PayPal Disadvantages

PayPal is an online banking system that allows users to purchase things online without providing their credit card information to websites. The system also allows users to receive email money transfers for freelance jobs, friends or people buying things from them online. Although many people use PayPal daily, it is known to have some disadvantages.

New users, especially the users who are planning to use the PayPal account to conduct business, are asked to verify their account. This can be done via credit cards or bank account information. As a user, you do not give vulnerable information to PayPal, but simply confirm the small amounts that PayPal will send to your account. Failure to verify your account can lead to account freezing or payments being put on hold.

When a payment is sent to you via PayPal, it is not immediately directed to your bank account should you choose to transfer the payment. It often takes five to seven business days for PayPal to transfer your money to your bank account. This is a disadvantage, as payment is sometimes delayed up to a week or more.

Should you choose to transfer your money from your PayPal account to your bank account, PayPal requires a transfer fee. The fee is $.50 per transaction as of October 2010 and is less noticeable on larger withdrawals. It is, however, a disadvantage on smaller transactions.

Users who primarily use PayPal for business services are at risk for having their payments put on a temporary hold. PayPal can decide to hold payments based on a user’s account, the frequency of transaction activity, the business being conducted on the account and disputes or complaints PayPal may have received regarding the user. According to PayPal’s website, holds are most commonly placed on users who have limited selling activity, high-risk category merchants and users who experience performance or buyer dissatisfaction issues.