Important: PayPal for Marketplaces is available to select partners for approved use cases. For more information, reach out to your PayPal account manager or contact us:

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This glossary defines commonly used terms in PayPal for Marketplaces.

Connected path

A marketplace model in which the PayPal merchant assumes financial liability, rather than the partner.

  • Merchants must have PayPal Business accounts.
  • PayPal signup is completed in a secure window on the platform site.
  • If a merchant already has an account with the partner, the signup form can be populated with the partner’s existing account data.
  • Merchants grant the partner permissions to process PayPal transactions on their behalf.

An individual or company that purchases goods or services on a PayPal for Marketplaces venue. Also called a buyer, consumer, or sender.


PayPal's release of funds to a merchant’s bank account. If the merchant has selected Instant disbursement, they receive funds as soon as a sale is complete. If Delayed disbursement was selected, funds are not released until the partner triggers disbursement.


HATEOAS, an acronym for Hypermedia As The Engine Of Application State, is a constraint of the REST application architecture. Each PayPal API call response includes an array of contextual HATEOAS links, if available. Use these links to request more information about and construct an API flow that is relative to a specific request.


PayPal's retention of funds on a partner’s behalf. A partner can opt to either place an automatic hold on all PayPal payments made on the platform, or notify PayPal when they want to initiate holds.

Loss account

An account used by Managed path solutions to facilitate reverse movement of funds. When a customer disputes a charge (for example, for fraud or non-delivery of goods), PayPal reverses the transaction and refunds the customer from the loss account. Loss accounts are required because Managed path Partners assume full financial liability for their merchants.

Managed path

A marketplace model in which the partner assumes financial liability.

  • Merchants aren't required to have PayPal Business accounts.
  • The partner controls the merchants’ experience and has full responsibility and liability for merchants.
  • Merchant accounts are linked with the partner in a parent-child relationship, where the partner manages those accounts on the merchants’ behalf.
  • Funds from the merchant accounts roll up to the partner’s account at the end of each day. The partner then disburses funds to the merchants outside of PayPal. (The Settlement Destination API can also disburse funds.)

A marketplace enables customers to purchase goods and services from, or donate financial contributions or tips to, multiple providers under the umbrella of a marketplace partner. The partner facilitates the platform, drives consumer traffic to it, and recruits other merchants to sell on it. The platform often charges the merchants a partner fee in exchange for supplying operation support services, such as a technology infrastructure, payment processing, fraud and risk management, and customer protection.


An individual or company that sells goods or services on a marketplace venue. A merchant can also be an individual or organization that conducts fund-raising activities through the platform. Also called a seller, receiver, or vendor.


A company that sells software or other technical services that enable merchants to process e-commerce transactions. A partner can also be a marketplace operator or owner. Partners earn revenue by selling their software and capabilities, and receive compensation from PayPal for enabling and influencing PayPal-branded payments.

Partner fee

Commission paid to a partner by the merchant on processed transactions.


A predefined configuration of PayPal for Marketplaces features and functions that determine how merchants are onboarded, whether shopping carts can include goods from more than one merchant, and so on.

Payer ID

Unique PayPal account identification number.

PayPal processing fee

Fee paid to PayPal by the merchant to process transactions (usually 2.9% plus $0.30).

Progressive onboarding

A method for onboarding Connected path merchants who don't already have a PayPal account. This method enables customers to use PayPal to pay across your platform with merchants not needing to go through PayPal setup until they receive their first order. Once a customer buys something with PayPal, the merchant receives an email from PayPal and is guided through the setup process.

Purchase unit

A single merchant’s portion of an order. If a customer orders multiple items from one merchant, you can put them in a single purchase unit. However, if a customer orders items from multiple merchants, you must create separate purchase units for each merchant. PayPal treats each purchase unit as a single transaction.

Reference account

A PayPal general ledger entry that the partner creates on behalf of a merchant to track transactions for Managed path integrations. The merchant cannot access this account.

Upfront onboarding

A method for setting up merchants to accept PayPal orders using the Connected path model. With Upfront onboarding, you post a PayPal signup link on your website for your merchants and PayPal handles the rest. The signup flow uses an in-context experience to keep your merchants on your website and minimizes the number of pages to navigate. You can prefill some form fields for the merchant based on content the merchant has already provided you. This method is different from the URL onboarding experience in that it leverages APIs and the experience is more streamlined for the merchant.

URL onboarding

A method for setting up merchants to accept PayPal orders using the Connected path model. This option doesn't allow you to prefill any information that you may have already collected from your merchants, but it is faster for you to set up than the Upfront onboarding method. With this onboarding experience, you use a URL with static parameters to direct the merchant to PayPal.


Webhooks are HTTP callbacks that receive notification messages for events.