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 A PayPal account is verified to increase the security of  the Paypal network. By verifying a PayPal account, the sending and receiving limits are increased. The seller is also considered to be more reliable. Non-verified  PayPal accounts are also more likely to be frozen.

Sending limits for users with an unverified personal account are US$100 and receiving limits are US$500. Many companies do not accept payment from unverified PayPal accounts, since stolen credit cards may be used. If a payment is sent from a non-verified Paypal account, they may ask for additional proof of identity like a copy of  the credit card.

For a US resident, a PayPal account can be verified by linking it to a US  bank account. In other countries, the procedure differs.  In Germany, a verified member has to complete a bank transfer while in other countries a credit card has to be added to the account. The user becomes part of the expanded use program.

When a non verified PayPal account holder logs into his or her account, the status is shown as non-verified . To become a verified user, a credit card or bank account details have to be added. The sending and receiving limits can be increased through the Expanded Use program. The user authorise PayPal to debit the credit card for a small amount - $1.95. A four digit code is available in the credit card statement for this debit entry, which has to be entered in the PayPal account.  The debited amount is refunded back to the PayPal account, when the user first sends money.

However, verified personal accounts may be frozen if they are used for business transactions and the balance in the account is large. If  you are using your Paypal account to receive payments from customers , it is advisable to open a free Paypal business account.