PayPal Questions

I have some questions about PayPal that I haven’t found answers to. Maybe someone can help me.

Most of the money converted from real dollars to PayPal funds isn’t withdrawn. When I sell things on eBay, I usually use the PayPal funds to buy other things rather than converting it back into dollars in my bank account. So, how much actual cash does PayPal have to have on hand in order to make the system work?

I’ve seen figures of $12 billion or more in transaction volumes performed on PayPal. But the real question is how much new money is being put into the system versus what is taken out. My sense of dealing with eBay and PayPal is that about 1/3 of what is added in a given year is taken out. This could be way off, but I tend to keep my PayPal money in PayPal for other transactions.

If this is true, then a couple of things:

1. PayPal is able to keep most of the cash converted to PayPal money.

2. What would keep PayPal executives or employees from just creating PayPal money and putting it into their own accounts to purchase whatever they desire?

3. PayPal is creating inflation by printing more money exactly the same way the Federal Reserve does.

4. How is PayPal regulated? Is it a bank? Credit Union?

I’m just wondering about this. Maybe someone can help me with some answers.