PayPal is an e-commerce institution that provides users a variety of financial services; the majority of which are used in conjunction with parent company eBay. In early 2012 PayPal expanded an existing policy that forced eBay sellers to wait for funds from purchases for up to 21 days. There are several other policies in place that delay access to available funds for many users.
21-Day Holds for Sellers
PayPal claims the 21-day hold was put in place to protect buyers so there were no problems with orders, disputes, claims, returns and charge-backs. New sellers and people selling high-risk items such as tickets to concerts or sporting events or consumer electronics are subject to the hold. Both eBay and PayPal fees are not subject to the 21-day waiting period and are deducted immediately after buyers pay for their items adding to seller frustration.
There are several methods sellers can use to avoid the 21-day hold; direct shipping using the U.S. Postal Service, UPS, or FedEx, or payment for shipping and printing of shipping labels on PayPal. Users who meet these requirements can expect payment for goods in as little as three days after confirmation of delivery to buyers.
Delaying payments for a specific amount of time is a common practice in the payments industry, according to PayPal. PayPal will place holds on sellers based on individual seller history or selling activity, low DSR (Detailed Seller Rating), negative feedback from customers, providing inaccurate account information or a general below standard performance record on eBay. PayPal looks at seller activity periodically and makes adjustments to the individual seller’s status (hold required or instant access to funds) when warranted.
Wait Times for Other PayPal Services
There can still be a delay once PayPal releases money into an existing account. It takes three to four business days to transfer funds to your bank account and five to 10 days to request a check from PayPal. Transfers to a bank account are free, but there is a $1.50 fee for a check. Funds are available instantly (once they are released into an existing account) via a PayPal debit card and accessible from ATMs for a $1 fee. Special offers also qualify for instant, free access to available funds.
PayPal claims its hold policy is to protect buyers from bogus sellers and to stem potential losses it incurs from its buyer protection program, according to a 2012 article in Fortune. The article states that PayPal users (especially small-time sellers) are furious with the policy, and believe it is designed to keep customer funds available to PayPal (and, by extension, to eBay) to gain profits from interest on funds held, or for short-term investments that could also generate profits.
Despite all of these issues, PayPal maintains 128 million active accounts as of April 2013; 5 million new accounts were added in the first quarter of 2013.
David Powell has been writing about electronics and tech for more than 25 years and has held senior writer and content manager positions in both the retail and dot com sectors. His work has appeared in "Best Buy Mobile Magazine," "Game Day Magazine" (official program of the NFL) and newspapers nationally.