EcommerceBytes-NewsFlash, Number 1723 - February 08, 2008     3 of 4

PayPal's 21-Day Hold Policy for eBay Sellers

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eBay is taking a tougher stand with sellers with the introduction of new Seller Standards announced on January 29, 2008, including significant changes to its Safe Payments policy. Many people are familiar with the policy that limits payment methods sellers may advertise, including the ban on Google Checkout. Included in last week's announcements was news that eBay's online payment service PayPal may impose 21-day holds on transactions in certain circumstances.

eBay's FAQ about the21-day hold states: In a small percentage of cases where it has been determined the risk of dissatisfied buyers is higher, PayPal may delay release of the payment funds to the seller until the buyer has left a positive feedback or 21 days have passed without a dispute, claim, chargeback or reversal filed on that transaction.

The FAQs state that PayPal considers a number of factors in determining a whether a transaction may have a higher risk of dissatisfied buyers, including the following:

  • Seller's % Positive Feedback in the last 30 days
  • Seller's Detailed Seller Ratings in the last 30 days
  • Final price for the item
  • Shipping & handling fee
  • Seller's eBay tenure as an eBay member
  • Seller's total number of Feedback

PayPal will release the hold when the earliest of the following occurs: the buyer leaves positive feedback; 3 days after confirmed item delivery; or 21 days without a dispute, claim, chargeback, or reversal filed on that transaction. (PayPal said if a buyer leaves a negative feedback but does not initiate a dispute, PayPal would release the funds to the seller after 21 days.)

PayPal's Jeff Clementz and eBay Trust & Safety's John McDonald told AuctionBytes on Thursday that sellers who have been selling on the site for at least 6 months and have a minimum feedback score of 100 would not be affected unless their Buyer Dissatisfaction Rate for the last 30 days becomes greater than 5 percent. (See related story on Buyer Dissatisfaction Rates

Sellers posting on online forums have expressed concern about the policy. One seller wondered which party would earn interest on the funds that were being held in such cases. A PayPal spokesperson said, "Sellers who have enrolled in PayPal's Money Market Fund continue to earn interest on all balances, including pending balances. If for some reason the pending balance is removed from the seller's account, then the interest the seller earned while the balance was pending will stay with the seller's account."

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

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