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EcommerceBytes-NewsFlash, Number 2856 - July 26, 2012 - ISSN 1539-5065    2 of 3

PayPal Tests Identity Verification Tied to Payment Holds Policy

By Ina Steiner
July 26, 2012

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PayPal announced Tuesday that changes would be coming to its payment holds policy, which is in place in order to move transaction risk to its sellers and merchants. By holding a seller's funds, they remain available to PayPal if it has to issue compensation under its Buyer Protection policy. PayPal releases the funds as soon as the buyer provides positive feedback, the seller provides shipment tracking to PayPal, or after 21 days - whichever comes first.

The head of Risk Management for the Americas at PayPal Katherine Hutchison said PayPal had started testing an updated policy that would immediately impact new sellers. Existing sellers may also have their payments placed on hold under the existing policy, but apparently they can expect to get no relief from the changes PayPal is testing.

"With some updated language on our web site, clearer policies and adding an identity verification process, we'íve been able to give sellers access to their money faster," Hutchison wrote. "We've also made it more clear to sellers how many sales are needed to establish a pattern of successful selling. Once that pattern is established, sellers typically "graduate" out of delayed funds availability."

She said the testing of the updated policy and process started in early July, and so far, "we're very pleased by the results," she said.

She also said it was important to note that the policy allows PayPal to "keep the environment safe for buyers, keep our pricing low for sellers and simply allows us to run our business without incurring tremendous loss."

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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