One problem most freelance translators are faced with is how to receive payment. In particular: How to receive payment for small jobs. Many translation agencies are reluctant to pay small fees via wire transfer due to the transaction fees; often they will send you a check instead. And I suppose I don't have to tell you: The banks charge an enormous commission when you come and want to cash in your check.

Then along came PayPal ...

Basically PayPal lets you send and receive payment over the Internet. It bases its service on the existing bank and credit card networks, but it is not a bank in itself.
Registering is free; all you need is an email address. Sending money is free - receiving money however, is not. You pay 3.4 % of the received amount unless you are receiving Dollars; in this case you pay 2.9 % of the received amount. Then you have to pay a flat fee for each transaction: 0.35 Euros or 0.30 Dollars. In addition you have to pay a cross boarder fee of 0.5 % - 1.0 % if you receive payment from someone located in another country.
Then you have to pay a small fee when you withdraw your money to your regular bank account. (Unless your bank is located in the United States; then you don't have to pay this fee.) How much this fee is depends on the country you are located in. I for instance live in Switzerland and have to pay 0.50 CHF to withdraw to my account. Banks in countries within EU, except the United Kingdom, all charge 1.0 Euro.
Let us have a look at an example. I perform a small translation and charge a minimum fee of 20 Euros. 3.4 % of 20 Euros is 0.68 Euros, plus the flat fee of 0.35 Euros. Add the cross boarder fee of 1%, which is 0.20 Euros. So, of my 20 Euros PayPal takes 1.20 Euros. In addition I have to pay the fee of 0.50 CHF for withdrawing the money to my regular bank account.
If the agency sent me a check instead of using PayPal, my bank would charge 7.50 CHF (4.80 Euros) for cashing the check for me. Each bank has its own fees for cashing checks and receiving wire transfers. But for smaller amounts PayPal is definitely the cheapest way of accepting payment. You will have to do a small calculation and see how large amounts you can receive before the PayPal fees exceed the fees your bank charges.

But is it safe?

Most freelance translators using this way of receiving payment are satisfied with the service and have had no problem with PayPal. I have only heard of one-two translators having their accounts frozen by PayPal for no legitimate reason.
Some negative aspects of PayPal
The problems with PayPal only start when you have a problem, so to speak. Solving a problem can be very time-consuming and frustrating, and in many cases no solution is reached. Their customer support is not exactly something to brag about. It is very difficult to get behind their wall of auto responders and answering machines!
Another thing to be aware of are scams. There are numerous scams around, from people sending out emails pretending to be from PayPal asking you to confirm your credit card number, to hackers entering your account and spending all your money.
Other negative aspects of PayPal are that it is not available in all countries and you can only receive payment in a few currencies.
By using PayPal you take a large risk compared to using the traditional banking system. The chance of loosing your money is there. At the moment there are several lawsuits filed against PayPal and a lot of people who have lost money and not received any compensation. Have a look at these web sites:

A few tips for using PayPal

The majority of the people having problems with PayPal are people selling items via auctions etc. Some examples: Payment is cashed from the buyers account and not transferred to the sellers account. A buyer uses a stolen credit card number to purchase items from you and your account risk being frozen for being involved in criminal activity.
As long as you use PayPal to receive money and don't connect your PayPal account to a credit card the risk is relatively low. In the worst case you could loose the money available on your PayPal account, for whatever reason: hackers getting into your account, PayPal freezing your account etc.
Having read a few of the horror stories about PayPal, I am very cautious using their system. But I still use it for receiving small payments. Basically out of a lack of alternatives. PayPal was the first company to offer this kind of service, and for a long time it was the only company providing this service.
In the last year or so a few other companies have started providing the same service or very similar services. Most of them are very new companies and still not industry standard. When I ask agencies if they pay via Moneybookers for instance, they have never heard of this. But many of them can offer payment through PayPal.
I am sure we soon will have very good alternatives. But for now it seems we are stuck with PayPal whether we like it or not.

Guidelines for using PayPal

The only advice I can give is to be careful using PayPal. Here are some tips to help minimize the risk of loosing money through PayPal.
1. Only receive smaller amounts through PayPal.
2. Never leave large amounts on your PayPal account: Withdraw your money as soon as you have a couple of hundred Euros/Dollars.
3. Access your account and check that everything is ok each time you expect to receive payment.
4. Be prepared to loose the money on your account.

Hope this will be useful for everyone!

Cheers =)