PayPal is a convenient platform for small business owners to securely collect money for their goods and services. Sometimes, PayPal will hold funds (ahy also known as hold) for up to 21 days to ensure that your account has enough funds to resolve any issues with the order. Therefore, you will need this article from PlutusPay to learn more about why and how PayPal might hold your money.
Why does PayPal hold your money?
PayPal notes that they keep your funds to ensure that their platform is safe for both buyers and sellers. Even though the money belongs to you, PayPal is temporarily not giving you access to make sure there is enough money in your account to resolve issues like refunds or disputes. Money will then be released when the buyer confirms receipt of the goods as advertised from the seller who is you.
Some specific reasons your funds may be withheld:
- Your PayPal account is inactive.
- The amount of payment you receive is unusual compared to your typical sales model.
- PayPal detects an unusual change in the sale price for a particular transaction.
- You are selling an item that the customer may not be happy with.
- You just started selling recently.
Why is your money withheld?
There are many reasons why your funds are being held by PayPal, including:
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You just started selling.
New sellers need to build credibility and transaction history with buyers. Once you have built a successful transaction record, your status may change.
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You don't sell for a long time.
Similar to being a first-time seller, if you haven't sold in a long time, you need to rebuild your reputation.
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Customers submit complaints to request refund, dispute or chargeback.
If you have been flagged by multiple customers for various issues, PayPal may delay the release of your funds. According to PayPal, the best way to fix this is to work directly with the buyer to ensure issues are resolved as soon as possible. To avoid claims, be honest about your shipping costs, item condition, and return policy. You can also set up customer service messages to let customers know if something critical – like a natural disaster in your area – prevents you from delivering on time.
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You have a dubious business model.
PayPal will flag an account for unusual activity, including a higher-than-normal sales pattern or a significant change in the type of item sold.
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You are selling high-risk items.
Examples of this type of item include tickets, gift cards, consumer electronics, computers, and travel packages – anything of high value or event related can be flagged.
How long can PayPal keep your money?
As long as there is no problem with your transaction or account (e.g. a package has not been delivered or a customer files a complaint), PayPal will release your funds within 21 days.
Ways to release money quickly
There are several steps merchants can take to help release funds from PayPal faster, including:
- Add order tracking information (Tracking). Use one of the PayPal-approved carriers and PayPal will release the hold one day after the carrier confirms delivery.
- Print USPS or UPS shipping labels via PayPal. PayPal will track your package and release the funds one day after the carrier confirms delivery.
- Update order status for non-shipping services or items. For items that aren't shipping, like e-books or knitting classes, update your order status and PayPal will release the funds within seven days.
Effective ways to avoid
To make sure your money isn't on hold, try these tips:
- Check your email. Review the email sent from PayPal with the subject “Important Notice about your PayPal balance” as well as the alert on your Account Overview page. The email will provide information about why the funds are unavailable and what you can do to avoid this situation in the future.
- Upload real pictures of the product. Avoid buyer refunds, disputes and holds by posting real photos of the items you're selling, including detailed and accurate descriptions, public shipping and handling times, costs and methods , process orders quickly, pack items carefully to ensure they reach customers in good condition, and state your return policy from the start.”
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