Paypal is one of the mos secure and most used payment systems in the world. Is is so good that is used by hundreds of millions of people.
Paypal uses the best encryption possible: The new AES 256 bit algorithm. This protection is so good that the United States says it is good enough to protect Top Secret information, you can check this information on wikipedia, and they will use it to protect Confidential information.
So you can be safe when you re using Paypal.
The possible security hole you might find on Paypal is when you receive an email that is not from Paypal asking your password to access your account. In this case delete the email immediately, otherwise you can loose all your money!
Paypal has even some security recommendations you can see see on their website.
Security Tips and Fraud Prevention
https://www.paypal.com/row/cgi-bin/webscr?cmd=p/ge n/fraud-prevention
Paypal Security Center
https://www.paypal.com/row/cgi-bin/webscr?cmd=_sec urity-center
You will find there:
Buying Safely -> Privacy to Fight Identity Theft
-> Prevention to Help Stop Fraud
-> Protection for Your Purchases
Selling Safely
-> How We Help Protect Sellers
-> Tips to Sell Securely
-> Resolving Issues for Sellers
How safe is it to pay by Paypal?
It depends on the website. The payment will be made through Paypal, so there is nothing to worry about on this point, the problem is if the seller doesnt deliver the item on the download URL link.
How safe is selling with Paypal?
To sell with Paypal you can use the most used option: Website Payment Standard. You create a single product buy button and you put it on your website. After they payment, the user will be automatically redirected to the download page.
Overall
Paypal is a payment system you can and you should trust. It uses the newest and most advanced algorithm and has everything you can expect to protect your money. Almost all the security trouble you might have has to do with improper use.
