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Thu Aug 4 2022 16:25:36

Seller Hits Unexpected PayPal Ceiling

By: Ina Steiner

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Did you know PayPal has a ceiling on how much you can process through its service before it will begin instituting payment holds on your funds?

A reader who sells on eBay and on his own website received an email from PayPal a few days ago with the subject line, "Some money from your sales may be placed on temporary hold."

It informed the seller he was now "nearing the amount that will be immediately available to you from sales each month, so some money from your sales may be held temporarily."

It instructed him on how to request an increase and explained: "You can easily request that more money be available to you sooner. We'll also periodically adjust this release amount to match your business growth. And, if business is a little slower one month, the amount available to you won't be reduced."

But 24 minutes after he received the letter and requested an increase, he was turned down. The reason for the rejection: "We noticed an unusually large increase in your sales activity."

However, the seller told EcommerceBytes, he had experienced no unusually large increase in sales. In fact, he explained, "Because eBay no longer send payments to PayPal, and the simple fact I have changed my business a bit, my PayPal activity has dropped."

Included in the rejection email were some suggestions: "In general, following these ideas will help you have more money available to you." It included the following suggestions:

- Avoid long refund times.

- Ship promptly and provide valid tracking through PayPal.

- Work closely with buyers to avoid chargebacks and claims.

The seller called PayPal, and a representative confirmed his account wasn't showing problems with chargebacks, shipping times or refunds. But after the rep sent another request on his behalf, the seller received another rejection for his request for an increase.

"I am pushing to change my web site to not take PayPal at all, I'm tired of how they treat sellers," he told EcommerceBytes.

PayPal has used payment holds to manage risks for well over a decade, but as shown in this example, it can blindside sellers. In this case, there also seemed to be a disconnect between PayPal messaging and what the seller was experiencing (he said he didn't have an increase in sales activity and did not have any issues with chargebacks, shipping times or refunds).

We'd like to know if readers have experienced any unexpected payment holds on PayPal or other payment processors and if they seem justified. And if you have advice to offer, feel free to share in the comments below.

Update 8/5/2022: Updating to add that the seller had a very long history with PayPal and has been selling on eBay for 22 years.

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Readers Comments

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by: railady This user has validated their user name.

Thu Aug 4 19:31:55 2022

I got hit with what must have been about the same situation a couple of months ago.  PayPal froze money in a couple of my sales, claiming some sort of gobbledygook about sudden increases in account activity.  Absolutely nothing out of the ordinary was going on with my account other than making a couple of sales after a month or so of fewer sales. (This of course was helped along because eBay buyers no longer must use PayPal - they have all kinds of payment choices now!)

So PayPal froze funds in two of the payments in my account -- I was instructed that I had to add a tracking number for a shipped package, for the funds to be released in either instance.  

I have been using eBay, Ruby Lane and PayPal since the 1990s.  Changed to a PP business account when the venues had to start collecting sales taxes.  I see NO reason for this kind of thing by PayPal, other than o get to earn more interest on money they were keeping, before they absolutely HAD to pay it out.

The two payments involved were nickel and dime stuff - the more expensive one approaching $100.  I have never had any trouble with PP before - this really changed by viewpoint.  

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by: railady This user has validated their user name.

Thu Aug 4 19:36:06 2022

Additional thought - I NEVER use PP for anything involving shipping.  But for both transactions in which they froze fees -- for which I shipped using ShipStation -- they DEMANDED a tracking number to unfreeze the funds.  

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by: Vigilant Eye On eBay This user has validated their user name.

Thu Aug 4 21:13:15 2022

Although I have never encountered a customer chargeback and have always uploaded tracking information for shipped packages directly to PayPal, there has never been an occasion where access to my funds has been restricted in the entire 20+ years that my business account has been in existence.

With regards to PayPal account risk factors: The lack of holds on my accessible funds might also be a result of the fact that I do not accept or send ''Friends and Family'' payments and never withdraw all of the funds available in my account (i.e., never bring my account balance to zero) because they are typically spent through the use of my PayPal business debit card.

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This user has validated their user name. by: The End

Thu Aug 4 22:40:07 2022

Never Ever use PayPal.

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This user has validated their user name. by: Lightning

Fri Aug 5 01:51:25 2022

I have never had PayPal hold funds, but I know other sellers who have.  A few of us discussed it when it happened, comparing notes on whether the others had experienced holds before.  That's when we found that some of us had, some of us hadn't.  

Those who had holds found that the funds were released upon delivery.  That's why PayPal is so adamant about the tracking number - with held funds, they can't pay you if they can't follow the transaction.  

The only problem I have had with PayPal involved a 1099 that they royally screwed up, said was absolutely correct, later re-issued with the correct revised numbers and no apology.  Other than that, I have found them to be very accurate, helpful, and responsive.  

Small issues are usually fixed with an email.  Higher priority issues, I call and get very quick service.  I know there are horror stories out there, like there are for many corporations.  Just like banks, they are great until they screw up.  Then you hate them.  

My favorite comparison is one friend telling me he hates Citizens Bank, won't do business with them ever again, moved his accounts to Bank of America.  My other friend tells me he hates Bank of America, won't do business with them ever again, moved his accounts to Citizens Bank.  It's all about who was the most recent to mess you up.  Not a situation of if, but when.

Perminate Link for Seller Hits Unexpected PayPal Ceiling   Seller Hits Unexpected PayPal Ceiling

by: Snapped This user has validated their user name.

Fri Aug 5 04:07:29 2022

A pragmatic approach to tolerating corporate shenanigans is all well and good, but it doesn’t erase what a closer look reveals by it.

Endemic economic servitude.  Everybody does it, unless they can’t afford to.  Because there is nothing to stop their malfeasance, while they simultaneously justify it using unfounded accusation of the very behavior they practice.  Lot of that going around everywhere, actually.

So bend over, or stand up.  Your vote.

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by: Shanna This user has validated their user name.

Fri Aug 5 11:16:46 2022

I suggest readers look into what Paypal has done to black comic book creator Eric July, who bucked the system and created his own comic book publishing company and sold more comic books than many of the big boys. Paypal is currently holding more than a million dollars from him because they can, no other reason given.

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by: Missingcord.com This user has validated their user name.

Sun Aug 7 17:49:58 2022

We got this message as well. We no longer accept paypal. I just need to remove the logo of theirs from our site. We have been with paypal since 2007 and have processed many thousands of dollars with them . Our SNAD rate with them is like 2 or less a year out of hundreds of items. They just told us our limit per month is ( $300 ) lol. Its been fun i guess , while it lasted. We have two payment processors with no limits that we use for all our sites.  

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by: Nothingnewecrater This user has validated their user name.

Mon Aug 8 08:12:25 2022

I guess when you sell nothing,then make a sale they see unusual activity? lol

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by: Mark4 This user has validated their user name.

Mon Aug 8 11:42:04 2022

Paypal is horrible, we threw them off all of our ecommerce when they started stealing fees.  

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by: lessthanthreerecords This user has validated their user name.

Tue Aug 16 14:31:16 2022

I just had a portion of a payment put on hold yesterday. Worse yet, the customer service rep keeps changing their story about what's going on. The majority of the payment (a little over $200) was made available to me immediately, but the remainder (about $57) was put on hold. I immediately messaged PayPal to find out why and when the hold would be released. First, the rep said that the hold was due to "limited selling history". I've had my PayPal account for over 20 years and have been selling online as my sole source of income for about 12.5 years. The rep went on to say that I have instant access to $1,000 per calendar month, but beyond that, there will be a hold of up to 21 days. I replied stating that in August, I've only had two sales through PayPal, totaling less than $400. The rep then said that the $1,000 is reset on the 15th of the month (despite the fact that, in the first message, they specifically said "calendar month"). I pointed out the fact that they changed their communication in terms of calendar month vs. reset on the 15th, but also added that my gross sales between July 15 and August 15 were still well under $1000 (they were just over $600). The rep also said that a message was sent to the buyer to confirm receipt of the item, and that the funds would be released once they confirmed. The rep was unclear as to whether the buyer MUST state that it was received, or if the 21 day period still held, and the buyer confirmation is a possible way to shorten that time-frame. I added that most of my buyers receive their item and do not explicitly state that they received it. I asked what happens in that case: do I never get the rest of the money if the buyer receives their item and does not respond to PayPal's request? I also pointed out that the item sold was an art print that is going to ship rolled in a tube. So, what happens if the 21 days pass and the item is still in transit (very possible for a tube shipped via USPS)? Is the hold 21 days? Or until the buyer confirms receipt? Constant doublespeak from PayPal rep!



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