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Wed Oct 17 2007 11:49:56

PayPal Rolls out Payment Review

By: Ina Steiner

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I spoke to Jeff Clementz of PayPal on Monday to dig into the new Payment Review feature a little more now that it's rolling out on eBay (see this article from last Friday).

First a bit of background - Jeff explained that eBay sellers are currently notified whether a PayPal payment is eligible or ineligible for Seller Protection. (Sellers can choose to reject payments that are ineligible for Seller Protection.)

If PayPal puts a hold on a payment through the new Payment Review process and then deems it is okay, it is then eligible for Seller Protection. As long as a seller follows the requirements (including sending the package with tracking), the transaction will be covered 100 percent from "unauthorized buyer fraud," which Jeff says is synonymous with Seller Protection, which protects against stolen credit cards or bank accounts.

My biggest question was about the gap between the time the seller is notified of a payment and the notification that that payment is under review. Especially now with the pressure on sellers to get items shipped right away due to Detailed Seller Ratings, I could envision that sellers might send out packages and *then* receive a notice that the payment was under review. Jeff said that the notice of Payment Review would be sent to sellers within seconds, or as long as 3 - 4 minutes, of the transaction taking place. Toward the middle of next year, the payment notification itself will indicate whether the transaction is under review or not.

Regarding messaging to the buyer to inform them that it is PayPal holding up the transaction and not the seller, Jeff said because they don't want to tip off the fraudster, they won't immediately email the buyer. As part of doing the investigation, they will call buyers most of the time to see if they had made the purchase. That call would be made within the review time window, which PayPal published as 24 hours, but Jeff said is expected to be closer to 4 - 6 hours.

Jeff said currently PayPal will not notify buyers whose transactions are found to be okay to let them know it was PayPal that held up the payment process. He said PayPal takes the issue very seriously due to seller feedback issues, and they will monitor it closely with eBay's feedback team. But ultimately, Jeff said, sellers need to make a risk decision - "it's really a seller's risk-mitigation choice." (In other words, you can still choose to send the package, even though PayPal identifies the payment as high-risk.)

If the buyer gets a call from PayPal, will they realize that is why the seller is delaying shipment? And what about cases where the buyer doesn't get a call, even if it's a small percentage? I'm not surprised to see sellers were concerned over the lack of communication with buyers over delays, but we'll see if this is a significant problem as the program rolls out.

Jeff said he does not expect a lot of negative feedback resulting from Payment Review "because most of these reviews will be completed so quickly. We wanted to get this feature live because we think it will materially reduce the level of fraud."

I'd love to see PayPal publish statistics on how many false positives are caught in Payment Review as it rolls out.

PayPal is rolling out Payment Review in a limited release, and is not applying it to transactions that come through third-party software and shopping carts (transactions using the API or IPN), so there is no need for concern about it possibly breaking integration and carts. PayPal felt it was too risky during the holiday season and will work with the developer community to roll out Payment Review for their tools in 2008.

Jeff wanted to make a final point: if a transaction clears Payment Review, PayPal will cover unconfirmed addresses if it is the address PayPal tells you to send the item to.

I'll use the comment feature if I learn anything more, and please feel free to post your experiences with this brand new Payment Review process.




Comments (11) | Permalink

Readers Comments

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: Sun Kim

Wed Oct 17 13:10:15 2007

Glad Paypal is offering this transacton review service. Google Checkout has been offering the same service since its inception, but they've been awfully slow sometimes in notifying sellers that a transaction is questionable. Sure, there may be some casualties from e-mail not being a 100% reliable technology, but it works for me 99.9% of the time. :)

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: Boston ebay seller

Wed Oct 17 13:51:04 2007

What happens to digital items?!  I sell some small $ items this way.  An item is delivered immediately after paypal payment.  Ebay controls delivery, not me.  That's the whole attraction; 24/7 automatic fulfillment.  Any ''hold'' must block electronic delivery.

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: jsicolts

Thu Oct 18 06:14:39 2007

What a total waste of time and ANOTHER heavy handed way for eBay and Paypal to make extra money on the sellers. What paypal is proposing of course is a CRIME in New York State, since with holding payment, unless YOUR A A FDIC Bank is unlawful.
SELLERS should determine if the funds are legit, not paypal.

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: clearance

Thu Oct 18 08:39:03 2007

My funds were reversed twice this past year alone about 3 days AFTER I shipped an  item. I was told by PayPal payment was made from a CONFIRMED address. I hope their new ploy works to protect sellers. Buyers get plenty of protection and then some.

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: Peter Leeflang - CEO Leeflang Archive Corp

Thu Oct 18 12:08:48 2007

If Paypal really wants to help, they should allow sellers to REQUEST a payment review with unconfirmed addresses. They can even charge extra money with that, so it does not get abused, but only used with cases where there is serious doubt about the buyer.

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: firemeg

Fri Oct 19 07:02:33 2007

eBay is finally catching up to rival Google Checkout.  Way to go.

Anyone who thinks this is a bad idea has never been a high volume seller or never had a Paypal reversal because of a stolen credit card.  Two times in one year Paypal issued a reversal - both times they took our money over a week after the item had shipped.  So we as sellers were out the item, out the money, and out the listing fees, and out the money we spent on the product originally.

Since moving off eBay onto our own ecommerce sites, we have used Google Checkout.  So far for us it has worked properly and most of the time issues the approval within an hour, sometimes a bit more - sometimes less.  But, it has already saved us hundreds of dollars over Paypal, because twice it flagged stolen CC's and canceled the transaction.  If we had been using Paypal in those cases, it would have been a week or more until we were notified and we would have lost even more money.

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: jsicolts

Sat Oct 20 04:58:20 2007

True firemeg, what you stated above, sad, but true.

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: Chris

Tue Oct 23 09:07:01 2007

I had my first transaction held the same day this announcment came out. Showed up just like a normal dispute does with options to let PP know if I had shipped the item already, had not shipped, was in communication with the buyer or had already refunded the buyer. I didn't quite understand why they wanted to know if I already shipped it since I had not been paid yet. Are there sellers that would do that? I answered that I had not shipped... that was 2 days ago and payment is still in the held state.

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: Chris

Fri Oct 26 12:04:39 2007

Can you believe this transaction is still pending? (see my comment above) Six days and counting. Now is the buyer allowed to leave me negative feedback on this even though Paypal is the one holding the money?

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: Kris

Wed Oct 21 14:54:17 2009

This PayPal review process is garbage.

I dont ship items, I submit invoices to clients to pay using PayPal so I can process credit cards.

Yet they review based on seller protection anyways.  I have had a billionaire's credit card go under review (Platinum VISA with $500k limit), they entered the transaction 10 times it was consistently declined.

Another client called them to say what the hell is going on why are you declining my card and then they said sometimes just put it through in a day or so and it will go through - he did and then they put it under review.

The idiot agent had no idea at all what PayPal does in the review process whether it's electronic or by telephone.  I offered to give him my client's phone number to call and confirm the transaction and he refused.

This is the third client (my clients are all businesses) who has had problems with my PayPal process since they've implemented this garbage.  I've never had a single chargeback on my account or fraud issue as I only do B2B.

I'll take the money now over their stupid seller protection policy any day.  If my clients money doesnt come through, then I just wont deliver their website.  Their protection policy is useless to me.  

I wish I could opt out because this is dumb.

PayPal Rolls out Payment Review   PayPal Rolls out Payment Review

by: Jason

Fri Nov 13 13:32:07 2009

I too develop websites and use PayPal as a method for allowing my clients to pay with their credit cards. I have been waiting for 2 days for a payment made with my clients company platinum card that has been placed "under review" that was supposed to be done within 24 hours.



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