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PayPal Explains Holds On eBay Sellers' Accounts

By: Ina Steiner

PayPal posted information about its rolling reserve policy on its blog today. Bill Clark, an analyst on PayPal's risk team, wrote, "We've heard a lot of questions from sellers about reserves, so I wanted to explain what these reserves are and why PayPal requires them on some accounts."

PayPal began instituting two types of holds on eBay sellers' accounts to mitigate risk. One is called a "rolling reserve," the other is a 21-day hold. In the blog post, Clark said it instituted rolling reserves "for a very small percentage of our sellers - currently less than 1%."

Why does PayPal institute rolling reserves? "This reserve helps to ensure that money is available in sellers' accounts to cover potential payment reversals or chargebacks if they do not have enough funds in their PayPal balance to do so. When sellers don't have the funds to cover their transaction liabilities, PayPal is responsible for reimbursing buyers which represents a significant cost in our system. We've been using reserves for some time in other parts of the business, and what we've found is that reserves help PayPal control costs so we can provide competitive pricing for all of our sellers, and continue to invest in improving our service."

How does PayPal determine when to institute a rolling reserve on a seller's account? "To determine when to place a reserve, we look at a number of factors that may increase the risk of chargebacks or reversals - things like industry categories that have higher-than-average chargebacks, or sellers who are new to PayPal (where we've historically seen a higher instance of chargebacks or reversals). We reassess risk factors periodically, and if we determine that the risk has gone down in certain seller segments, we will release the reserve."

Clark did not address the...

Read The Rest From: AuctionBytes

NewSkies · Joined: 03 Dec 2008 Posts: 272

PP is a business in which this is a risk factor for such a business type. Banks nor insurance companies hold customers' money for their risk reserves; neither should PP.

Fortunately have had no PP holds nor major problems to date, but I do consider that I have been very lucky.

2BOYSandTOYS · Joined: 14 Mar 2005 Posts: 10095 Location: Kansas

I too have not had any issues - a chargeback or 2, but I expected them as the transaction did not look right (address provided was different than Paypal address provided.

I have been of the opinion that Paypal now handles enough $$ that it should have some regulation - not certain the same level as other financial institutions - but something....

NewSkies · Joined: 03 Dec 2008 Posts: 272

2BOYSandTOYS wrote (View Post): › docWrite("quote")
I have been of the opinion that Paypal now handles enough $$ that it should have some regulation - not certain the same level as other financial institutions - but something....

I agree! Good you also have had little PP problems, however, that IS OUR (the customers/sellers) risk factor.........and WE have NOT held a reserve of PP owned $ up front! lol

elgato · Joined: 24 Feb 2005 Posts: 16905 Location: Texas

Related article:

"PayPal Holds Affect eBay and Off-eBay Transactions"

PayPal wrote about its existing rolling reserve policy on its blog on Monday because, it said, it has been receiving a lot of questions from sellers about the policy. Risk analyst Bill Clark explained:

Rolling reserves are very common in the payments industry, so some of you may have already experienced them with your merchant accounts. For those of you who are unfamiliar with rolling reserves, here's how it works. PayPal may require that a small percentage of some of our sellers' payment volume be held in their account for a period of time, sort of like a security deposit to cover future chargebacks and reversals.

Clark told AuctionBytes that the reserves apply to a very small number of sellers both on and off eBay. When asked what percentage of funds are held, Clark said, "The funds held are competitive with other leading financial services companies and are necessary to continue providing a low cost service to other sellers in our system."

more.. link to news article

dwbayseller · Joined: 31 May 2009 Posts: 7

I am losing my patience with Ebay/Paypal. For the first time I have had Paypal withhold my funds and expect me to ship the product to the customer, even though my paypal account and my Ebay account are both several years old and I have 80 Positive feedbacks (100%) most of which are from items sold not items bought. According to them the funds will be released when the customer has left me a positive feedback or 3 days after the USPS tracking number shows as delivered.

I sent them an email asking why this has happened and if I can expect it to continue and received back one of the generic canned responses.

So appearently now all a customer has to do is say they didn't recieve the item / it was not listed properly etc, and Paypal will refund them the money without forcing them to return the item. To me, this makes it way to risky to sell anything of value on Ebay because they are making it so easy for someone to rip off the seller.

I am almost to the point of giving up selling on Ebay alltogether.

sciencefare

dwbayseller wrote (View Post): › docWrite("quote")I am losing my patience with Ebay/Paypal. For the first time I have had Paypal withhold my funds and expect me to ship the product to the customer, even though my paypal account and my Ebay account are both several years old and I have 80 Positive feedbacks (100%) most of which are from items sold not items bought. According to them the funds will be released when the customer has left me a positive feedback or 3 days after the USPS tracking number shows as delivered.

I sent them an email asking why this has happened and if I can expect it to continue and received back one of the generic canned responses.

So appearently now all a customer has to do is say they didn't recieve the item / it was not listed properly etc, and Paypal will refund them the money without forcing them to return the item. To me, this makes it way to risky to sell anything of value on Ebay because they are making it so easy for someone to rip off the seller.

I am almost to the point of giving up selling on Ebay alltogether.I understand your concern.

I *think* that one of the criteria implemented in the past year by PayPal was that for certain transactions, for sellers having less than 100 feedbacks, payment would be withheld until the item was delivered and/or the buyer left positive feedback.

This is unfortunate. However, hopefully your buyer will not take advantage of the system, and all will be well.

Good luck! :)

hotandvintage · Joined: 09 Feb 2008 Posts: 1705

hopefully your buyer will not take advantage of the system, and all will be well.

How sad is that, and how true.

mojavelyn · Posted: Sat Jun 20, 2009 10:00 pm Post subject:

If your are selling hi-risk items, paypal will hold the money for buyer satisfaction.

Several years old and only 80 FB?

DaLizardsLair · Joined: 15 Feb 2009 Posts: 4782

Quote: › docWrite("quote")So appearently now all a customer has to do is say they didn't recieve the item / it was not listed properly etc, and Paypal will refund them the money without forcing them to return the item

Not true.

You give eBay the DC number of the package and when it shows as delivered, you money is released to you.

There is supposedly a way around this problem. If the item sold for a decent price, you can supposedly go into the transaction detail for the item, and refund the buyer $1 for whatever reason you want...say fast payment discount, and the remaining money is now unfrozen.

I saw that method mentioned once before, but I've never tried it to see if it really worked.

luckyalive · Joined: 27 Apr 2008 Posts: 475

LOL, I wish people would listen. I and others have been saying for years PayPal is free ticket to rip seller off. Gotta love eBay cancelling my auction for vintage computer books because they were in the high risk area of computers - I guess they were afraid the buyers were not smart enough to read the books (as they never read the listings).

Really not going to matter what your feedback is, or the item, or anything else - anyone can use PayPal and claim whatever they want. They can cancel their payment while the item is in transit (immedately after you email the tracking number). It does not matter if you have 100% proof PayPal/Ebay WILL NOT HELP YOU!

mojavelyn · Posted: Sun Jun 21, 2009 12:33 am Post subject:

Back when I was only a CS for an auction site... A fraud buyer came into the site just before Xmas...
Paid for several items, bid on several more... One seller shipped as soon as she had the money, which was the next day... as soon as it was mailed, Buyer did a reversal. I was using a jewelry drop shipper at the time. I had sent an email to her telling the ring had been ordered. I called PP and gave them the story. Told them about all the buys and bids she had done. I was asked to send them the links. Every seller got their money back. I was still in possession of my item, I had the drop ship items come to me first. The owner was able to retract the open bids... but the sellers who had shipped... got their money back... so did I. It was obvious she was committing fraud.

AND everything was recorded in PP. Payments, shipping labels and all...

So PP does have a good side... you just have to prove your case. And I was able to do it. Don't be emotional. Don't be angry. Be factual. Don't get off on rabbit trails. Present the facts. Not suppositions.

added .. Being able to send them the links, tracking her purchases and bids... was a big help. Everything being paid via paypal and they could track her there too, the purchases and the chargbacks. The sellers who used PP for shipping... proved the items were at least prepared for shipping. In my case, the ring she ordered from me, along with the same purchase and payment immediately to the dropshipper.

GTST88 · Joined: 27 Jun 2009 Posts: 1

Hi there,

I am new to the forum and have to say it is brilliant !

One thing has really worried me....this paypal rolling reserve policy.

Does anyone know is this just for ebay sales? as we take payments through their virtual terminal for direct sales out of ebay.

If Paypal held 6-10% of our turnover on a rolling basis then our business would not be able to survive!

Any replies would be really appreciated

Cheers

elgato wrote (View Post): › docWrite("quote")Related article:

"PayPal Holds Affect eBay and Off-eBay Transactions"

PayPal wrote about its existing rolling reserve policy on its blog on Monday because, it said, it has been receiving a lot of questions from sellers about the policy. Risk analyst Bill Clark explained:

Rolling reserves are very common in the payments industry, so some of you may have already experienced them with your merchant accounts. For those of you who are unfamiliar with rolling reserves, here's how it works. PayPal may require that a small percentage of some of our sellers' payment volume be held in their account for a period of time, sort of like a security deposit to cover future chargebacks and reversals.

Clark told AuctionBytes that the reserves apply to a very small number of sellers both on and off eBay. When asked what percentage of funds are held, Clark said, "The funds held are competitive with other leading financial services companies and are necessary to continue providing a low cost service to other sellers in our system."

more.. link to news article

DaLizardsLair · Joined: 15 Feb 2009 Posts: 4782

GTST88 wrote (View Post): › docWrite("quote")Hi there,

I am new to the forum and have to say it is brilliant !

One thing has really worried me....this paypal rolling reserve policy.

Does anyone know is this just for ebay sales? as we take payments through their virtual terminal for direct sales out of ebay.

If Paypal held 6-10% of our turnover on a rolling basis then our business would not be able to survive!

Any replies would be really appreciated

Cheers

elgato wrote (View Post): › docWrite("quote")Related article:

"PayPal Holds Affect eBay and Off-eBay Transactions"

PayPal wrote about its existing rolling reserve policy on its blog on Monday because, it said, it has been receiving a lot of questions from sellers about the policy. Risk analyst Bill Clark explained:

Rolling reserves are very common in the payments industry, so some of you may have already experienced them with your merchant accounts. For those of you who are unfamiliar with rolling reserves, here's how it works. PayPal may require that a small percentage of some of our sellers' payment volume be held in their account for a period of time, sort of like a security deposit to cover future chargebacks and reversals.

Clark told AuctionBytes that the reserves apply to a very small number of sellers both on and off eBay. When asked what percentage of funds are held, Clark said, "The funds held are competitive with other leading financial services companies and are necessary to continue providing a low cost service to other sellers in our system."

more.. link to news article

It CAN be for any site, but I've never experienced it. It may depend as much on what you sell, as where.

charlottemisty · Joined: 18 Jun 2005 Posts: 292

I sold an item on ebay and was paid through PayPal with a hold put on my funds. The amount was less than $10.00 but I was upset so I refunded the payment and told the buyer I could not ship the item since Paypal would not release the money. The buyer sent me a check instead because they really wanted the item. I will not send anything unless I have received payment in full. That is how I feel.