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Why is PayPal holding my money?

What you should know about payment holds placed by PayPal

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Why is PayPal holding my money?

It can be frustrating to find your funds locked up in PayPal's vaults. Here's what to know about what's going on.

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Sooner or later, many eBay sellers find that PayPal places a "hold" on a buyer's item payment. Holds can be disconcerting. After all, one eBay strength that keeps many smaller sellers on eBay as opposed to competitors like Amazon.com is the fact that in most cases funds can be accessed relatively quickly after a sale on eBay.

But suddenly you've discovered that after a recent sale, you don't have access to your funds after all. What gives?

Some Basic Realities

Before you let frustration completely engulf you, there are some basic things to know about PayPal payment holds that can, in some cases, soften the blow:

  • It's not necessarily about you. Payment holds can happen even to sellers with a perfect feedback and delivery record and an eBay membership that dates back years or even more than a decade. A hold does not mean that eBay is about to suspend you or that you're on a "blacklist" of some kind.

  • It's not forever. Payment holds last no longer than 21 days, and in some cases they may be shorter than this—holds can be lifted along the way as the status of the item is updated (when it's marked shipped and a tracking number is provided, for example, or when the tracking number reports delivery, or when the buyer leaves feedback for you). So the longest your hold is likely to be is 21 days and in most cases it will be shorter than this.

  • It needn't prevent you from shipping. If you're a smaller, intermitted seller that tends to use your PayPal balance to pay for shipping, a hold doesn't mean you'll have to go "out of pocket" to pay to complete your transaction. You can still use the eBay shipping tools to print a shipping label with a major carrier from your PayPal balance and the hold won't apply (you may have to wait a few hours for the exception to kick in, but within a day, you should be able to pay for shipping through eBay).

  • Your buyer doesn't know. The fact that the payment has been held is not relayed to your buyer, so there's no reason for this to affect your professional persona or reputation. The hold is known only to yourself and to PayPal.

Knowing these things doesn't necessarily alleviate all of the frustration that a hold can cause. Even if you didn't need access to the funds right away, just finding that a hold has been placed can ruin some sellers' days.

But if it's not about you and it's only temporary, why has it happened? What is PayPal doing?

Reasons for Holds

In general, it's not possible to know all of the reasons for a hold, and it's likely that the decision wasn't made entirely by humans. When a hold is placed, eBay and PayPal are basicall engaging in a kind of risk management on their end; they want to make sure that funds are readily available in case a refund has to be issued, and want to give the transaction time to play out before the funds are released to you.

Here are some reasons that a hold might be placed:

  • It's just a risky kind of item. Every seller knows (and in fact many sellers complain that) some categories on eBay are particularly subject to fraud and poor seller behavior. Classic examples are areas like hot consumer electronics and phones, tickets and gift certificates, and categories in which fakes and counterfeits are common. Many more holds are placed for items or categories that have been problems on eBay's end (as they deal with dissatisfied customers) than for items or categories that are relatively trouble-free.

  • You're acting out of character. As an eBay seller, eBay tracks more or less how much you sell, what sorts of things you tend to sell, and how your transactions have gone in the past. If as a seller you suddenly begin to sell in ways that are unlike your past activity (lots of sales in a new and risky category, for example, or suddenly moving from low-end items to high-end items with high prices), PayPal may place a hold for a period of time to ensure that you really are you—that your account hasn't been stolen by a scammer that is using your feedback record to support fraudulent sales.

  • You're relatively new to eBay. If your selling history is somewhat limited—just a few items sold so far, for example—and the listing is relatively high in value or in a relatively risky product area, PayPal may have placed the hold as a precaution until they have evidence that the transaction has gone well and (to put it bluntly) they can tell that "you know what you're doing," so to speak.

  • You're spending differently. If you regularly use your PayPal account to make payments, whether online or with a PayPal debit card, the hold may not be directly related to your selling activity so much as to your payments activity. If you're suddenly spending a great deal through PayPal, shopping in a large number of new places at once or in online areas that you haven't before, or suddenly using the debit card far away from home, holds may be placed on selling revenue until PayPal is able to determine that someone hasn't stolen your PayPal account—an action similar to the ones that banks take with credit cards.

  • Your recent history is troubled. If despite your best efforts you've recently had some trouble as a seller, earning an unusual number of negative feedback or poor detailed seller ratings or have experienced some fulfillment delays or customer dissatisfaction issues that eBay has become aware of, PayPal may begin to place holds on transaction funds until it's clear that transactions have been successfully completed.

Even with this knowledge, sometimes a hold can seem like an act of nature, unrelated to anything you can think of. At times like this, it may not make you feel better to know that somewhere deep in the bowels of eBay and PayPal, some kind of statistical calculation has decided that your transaction is a risky one and the funds ought to be held.

Most of the time, sellers would prefer that holds not happen at all. And in fact there are a few steps that you can take to prevent them.

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