Understanding PayPal Holds

There was a recent blog post on eBay Ink that did a very good job of explaining PayPal holds and how they work. Most folks probably won’t pay attention to the details until it happens to them (color me guilty of this).

What are PayPal holds?

In a small percentage of cases, eBay asks PayPal to hold a payment in a seller’s account for 21 days. The case highlighted was a new seller selling expensive electronics.

What percentage of payments are held?

The answer was 5%. (I don’t know about you guys, but 5% of all the transactions on eBay seems to be a substatial amount of money being held !!)

When won’t your be subject to holds?

  • You have been an eBay member for 6-months or more, and
  • Your total Feedback score is 100 or greater, and
  • Your Buyer dissatisfaction percentage is less than 5%.

OR

  • Your average Detailed Seller Rating (DSR) is 4.5 or greater, and
  • You have received 20 or more DSRs in the last 12-months, and
  • Your buyer dissatisfaction percentage is less than 5%

As a general rule, unless you are in an at-risk bucket (low feedback, low DSRs) you will likely not have to worry about PayPal holding your funds in a way that will impact your business.  On the converse side, new eBay sellers have a barrier to entry that did not exist before.  If you are new to eBay, you’ll want to either have the funds to cover restocking and shipping for 3 – 4 weeks, or sell less expensive items until you build up a track record.

Additional Reading: The Consumerist: What Can You Do If PayPal Holds Your Funds For 21 Days?

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