Is it possible to use Skype to fax?

If not, how can I fax using a computer application?

I am also open to using an online application.

First, you can't use skype alone to fax, but there seem to be a number of skype plugins that would enable that functionality.

Most of the installed fax solutions are made now for high performance faxing or low volume occasional faxes. For instance, windows 7 comes with "windows fax and scan" app which if you have a modem and it's hooked up to a phone line, will absolutely send a fax for you without much fuss. If you needed to do a mail merge on top of that, you might have some difficulty

There are 100 and 1 online fax solutions out there. They range from the simple send an email to this special email address and we will fax it to the number in the subject line to fully integrated API solutions.

efax.com is the most popular of these, but I'm not convinced it's the best or cheapest, but you can't have that many customers without doing a lot right.

According to the PamFax FAQ:

Skype have unfortunately removed the ability for partner applications to use Skype Credit back in 2009.

As a consequence we switched over to an alternative "Pay As You Go" offer which will allow occasional PamFax users to still use PamFax "On Demand" without needing to buy a monthly plan.

No, you cannot send or receive a fax using Skype alone. However, with the help of plugins you can do just that. One popular plugin is PamFax. Alternatively, there are many online services for sending faxes.