Where Does All The Money Go?

Posted on August 29, 2013

Almost everyone has probably used PayPal at some point in time to either send or receive a payment, such is the almost monopolistic hold it seems to have on the eCommerce marketplace.  So here are a few thoughts on the shortcomings of PayPal, shortcomings and hang-ups that effectively inspired us to create our own alternative.  Unfortunately there are some online products or services that only take PayPal (or situations in which you will find yourself having to use it), so we still have roll our sleeves up and deal with this often frustrating company.

The amount of time that PayPal holds users’ money for instance, raises serious questions about the efficacy of using it for an online business.  It’s not a bank, and you don’t earn interest on the money they hold onto for ambiguous periods of time.

So let’s look at the time it takes for any transaction on PayPal to really go through.

Take for example the process of crediting your PayPal account with money from your bank account.  Let’s say you need to make a payment ASAP, maybe for something quite important like your monthly rent payment.  You find out quite late in the process that having transferred the money from your bank account, you could be waiting for days on end for it to become available in your PayPal account.  So where does the money go in the interim, and is it acceptable for users to receive just the same generic responses about ‘up to 7 working days’ etc..?

Or take the case of starting selling with a new PayPal account.  Sell an item for say, $1000, here’s what happens:  You need to send the item to your buyer (could be thousands of miles away), whom you possibly know nothing about, without even having taken the payment.  For ‘up to 21 days’ you will then have to wait until PayPal see fit to make your money available to you.  How many sensible businesses would actually operate like that out of choice?  They are putting you at the mercy of a number of seriously bad possibilities: the buyer could be a complete fraud and lie about having not received the item.  The buyer could be using a stolen credit card.  The buyer could in fact change their mind and start trying to pull a fast one with their credit card company.

Or the seemingly random account freezes for 6 months: a Cynic may well ask, is this just a scam for them to make interest on your money?