OT: Temporary Holds On Funds Placed by Paypal

[Uncle Jam's Army]

So I decide to buy a factory wheelset from one of the U.K. shops and decide to use paypal to make the purchase in order to protect against any security breaches in credit card information like in the past with these U.K. shops. I used funds from my checking account to make the purchase. Later the same day I decide to cancel the order and go with some handbuilts instead, and the U.K. shop refunds the money the next day.

Paypal, however, puts a temporary hold on the funds five days ago. I call paypal today to find out why the hold is in place, expecting any such hold to have been resolved by now. The guy on the phone explains that the hold is in place because paypal doesn't know if the funds used for the purchase were actually in my checking account when I made the purchase (they were there and promptly withdrawn by paypal at the time of the purchase). O.K., sounds somewhat reasonable. But then I ask how long the hold will be in place and the guy says there's no telling; however long it takes to confirm that I had funds in my checking account. I tell him that is simply unreasonable for paypal to hold on to my money for an indeterminate amount of time and the guy has the effrontery to tell me it's not my money, it's theirs. Argument ensues, with me telling him that is ridiculous, as the money is no longer sitting in my account and is being held by paypal. I end the call telling him that paypal is just making it likely that I will go out of my way not to use their services for payment options in the future. The guy is nonplussed.

If I ever do business with anyone in the future in the classifieds, I hope you will understand my refusal to use paypal.

[rice rocket]

I still use Paypal (reluctantly). Rule #1, I never let them touch my checking account unless it's for depositing.

[AngryScientist]

I still use Paypal (reluctantly). Rule #1, I never let them touch my checking account unless it's for depositing.

i go a step further - zero access to checking accts for me. credit card only. i'm pretty much a buyer though, i rarely sell anything, and if i do, i just let the funds sit in the acct until i buy something...

[rice rocket]

I used to let stuff sit too, but then I sold an engine and decided I shouldn't like a couple thousand sit there, secured only by one password, held by some non-FDIC insured company.

[AngryScientist]

I used to let stuff sit too, but then I sold an engine and decided I shouldn't like a couple thousand sit there, secured only by one password, held by some non-FDIC insured company.

lemme guess - K20 ?

[merlinmurph]

To protect yourself against CC fraud, get a CC that offers virtual CC numbers. I have a Citibank MasterCard that offers this. A virtual CC # is a one-time use number. If someone tries to use it a second time, the transaction fails.

Murph

[rice rocket]

lemme guess - K20 ?
Haha, I wish. It was a 13-BREW.

[Uncle Jam's Army]

Thanks guys. In hindsight, I should have gone credit card.

[zetroc]

Dwolla is pretty good.

[Litespeed_Mike]

+1 on Dwolla

[54ny77]

on paypal--i always (and only) use their credit card payment feature for commercial vendor purchases. too much potential headache otherwise.

[pedlpwrd]

This is the exact reason why I have never used this service. They are bound to take control of all internet purchasing at some point. I would rather utilize trustworthy folks like here, on the forum, or even craigslist, before watching my money float into "electronic internet" deepspace. Lol. I hope that this gets resolved for you quickly!

[Louis]

To protect yourself against CC fraud, get a CC that offers virtual CC numbers. I have a Citibank MasterCard that offers this. A virtual CC # is a one-time use number. If someone tries to use it a second time, the transaction fails.

Interesting. I'd never heard of this.

How is the virtual number issued to you? Do you call in via phone, or do you request via a web site? (which would mean that you have a password to access your account)

How long is the number good for? (I assume not forever, because the would probably end up running out of numbers.)

[rice rocket]

My old AMEX card had it, you just do it all from their website. I know Bank of America has this feature too on their cards, but I only carry a checking account with them. The number is usually good for one transaction.

[Ken Robb]

I used to buy through PayPal using my credit card. After a few transactions I was notified by them that I had reached the limit for credit card purchases and would have to open and account linked to a checking account. I set up a PP account . I sold an item and left the money in my PP account. I "won" an auction and when I tried to pay with the $$ in my PP account I found it had been emptied with a message from "Ben Had". No more PP for me and I guess that means no more eBay.

[tiretrax]

After I purchased more than $10k worth of merchandise, paypal insisted that I "verify" my bank account with them. That's the biggest load I've ever heard. They have my CC info and are only an intermediary, not a bank. The USPS or Western Union wouldn't ask for that.

[biker72]

So I decide to buy a factory wheelset from one of the U.K. shops and decide to use paypal to make the purchase in order to protect against any security breaches in credit card information like in the past with these U.K. shops. I used funds from my checking account to make the purchase. Later the same day I decide to cancel the order and go with some handbuilts instead, and the U.K. shop refunds the money the next day.

Paypal, however, puts a temporary hold on the funds five days ago. I call paypal today to find out why the hold is in place, expecting any such hold to have been resolved by now. The guy on the phone explains that the hold is in place because paypal doesn't know if the funds used for the purchase were actually in my checking account when I made the purchase (they were there and promptly withdrawn by paypal at the time of the purchase). O.K., sounds somewhat reasonable. But then I ask how long the hold will be in place and the guy says there's no telling; however long it takes to confirm that I had funds in my checking account. I tell him that is simply unreasonable for paypal to hold on to my money for an indeterminate amount of time and the guy has the effrontery to tell me it's not my money, it's theirs. Argument ensues, with me telling him that is ridiculous, as the money is no longer sitting in my account and is being held by paypal. I end the call telling him that paypal is just making it likely that I will go out of my way not to use their services for payment options in the future. The guy is nonplussed.

If I ever do business with anyone in the future in the classifieds, I hope you will understand my refusal to use paypal.
I had the exact same problem. Bought a set of wheels from a forum member with PayPal. He had already sold the wheels so refunded the money. Took a week for PayPal to lift the hold.... :confused:

[Kirk Pacenti]

The cynic in me says there is no reason that these transactions can not be made instantaneously and that the only reason to 'hold' any funds is to collect interest off the $$$ they are holding. Anyone know how many billions of $$$ paypal has in escrow on any given day? :crap:

[rice rocket]

KP, I totally agree with you there, I have no doubt that they sit on the funds for more than necessary for their economic benefit. I wouldn't say "instantaneously", but it shouldn't be more than one day. If a bank can manually process and clear a PAPER check in one day, Paypal can do better with a fully electronic transaction.

[Ozz]

The cynic in me says there is no reason that these transactions can not be made instantaneously and that the only reason to 'hold' any funds is to collect interest off the $$$ they are holding. Anyone know how many billions of $$$ paypal has in escrow on any given day? :crap:
OK, I'll disagree with you. :)

They don't hold the money to earn interest (short term rates are near 0%)....I would guess that they hold the money protect themselves against fraud losses. They might earn a little something on it if they hold it at a bank (either as interest or earned credit to offset service charges incurred by them at the bank), but I think the primary reason is fraud prevention.

As honest and ethical as we assume our fellow forum brethren to be, there are many more folks who spend their days trying to steal acct info (both bank and credit card) to commit fraud. Holding onto the funds tips the odds to their favor in preventing losses.

Us honest folks always seem to pay the price for the dishonest ones.

:beer:

[BumbleBeeDave]

. . . I have heard so many horror stories about PayPal that I pay only with checking account and have an account earmarked for that purpose. It requires $25 to keep the account open at the bank and that's how much I keep in it. If I take in funds via PP I transfer them out ASAP and if I want to buy something I don't put $$ in there until I need to pay.

Yes, Paypal also has a CC number because they only let you go so long before they make you give thme one. But I never use that option and check my CC ledger regularly. I will immediately deny the charge with my CC bank if I see anything fishy.

PP doesn't give a damn if you are unhappy with them or not. They have succeeded in rigging the market in their favor and can usually do as they please. So about the only thing an individual can do is deal with them as little as possible.

BBD

[cekte]

+1 Last few posts very well said and sadly seem quite accurate.

[malcolm]

Haven't read the entire thread so I'll apologize if this has been addressed but unless you link a checking account you'll reach a point where they won't let you send funds anymore. I'm embarressed to say I hit that limit several years ago and have refused to link a checking account and therefore can no longer send funds via paypal, I can still recieve them though. If memory serves the magic number was 10k.

[tiretrax]

Haven't read the entire thread so I'll apologize if this has been addressed but unless you link a checking account you'll reach a point where they won't let you send funds anymore. I'm embarressed to say I hit that limit several years ago and have refused to link a checking account and therefore can no longer send funds via paypal, I can still recieve them though. If memory serves the magic number was 10k.
Yes, see my post at top of page. I won't use them at all, now.

[Kirk Pacenti]

You know, I was thinking of going to a paypal shopping cart on my web site... I think I will pass now.

[Germany_chris]

The cynic in me says there is no reason that these transactions can not be made instantaneously and that the only reason to 'hold' any funds is to collect interest off the $$$ they are holding. Anyone know how many billions of $$$ paypal has in escrow on any given day? :crap:

You got it!!!

I had the same argument about holding funds with them but I'm quite sure I was far less pleasant..

Then there is the ebay/paypal one company that doesn't talk to each other I had to send a screen shot to ebay from paypal so they would finally take my account off hold for refunded merchandise. It's sad really I'll probably axe both accounts I'm just too tired of dealing with them..

[friessco]

Collecting interest off the "float" is part of the paypal business model.

[BumbleBeeDave]

Collecting interest off the "float" is part of the paypal business model.

. . . exactly how much that "float" sum is on an ygiven day. I bet many millions--perhaps even hundreds of millions. They may make $100k daily in interest just off the float. They make it easy to put $$ IN your PP account but a pain to get it OUT because they want you to give them an interest-free loan!

BBD

[retrofit]

From a 2008 CNN Money article, What PayPal does with your money (http://money.cnn.com/2008/02/26/smbusiness/paypal_float.fsb/):

Any funds PayPal holds for dispersal are automatically deposited in a corporate bank account, which earns interest...[PayPal] counts interest payments on those funds as one of its revenue streams.

That's a perfectly legal practice, as PayPal is classified as a deposit broker...Paypal's user agreement...states: "Paypal may combine your funds with the funds of other Users and place those Pooled Accounts in one or more bank accounts in PayPal's name."

This applies to any user funds that are in the company's "custody." The agreement further states that accountholders "irrevocably transfer and assign to PayPal any ownership right that you may have in any interest" that accrues in these accounts.

Citigroup...approximates the interest earned on the float at "single-digit millions per quarter, and at most $10 million a quarter...All that's a drop in the bucket [relative to eBay's total revenue]

[Kirk Pacenti]

. . . exactly how much that "float" sum is on an ygiven day. I bet many millions--perhaps even hundreds of millions. They may make $100k daily in interest just off the float. They make it easy to put $$ IN your PP account but a pain to get it OUT because they want you to give them an interest-free loan!

BBD


Yes, this is what I suspect too...

[bargainguy]

You know, I was thinking of going to a paypal shopping cart on my web site... I think I will pass now.
I applaud your decision. You can always take a credit card through your website and not have funds tied up in paypal.

You may lose a small amount of business, but you also have the satisfaction of not dealing with them and thereby compromising your values.

Don

[Ozz]

From a 2008 CNN Money article, What PayPal does with your money (http://money.cnn.com/2008/02/26/smbusiness/paypal_float.fsb/):

...Citigroup...approximates the interest earned on the float at "single-digit millions per quarter, and at most $10 million a quarter...All that's a drop in the bucket [relative to eBay's total revenue]
IIRC, in 2008, short term MMA rates were around 2%, nowdays they are about 0.2% (or less).

What they earn on float is an even smaller drop in the bucket.

just sayin'.....

[lonoeightysix]

Yet some on this forum browbeat over randomly sprinkled "gift payments"???