|Sat Mar 10 2012 17:27:59|
eBay Attempts to Explain PayPal Holds and Floats
By: David Steiner
In a rare Saturday announcement, eBay VP of Merchant Development, Michael Jones, posted the company's response to some pervasive questions merchants have asked over the years relating to the holding of funds by PayPal. Jones' announcement references a post on PayPal's Blog by Ed Eger on February 28th of last year.
Eger is general manager of PayPal North America. In Eger's blog, he explains why certain merchants experience the holds, while other do not:
In order to maintain the strength of our business and keep our costs low, we’ve had to evolve some of the ways we manage merchant risk. This does not mean we have unilaterally tightened credit across our entire merchant base. Instead, we are selectively addressing a small fraction of the highest risk merchants in our portfolio—merchants who we believe may struggle to meet their commitments to their customers.
Some of the more interesting points of Jones' post are:
When sellers experience a hold, we want to help them get access to their money as quickly as possible. That’s why we ask sellers to ship their items quickly and provide tracking information. In the vast majority of these cases, when sellers follow these guidelines, their money is available within 3-6 days. Longer holds may apply if best practices aren’t followed or if there are other buyer claims that haven’t been resolved. Although most of our sellers deliver their items quickly, our policies are intended to make sure that this happens consistently, and that buyers receive what they paid for.
And concerning the belief that PayPal earns money on the interest "float:"
We’ve also heard some speculation that eBay and PayPal are requiring sellers to hold money in their accounts so that we can earn interest on the funds. This couldn’t be farther from the truth. PayPal has always stored balances (including held balances) in FDIC-insured bank accounts, which earn a modest interest rate. To eliminate any confusion with our customers over the intent of our policy, we have decided to move the equivalent amount of money of our total “held balances” to a non-interest bearing account.
The timing of eBay's announcement about seller holds comes one year after PayPal's blog post. Three months ago, we wrote about this issue - see our report here. Perhaps eBay's post is in response to regulators taking a closer look at PayPal's practices?
The full eBay announcement can be read here.
|Comments (49) | Leave Comment | Permalink|