
PayPal Rewards Some Users by Promising It Won't Hold Their Funds - iProject
http://thenextweb.com/insider/2012/09/12/paypal-emails-users-change-policy-will-longer-temporarily-hold-funds/
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ComputerGuru
This is going to be a largely unpopular opinion here, but PayPal actually
works really hard to limit fraud. They froze my account and "robbed" me of
around $2,000 dollars (and I complained about it here) maybe 2 years ago,
holding that cash for around 8 months until I got them all the paperwork they
needed (it had to do with a non-501c corporation accepting donations).

But when you suddenly start making _real_ money, the game completely changes.
You start getting personal phone calls from real people, you have actual phone
numbers that you can call, they contact you at your cell phone, and they tell
you things like "Due to rule xyz, we would technically have to freeze your
account, and the next time you log in, you'll message saying if you don't
provide information a, b, and c, you'll get locked out of your account; don't
worry, that's not going to happen, but please work with us to determine what
we can do to meet our technical requirements for donations coming in to non-
profit organizations" and "We've been noticing customers filing chargebacks,
however we do recognize that your chargeback rate is far below the usual x%
[I'm not allowed to disclose this number] so we'll just front you the money
until we rule the dispute; we also noticed you're no longer bothering to
dispute the chargebacks, is there a particular reason? Is there something we
can do to help you improve the process?"

You get personal phone calls like "We noticed your sales volume this month has
dropped by x%, is there something we can do to help?"

Basically, I have come from hating PayPal and searching desperately for an
alternative, to recognizing that they are doing their best and working very
hard on a very difficult problem. I have worked with startups that are loved
here on HN that have tried to solve the same problems, and I must say that
though I was initially impressed with their work, they did not know what they
were getting into, and I now actually prefer that my customers check out via
PayPal than via my credit card processor alternative that I initially set up
to spite PayPal (but, of course, it's important to have both PayPal and a
traditional credit card processor for checkout).

EDIT

Yes, of course. Downvote me for providing some insight that puts PayPal in a
positive light. How dare I.

~~~
iProject
> Due to rule xyz, we would technically have to freeze...

This leaves me wondering, how clearly are PayPal's rules spelled out (I've
just avoided PP like the plague, since I can) to help merchants avoid gotchas?
Are freeze-worthy violations presented boldly ...or only buried in tiny TOS-
like legal documents?

~~~
InclinedPlane
These are not just paypal's rules, but VISA/MC/national government rules and
laws.

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dangrossman
PayPal's had for years a policy of not holding funds of well-established
accounts with a good history. Either this is a broadening of that policy to
more accounts, or a PR move to get more people to know about it.

This text has appeared in my chargeback notices back to at least mid-2010:

> Usually, when a buyer files a chargeback and the card issuer reverses the
> charge, we temporarily hold the funds until the issue is resolved. However,
> because of your low dispute rate and consistent sales volume, we're allowing
> you access to the funds while we investigate the chargeback. We want to
> extend this courtesy to our valued customers, because we know how
> inconvenient it can be to have your funds held.

<http://i.imgur.com/a35fP.png>

~~~
nhebb
A week ago I had funds held for a dispute and received this message from
PayPal today. So it is a policy change, not just a PR move.

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MBCook
That could easily be an Onion headline.

I hope they continue with this. They were the only game in town for so long
(short of getting a full merchant account) that they didn't have to bother to
fix these kinds of issues.

------
dchuk
I got one of these notices today.

I'm also migrating my product over to Stripe for all new accounts moving
forward in a couple of weeks.

I know those two events aren't connected in any way, but I wonder if they're
starting to feel the heat a bit now that there are more viable alternatives
out there for easy subscription payment collection...

~~~
joelrunyon
I'm using stripe & paypal for a new project. Absolutely LOVE stripe, but
there's about 40% of people who prefer paying with paypal so I keep it around.
Really nice to not have to rely on it anymore though.

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mparlane
So much for just "PR talk" eh? Sounds like fixes are on the way. It's a start.

~~~
Empro
Looks like this new president knows what he's doing. He may just end up
stopping a wide-scale desertion.

~~~
yuhong
I was thinking that looking for CEOs from alternate sources is a good idea for
a while now.

~~~
michaelt
Is it the new CEO, or is it that Stripe means Paypal actually have some
competition?

~~~
jtheory
Both, I imagine.

Though Stripe isn't _yet_ a viable competitor for lots of businesses, because
they haven't sorted out the international thing at all yet, but they're
working on that (as PayPal well knows).

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lincolnwebs
For certain people in certain circumstances, they won't do the gobsmacking,
business-killing thing they've been doing. It's not so much a step in the
right direction as just tilting their head toward it.

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Lasher
I didn't get one of these emails, does that mean that Paypal are going to hold
even more of my funds to cover the increased risk? Ouch :)

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mzuvella
'Won't hold their funds' is a reward? That should be the standard.

~~~
dangrossman
That's not how chargebacks work and even PayPal doesn't have the ability to
change that system. When someone charges back a PayPal payment, the funds are
removed from PayPal's bank account and deposited to the cardholder's bank
before PayPal even gets notified.

Their allowing you to keep the payment until the dispute is decided is
actually PayPal floating you a loan on faith that if you lose the dispute, you
won't have disappeared along with your balance to reverse it then. Of course,
for disputes only within the PayPal system, PayPal's a bit safer not
immediately reversing the payment.

~~~
dsrtvnvc
Then why there isn't any opposition to chargebacks?

In Europe we just use wire transfer for all electronic payment. It's instant
and free. There is no such thing as chargeback.

~~~
dangrossman
Consumers want chargebacks. They let you get your money back when you get
scammed or your payment information is stolen. Does that never happen in
Europe? Nobody ever takes your money then fails to deliver the
product/service? You never have your information stolen and used to pay for
something you didn't authorize?

~~~
dsrtvnvc
>Nobody ever takes your money then fails to deliver the product/service?

Just call the police?

On auction sites there is also insurance.

>You never have your information stolen and used to pay for something you
didn't authorize?

How? They would also need your bank account password and sms token.

~~~
dangrossman
Please don't play dumb; it's not the appropriate level of discourse here. Is
your police department going to open an international investigation into how
many USB cables a Canadian company shipped or didn't ship to you? You know
that realistically, if you wire money to an account of someone untrustworthy,
you have no recourse at all. There's no guarantee there's even an account on
the other end to recover money from.

With credit cards, millions of people pay millions of merchants they have
never done business with before while completely protected against fraud. The
chargeback dispute process is completely international; the burden of proof is
on the merchant no matter where in the world they are. And the protection is
guaranteed for months, even if the merchant has disappeared.

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46Bit
This is how it should work. This is why people try to make friends with their
bank manager: the working relationship helps the bank know who the hell
they're dealing with, and so means they can communicate better and have
goodwill. That PayPal should do the same is, if anything, good.

------
InclinedPlane
Cue people whinging about a system they know almost nothing about.

Why are there so few true paypal competitors? Because paypal makes it so
difficult to compete against them with their stellar service and low fees? No,
because it's a legitimately hard problem, and you can't really avoid doing
what paypal does while still abiding by all the relevant laws and financial
regulations.

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chris_wot
Funny how allowing customers access to their own Funds is now considered a
"reward"!

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Rulero
It seems like PayPal is starting to realise the mistakes they have committed,
and they are trying to rectify them.

Most importantly, PayPal know they are screwed. This reward isn't a reward,
it's just an absurd incentive to prevent them losing their market share. This
is just ridiculous, I don't see how liquidity of your funds is a a form of a
reward, your funds should be liquid in the first place because it's your hard
earned cash.

------
circa
ugh i'm so sick of PayPal and have been working with them for years. Its time
to bail. We currently use it mainly for foreign transactions. Time to find
something else.

~~~
jtheory
Well, let us know what you find, then -- what rates, ease of setup, currencies
supported, etc..

Regardless, I'm not sure why you'd say _now_ is the time to bail, as opposed
to any other time -- now that they're finally trying to fix some of the
problems (effectively or not TBD, of course).

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raverbashing
A players hire A players, B players hire C players

Likely or not? Maybe the new CEO just realized that and is fixing the house.

