commission-fee system. It is ambiguous and it hard to predict who will pay the fee, how much it will be and consequently, it affects the price which can’t reflect its real cost.

There are three possible options:

  • – Sender pays the fee, regardless of payment type (whether it is simple, parallel, or chained)
  • – All receivers pay the fee in a chained payment
  • – Only the primary receiver pays the fee in a chained payment
Single Payment: scheme of interaction between sender and receiver

And finally – majority of e-shops just don’t have a necessity to split funds between several receivers, and therefore Delayed Chained Payments become pretty useless thing in these conditions – where we have one (primary) receiver and no secondary. So, it’s safe to say that there is no need in implementation of such a complex system for performing and processing of a single (also well-known as “traditional”) payment from a single sender to a single receiver.


In conclusion of all foregoing it can be said with confidence – it is clear that PayPal Adaptive have a lot to offer to the customers. Delayed Chained Payments are powerful tool in their narrow application domain such as trading platforms with multiplicity of sellers that require to create highly-customized payments with need to distribute payment between several receivers of different levels. But their utilization is limited by several factors such as user restrictions from PayPal, unclear commission fee, and absence of necessity in implementation in case of simple payments usage.

There are some restrictions within the system (for sending and receiving funds, withdrawing funds from PayPal account) set for PayPal users according to such criteria as country of residence, account type and so forth. The limit could be set for a single payment as well as for turnover per month. Users from the CIS (Commonwealth of Independent States) usually deal with «Sending Limit» (the limit for sending funds from account): PayPal doesn’t allow them single transfers exceeding $300-500.

PayPal doesn’t provide any kind of protection for money transfers. Any measures of transactions confirmation or significant activities in account are not provided either. But this is compensated with the opportunity of recalling the money after they were sent and quite perfect system of user verification. The main security measure in PayPal is the denial of working with anonymous clients: such users are subjects to the limits that make interaction with the system virtually impossible. Credit card verification is supposed to verify the identity of the holder of the card used. Apparently the security service stakes on absence of anonymity and the opportunity of involving the security police in case the account is compromised. It is claimed that the volume of eBay damages caused by fraudulent operations makes up only 0.2% from the amount of transactions made.

Since circumstances are going to differ from project to project, there is no clear winner among systems in this competition. Now you have more information about which platform will best suit your project in future. If you have questions about payment solutions, PayPal Adaptive Payments integration, or case you want to find Paypal Adaptive Payments Alternative products for your website or mobile application, please give us a call at +44 (20) 3129-0789 or write us here! We’d be happy to chat with you.

PayPal Adaptive: usage in e-commerce/market platforms and its restrictions