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Coping with PayPal Payment Holds

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Erika Garnica, eBay PowerSeller and ex eBay Top Seller account manager, explains how to avoid Paypal holds.

Although PayPal has become a common and thoroughly entrenched aspect of selling on eBay (indeed, on the internet in general), there are many aspects of PayPal that often confuse sellers. One of the most confusing and frustrating of these is the policy of payment holds.

Hopefully this article will be able to shed some light on PayPal's payment holds policy, and provide you with some suggestions on how best to operate successfully and profitably within the confines of the policy, and how to minimize any negative impact it may have on you.

When the policy of PayPal payment holds was introduced a couple of years ago, many sellers were very upset about it. Like many other changes that were introduced during that time, many sellers felt it was meant to be an insult to them, when in fact it was meant to help sellers by bringing more buyers to eBay.

Since that time, payment holds have indeed since proven to be a huge benefit in terms of bringing buyers to eBay (or back to eBay, as the case may be). And isn't that what we all want, more buyers? It inspires great trust in buyers and persuades them to purchase more items on eBay, since they know PayPal won't release the funds to the sellers until it's clear they have received their items.

When you really think about it, any seller who is honest and deals fairly with his buyers should have no problem with PayPal payment holds. And when you realize how quick and easy it is to get the funds released to you, as well as how to avoid the majority of payment holds, it shouldn't be a matter of concern.

In short, the best way to handle PayPal payment holds is to focus on and pursue the best and fastest ways to get the funds released to you, as well as how to avoid most payment holds in the first place.

How to Get PayPal Funds Released

First, if you ship your items yourself, from your own inventory, the best thing to do is to print your labels directly from eBay. That way your tracking numbers will immediately and automatically be linked to their corresponding PayPal transactions, and in just about every case, PayPal will release the funds to you within 2-3 business days after the items have been received.

And even if you're dropshipping items, it's almost as easy to get the funds released to you as well. As soon as you receive a tracking number from your supplier, immediately upload it to its corresponding transaction in PayPal (there's a button to do so next to the transaction record in your Transaction History), and the same process applies -- within 2-3 business days of the buyer receiving the item, PayPal will release the funds to you.

It's hard to imagine a situation in which you wouldn't be able to do at least one of these two things, but in the rare case that neither option will work, you can be very assertive without being pushy and contact your buyer the day after they

should have received the package (give them at least a day to check out the item, please!), either via email or phone, and ask them if they're happy with the item and, if so, if they might be willing to help you out by going ahead and leaving positive feedback for you.

If none of the following occurs, PayPal will release the funds after 21 days, provided the buyer hasn't filed a dispute regarding the transaction. But obviously, 21 days is quite a long time to wait for a payment from a buyer, particularly when you've already sent the item, so that should never have to happen.

How to Avoid Payment Holds

The next facet of coping with PayPal payment holds is learning how best to avoid having them placed on your payments in the first place. There are two components taken into account in this matter -- your status as a seller and the items which you sell. Although one or two factors within these two areas are out of your control, fortunately, most of them are completely under your control:

Seller Status

Here are the elements of your status as a seller that help determine whether or not PayPal will hold any of your payments:

  • How long you've been selling on eBay (i.e. less than 6-12 months)
  • Your overall Feedback score (i.e. less than 100, high rate of negatives/neutrals)
  • Few DSRs (Detailed Seller Ratings), specifically less than 20 in the past 12 months
  • Low DSRs, specifically 1s and 2s (compared to your total number of DSRs)
  • High rate of buyer disputes (compared to your total number of transactions)
  • Inaccurate or incomplete account information
  • Inconsistent payment activity (i.e. you normally receive $100-300 in payments per week, and all of a sudden receive $5000 in payments in one week)

Items You Sell

Here are the factors PayPal considers in regards to the items you're selling on eBay:

  • Sudden change in products (i.e. you've been selling in the Baby category for several years, and then all of a sudden, you start selling capital equipment in the Business & Industrial category)
  • No established history selling products in that category (whatever the category may be)
  • Selling products in a "high-risk" category -- Tickets, Travel, Gift Certificates, Computers, Consumer Electronics, Cell Phones, etc.

Obviously, at some point, every eBay seller meets at least 2 or 3 of these criteria. The good news, though, is that PayPal judges each case on an individual basis, and just because you may meet 1 or 2 of these criteria doesn't necessarily mean any or all of your payments will be held.

As a final note, many sellers are under the mistaken impression that this policy indicates eBay's preference for larger sellers and/or discrimination against smaller sellers. This is absolutely untrue. You might be surprised to know that there are hundreds if not thousands of high-volume eBay sellers who are subject to PayPal payment holds and have their payments held on a regular basis.

About the Author: Erika Garnica

eBay User ID theauctionguru

eBay Powerseller and Top-Rated Seller

Former eBay Top Seller Account Manager

Category: Bank

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