A feature expected since the announcement that eBay/PayPal bought Skype for billions was the ability to send money to others via PayPal has arrived with the Skype 3.2 beta download (thanks 901am -> GigaOM.)

How does sending money work?

STEP 1. In Skype navigate to TOOLS->Send Money… The screen you’ll see is shown at the top of this post. When you click “get started” you need to login but for those with PayPal security keys it does not ask for your six digit security key. Wonder if they’ll fix this in the final release version?

STEP 2. Choose which Skype contact you want to send money to in the Skype dropdown menu, enter the amount, purpose and comments (optional).

STEP 3. If your Skype contact is not using v3.2 beta (likely at this point since it just came out), then you’ll see the screen below asking you to enter in the person’s email address.

STEP 4. Verify the details. You can also change the payment type on this page to whatever your PayPal backend funding source is (credit card and/or checking account).

STEP 5. Your payment has been sent confirmation.

If the other party has Skype 3.2 or higher they will receive confirmation of the money inside Skype, otherwise they’ll get an email that looks like the normal “you have received money” PayPal emails.