You see these PayPal buttons all the time.

(Note, this picture is an outdated PayPal button. PayPal occasionally will change the look of their buttons.)

But before you put in your credit card number, you should make sure that this button really goes to PayPal and that the money really goes to the person that you intend. Afterall, it is not hard for someone to make a button that looks like that and claim to be PayPal, only to collect your credit card. This scam is known as spoofing or phishing.

Checkpoint 1: Check that it is PayPal

(This is the most technical checkpoint. So if it gets too complicated, you can skip it and do the other checkpoints. Since Checkpoint 2 checks the same thing as Checkpoint 1.)

First you want to find out what URL the button will take you to when clicked. In your browser do menu "View -> Source" to see the source code of this HTML page.

After finding the form button code as shown above, make sure that the action attribute of the <form> tag goes to https://www.paypal.com/

If it does not, something is wrong.

Checkpoint 2: Check again that it is PayPal

After clicking the button, you should get something like ...

Make sure that the URL starts off with https://www.paypal.com. If does not start in like that, then it is not going to PayPal. Note that it is https: and not just http:

The extra "s" means that information is traveling over a secured socket layer (SSL) and will be encrypted during transport.

Once you have passed checkpoint one and two, you have confirmed that the form above is really from Paypal and that the information that you enter is really going to PayPal.

Checkpoint 3: Ensure that data is encrypted

The lock in Internet Explorer's status bar also indicates secured socket layer. Once you have passed checkpoint 3, you can rest assured that the credit card number is being transmitted over the wires in encrypted form and can not be intercepted during transport.

Checkpoint 4: Make sure money goes to the right person

Now just make sure that the email shown is the person that you want to transmit money to. This is the email address that PayPal will send the money to. Rest assure that the credit card number only goes the PayPal. The person receiving the money can not know your credit card number.

This link has more information from PayPal on how to determine if Paypal button is real.