PayPal is making some changes to its User Agreement that will be effective for all PayPal users on July 27, 2017. One item that may be of concern to users:
"We're updating the "Payment Methods Used" section to clarify that, for pre-approved payments, if you have money in your PayPal balance, your PayPal balance will be used first and your preferred payment method will be used for any remaining amount due."
We asked PayPal, "If I pay for an item on eBay or a retail website, will PayPal now automatically use my PayPal balance first? What is (and is not) a pre-approved payment?"
In response to our inquiry, a PayPal spokesperson explained:
"To clarify, for "pre-approved payments" which are billing agreements, PayPal will use balance first. Pre-approved payments are when a customer stores PayPal as a payment method at a merchant's site (i.e. to pay for your Netflix subscription).
"For all other typical purchase transactions, such as eBay, we will not use balance first if you have a preferred payment method. Even if you do not have a preferred payment method, we will still show you all of your payment methods and you get to choose. We do not automatically use balance first."
Recurring billing - such as subscriptions - can sometimes give rise to surprise (and unwelcome) charges. Someone posted a guide
on LinkedIn on how to check with which companies you've entered into pre-approved payments using PayPal.
There are 3 other changes to PayPal's new User Agreement as well. You can see a summary of the changes to the PayPal User Agreement here
, and copied below:
1) We are adding terms for a new faster withdrawal option. If your debit card is eligible to receive faster withdrawals from your PayPal account, you will be provided the option to use it when you transfer money out of your PayPal balance. The transfer will be subject to a $0.25 fee, which will be deducted from the amount of the withdrawal.
2) We are advising sellers that that they may receive payments through their PayPal Account from customers that use their Venmo accounts. The transactions will be subject to Venmo's purchase protection program (which is similar to PayPal's purchase protection program).
3) We are updating the "Payment Methods Used" section to clarify that, for pre-approved payments, if you have money in your PayPal balance, your PayPal balance will be used first and your preferred payment method will be used for any remaining amount due.
4) We are clarifying our rights that apply when your PayPal account has a negative balance. If you continue using your PayPal account when it has a negative balance, you authorize PayPal to combine the negative balance with any debit or transaction sent from your account when that combination is disclosed to you in advance of initiating the debit or transaction.
PayPal encourages users to review the Policy Update and familiarize yourself with the changes that are being made. "If you do not agree to the amendments, you may close your account before July 27, 2017," it states.