There are more than a few reasons to love PayPal and what it has to offer, but there certainly are a few areas that could use improvement.
Just like with any new and innovate technology, PayPal has its fair share of critics and for good reason.
There have been a number of people coming out to complain about the online payment system due to reasons ranging from poor customer service experiences to a history of account freezes.
Here are some of the points you should be aware of when using PayPal payments.
PayPal Can Limit Your Accounts and Freeze Your Funds
There have been a few cases where a customer updating their information on a PayPal account has resulted in limiting that customer’s account activity and access. PayPal account holders have complained about getting stuck with a frozen account in earlier years. A frozen account can neither make transactions nor change account information. A frozen account cannot be deleted either, so it is sort of just exists in a suspended state until PayPal decides to take action.
On top of that, a frozen account will cancel any transfer of funds between your PayPal payments account and your bank. PayPal tends to freeze your funds if your account is in a limited-use mode, which is usually the case due to a breach in account security or an ongoing dispute over a transaction.
Be careful with the funds you place in your PayPal account. Taking your account off the “limited” status can be a frustrating process, especially when PayPal requests a formal application to appeal your case.
In some cases, going through an appeals process is necessary to reactivate a frozen PayPal account. The process can be tedious since there are a number of documents requested to prove your identity including a passport copy.
Additionally, customers have experienced account closures if an appeals process results in a rejection. PayPal can respond to appeals in short time spans such as within an hour. There is little that can be done if a closure has been set on a frozen account. Medium.com offers a story about such an experience, where an account went from “limited” to closed.
PayPal Might Surprise You With A 90 Day Rolling Reserve
A rolling reserve basically means that PayPal will hold back a certain percentage of your funds received and then release the funds to you after the 90-day hold period elapses. This hold on your funds is to help cover potential financial risk, according to PayPal. Some examples of risk would be payment reversals like chargebacks and claims.
More than a few online forums have members who have taken aim at PayPal payments. These forums are filled with examples where PayPal has supported buyers over sellers when it comes to settling cases of chargebacks and claims. While PayPal continues to defend its position of being a fair middleman, there is a history of merchant complaints that can be seen on various review sites.
Determining whether to put a reserve on your account depends on a number of factors. Here are some of the factors to consider.
Have you had a smooth transaction history on PayPal and other payment service providers? PayPal monitors your transaction record for any bounced payments and other discrepancies in moving funds.
Additionally, PayPal may also penalize you if your account has a history of customer claims against your service. The payment service provider crunches the data on how often dispute claims are filed against your account as well as how often those disputes are settled congenially.
Does your professional industry have a higher likelihood of chargebacks or refunds? PayPal invests time in making sure that your job and future will not factor in as a risk to the payment service provider.
If PayPal is completing a background check on you then there is a strong chance that your account has a reserve. In some more risky cases, the account is placed on a “limited” status where transactions are frozen until an appeal is filed with PayPal.
A poor credit history can lead to a higher reserve. But in the worst-case scenario, a poor credit history can lead to a complete closure of a PayPal business account. This depends on how much risk is associated with your business services.
Poor Customer Service Lines
Users have complained about their PayPal customer service experiences repeatedly on both the buyer and seller sides. Trustpilot, a site that publishes reviews for online businesses, has gathered a little under 5,000 reviews where over 50% of the reviews put PayPal’s service at the lowest star level. This has been the case on other review sites too, but there are some exceptions.
A PayPal payments review depends on the categories that make up how a review site is judging its content. Some review sites have given PayPal excellent ratings. However, PayPal payments scores poorly on review sites where a customer service category is considered heavily in the overall review.
Examples of poor customer service have included mishandled merchant claims, mishandled client transfers, complicated claims process, and far more. Many complaints have mentioned PayPal’s lack of transparency and communication when it comes to dealing with customer account issues.
Merchants Have A Hard Time Defending A Claim With PayPal
PayPal has a tendency to side with buyers over sellers when it comes to them being the payment pipeline. Merchants have had a hard time arguing their case with PayPal in the event of transaction complaints between buyers and sellers. This seems to be a common trend online as there are many blogs and articles posted on payment system biases.
Amazon’s seller forum offers an article on a botched transaction of a Louis Vuitton handbag. The seller shipped the bag to a buyer who posted a complaint about not receiving the package. PayPal canceled the transaction, but the seller did not get her handbag back. PayPal outlines its process of deciding on the transaction in the event that a complaint is filed. Most disputes fall under three categories – Items Not Received, Significantly Not as Described, and Unauthorized Transactions, according to PayPal.
When a dispute is filed, the online payment service holds the money for that transaction until the dispute is settled. Once a decision is reached, the funds will either be distributed to you or given back to the buyer. Merchants have a window of seven days in which to respond to a dispute and explain the situation as well as suggest a way to resolve the issue. Both, the seller and the buyer, have 20 days to sort out the dispute or move forward with a claim, which is outlined in PayPal’s dispute policies.
These disputes are common occurrences but escalate in different ways. In fact, the occurrence of paused or canceled transactions due to dispute claims happen often enough that there are multiple articles posted about next steps to take in that event. Review sites have also begun outlining these articles on next steps in their PayPal reviews like the review on cardpaymentoptions.com.
A lot of articles are directed at merchants, whether service providers or otherwise, who have lost money and goods over disputes that escalated to claims and chargebacks.
Some People Don’t Like PayPal Payments
While PayPal payments are a popular method of handling financial transactions, there is some risk associated with keeping PayPal around a long-term business tool. The online payment service may lose customers over security and lack of communication issues. It is important for account holders to be aware of the risks in using PayPal payments for large transactions.
It also may be a good idea to consider the amount of funds you hold in your PayPal account. There is a chance your funds may be placed in reserve by the online payment service if an account’s activity is considered risky. Make sure that whatever is available in your account is worth risking, especially if there is a strong chance that you may face a dispute leading to a freeze on your assets.