The eBay PayPal 20% Hold Solution
17 February 2009
EventHorizon1984
- See also The eBay PayPal 5% Hold Solution.
- Related article, TameBay: PayPal reserves: here's what's really happening
eBay tests "improvements" on it's International sites, before applying them to the U.S. site. An interesting "improvement" coming soon to U.S. eBay sellers is PayPal holding up to 20% of a sellers gross.
You can see Paypal's draconian application of it's "Reserves for Premier and Business Accounts" policy in the Great Britain thread (PayPal Reserve and Rolling Reserve) below.
With PayPal required to report U.S. seller sales to the IRS in 2011, this is a golden opportunity for PayPal to withhold 10% of a U.S. seller's funds for tax purposes.
Plus up to 20% for U.S. seller reserves.
"Ah arrogance and stupidity all in the same package. How efficient of you!"
Ambassador Londo Mollari, Babylon 5
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http://forums.ebay.co.uk/thread.jspa?threadID=1100224092
Paypal Reserve and Rolling Reserve
always-authentic-auctions (3925 ) 10-02-09 07:43 GMT
We received an email out of the blue from Paypal on Saturday to let us know that our account that we have held for six years will now be subject to a rolling reserve of 6%. This means that from now on Paypal will deduct 6% of all of payments and hold them on a rolling 6 month basis to protect itself against chargeback's. It also on the same day took the minimum reserve amount from our account of £500.
Over the next six months Paypal will hold somewhere in the region of £6000 - £7000 of our money. As this is a rolling amount as long as we are trading we will not see this amount back. If we stopped trading in six months it would take a further six months to get then money fully back.
According to the person I spoke to at Paypal yesterday this is something that is rolling out to ALL Paypal accounts and that we are 'lucky' as some people are being charged up to 20% with 10% being the norm.
Over the last six years we have sold the same items and have had a tiny amount of chargeback's and buyer complaints, I would estimate that is easily less than 0.5% of our total sales, and that would be a high estimate.
How then Paypal can justify this I have no idea, in the past when there was a buyer complaint or chargeback they simply reversed a pending withdrawal, this has worked fine for the last years.
As the reserve is a rolling amount this effectively means our Paypal fees have increased by 3 time's overnight withy no notice.
Has anyone else experienced this ?
*dimebar* (74 ) 10-02-09 09:12 GMT 1 of 23
There have been a small number of reports - from high volume sellers.
It isn't the norm, PayPal are telling you porkies.
Sadly, what they are doing is in their UA:
https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#biz-policy
10.4 Reserves for Premier and Business Accounts. When managing risk for Premier and Business Accounts, we may take various steps, such as establishing a Reserve, changing the speed or method of payment for withdrawals, set off amounts from your Balance and/or requiring you to deposit funds with us as security for your obligations to us or third parties. The following types of events may cause us to establish a Reserve:
1. You cease a substantial portion of or all of your business or adversely alter your business/operations;
2. There is a material adverse change in your business;
3. You or your business becomes insolvent or is otherwise unable to pay debts as they fall due;
4. We receive a disproportionate number of customer complaints, Reversals, Chargebacks, Claims, fees, fines, penalties or other liability related to your Account; or
5. We reasonably believe that you will not be able to perform your obligations under this Agreement, the Card Processing Agreement, or any other agreement you have entered into with PayPal.
We may immediately establish a Reserve if we reasonably believe that it is warranted under this section. If we establish a Reserve, we will provide you with notice specifying the terms of the Reserve. You may close your Account if you object to the Reserve. We may increase or decrease the amount of the Reserve, provided that in our reasonable judgment the amount of the Reserve is related to the risk for which it was created. If your Premier or Business Account is closed for any reason, we have the right to hold the Reserve for up to 180 Days. You agree to provide us, upon our reasonable request and at your own expense, information about your finance and operations, including your most recent financial statements (certified or otherwise) and merchant processing statements (if applicable). You also agree to undertake, at your own expense, any further action (including, without limitation, executing any necessary documents and registering any form of document reasonably required by us to allow us to perfect any form of security interest or otherwise) required to establish a Reserve in a manner reasonably determined by us.
Has your account had any payment reversals, charge-backs or claims within the last 6 months?
Do you sell scammable or expensive items?
Personally, I think it's another excuse to create another revenue stream.
One man can make a difference.
Need help? Click here for the Popular Links and Useful Me Pages thread
always-authentic-auctions (3925 ) 10-02-09 09:18 GMT 2 of 23
Hi, yes I read the terms and conditions and none of the reasons they quote apply to us. I have just got off the phone to them, they cannot help me with the specifics of our reserve, I am awaiting a call back from the team that applied the reserve. The shocking thing about this is that because the reserve is rolling this effectively means an increase in our fees of 6% which is a huge amount over a year, it's basically our profit that they have just wiped out.
always-authentic-auctions (3925 ) 10-02-09 09:21 GMT 3 of 23
Just another point to add. We were given no notice of this happening other than the email from the US, although when I checked our account straight after reading the email the reserve had already been applied.
When I asked why we had not had any notice and when this was announced I was told by the Paypal agent that this was an ongoing process that started at the beginning of the year and that they had 60 million accounts to go through.
So other sellers should be prepared for the same thing.
global_megastore (21239 ) 10-02-09 10:54 GMT 4 of 23
Paypal did this to us last November. They put a 3% rolling reserve on our account and then later that day sent us an email telling us they were doing it. We ended up having a conference call with Paypal in Ireland and the States and were told that this was because we sell high risk items and have a high rate of non-deliveries!? We sell children's duvet covers (hardly 'high risk'), Paypal refused to explain how they decided we have a high rate of non-deliveries, and wouldn't give us any specifics.
Currently they are holding over £6,000 of our eBay payments.
This reserve made us decide to stop accepting Paypal as a payment option for our non-eBay business. This means Paypal now lose out on approx £500,000 worth of business from us.
Would be interested to hear from anyone else affected by these rolling reserves.
*dimebar* (74 ) 10-02-09 11:38 GMT 5 of 23
"This means Paypal now lose out on approx £500,000 worth of business from us."
I hope you told them that to boot 
One man can make a difference.
Need help? Click here for the Popular Links and Useful Me Pages thread
global_megastore (21239 ) 10-02-09 14:23 GMT 6 of 23
We did explain this to the representative we spoke to in the States. He said he was only concerned with 'risk' and it was our decision how we accept payments. He made it very easy for us to decide that Paypal wasn't the answer.
global_megastore (21239 ) 10-02-09 14:29 GMT 7 of 23
To make things clear, let me state that I am not posting here simply to knock Paypal. But holding a % of our money for long periods of time could badly affect our business, especially in these financial times. All it does is drive us away from Paypal, and in doing so, away from eBay. Amazon, VISA, Mastercard etc don't give us these kind of problems.
*dimebar* (74 ) 10-02-09 20:40 GMT 8 of 23
Some corporations can't see the woods for the trees.
One man can make a difference.
Need help? Click here for the Popular Links and Useful Me Pages thread
global_megastore (21239 ) 11-02-09 09:52 GMT 10 of 23
I think that one of the reasons Paypal aren't keen to discuss this is because they do not fully understand how and why the reversals are placed. We got lots of conflicting information from different Paypal representatives (in the UK and Ireland), none of whom seemed to have been fully informed/educated.
After approx 3 weeks we got a call from 'Risk' in the States who explained that the reserve had been placed and offered very vague reasons for it.
He also made it clear to us that Paypal could increase the % of the reserve if they wanted to.
*dimebar* (74 ) 11-02-09 10:38 GMT 11 of 23
Same old story from the PayPal chimps.
One man can make a difference.
Need help? Click here for the Popular Links and Useful Me Pages thread
junkerking (0 ) 11-02-09 10:42 GMT 12 of 23
We got lots of conflicting information from different Paypal representatives (in the UK and Ireland), none of whom seemed to have been fully informed/educated.
as dime said paypal chimps
cheryl30uk78 (Private ) 11-02-09 17:07 GMT 13 of 23
and in the meantime they hold ppls money while they get the intrest another pp profit makeing enterprize
secure4life (40 ) 12-02-09 01:07 GMT 14 of 23
We just received our reserve info today...out of the blue. We just started our store in September, therefore I don't know where this is all coming from. Anyway, does anyone know how to maybe avoid this? Or get rid of the reserve on our PayPal account? 5% is a lot - makes me re-think this whole PayPal method...
global_megastore (21239 ) 12-02-09 11:06 GMT 15 of 23
I'd like to ask the same question as secure4life; "Does anyone know how to maybe avoid this? Or get rid of the reserve on our PayPal account?".
I have a feeling that once Paypal have put a reserve in place (i.e. once they get used to holding a sellers money), there is very little chance of the reserve being removed. It looks like we might just have to accept this as an additional cost for selling on eBay.
It's still early days, but it will be interesting to see the reaction should Paypal start rolling this out to more and more sellers. After reading about eBay's poor sales figures for the last year, I'm surprised they're putting more and more obstacles infront of sellers.
banannasarego (26 ) 12-02-09 16:10 GMT 16 of 23
I think it is a simple situation :
PayPal want to be a bank ( and have registered as one in Luxemburg ).
A bank requires a stable supply of capital to lend against - and preferably free of any interest charge.
They can then make discreet loans to other businesses at relatively high interest but knowing what their rolling 6 month capitalisation is.
In effect they are taking a rolling six month loan from you - against your wishes at 0% interest.
secure4life (40 ) 12-02-09 16:32 GMT 17 of 23
Yes...this whole Rollback Reserve idea is very unfortunate. For my situation we have a 5% reserve - even for money which we bring into the account from our own bank account. We ended up putting our store on hold (Vacation Mode)- in order to change all our prices to make up for this 5%. I have been told by PayPal that after 90 days they will review my case and see if the reserve will be taken off. In my opinion this will not be a very good thing for eBay and PayPal. Not only will they lose their customers - they will also lose a lot of money and business. I literally got laughed at when I said that this might cause us to shut down the whole eBay operation...I do not think that is funny. Anyway, I guess we will have to deal with it as sellers and the more people find out and get put on a reserve the more eBay and PayPal will get hurt in the long-run.
global_megastore (21239 ) 12-02-09 16:56 GMT 18 of 23
Thankfully we didn't have to up all our prices, but it has given us a very negative impression of Paypal. We hope to continue using eBay in future, but it makes sense for us from a finacial point of view to concentrate more on avenues that aren't actively hampering our business. It's certainly made us more pro-active to non-eBay sales.
Ebay's not the only place to sell online, but it is the only place that wants to hold a % of our profits for 3 months.
banannasarego (26 ) 12-02-09 17:04 GMT 19 of 23
secure4life:
1) You have not been charged any extra fees - they are just ho;ding a minimum of £500 or x% ( whichever is the greater ) for at least 6 months or until 6 months after: your last trade, and / or closure of your account. Unless there are chargebacks in which case the amount will be reduced accordingly.
2) Having reviewed rhe status of ebays attitude to their members I believe ebay and paypal are very happy to get as many accounts as possible closed: They do not want sellers any more neither do they want buyers - the idea that ebay want to become a mall or like amazon may be incorrect --> THEY WANT TO BE A SEARCH ENGINE to compete with google! so all they want are listings to publish and collect a fee per click!
ndc-uk (8747 ) 15-02-09 12:42 GMT 20 of 23
They hold 5% of every transaction you receive weather or not you refund it. So if you refund a payment you have to subsidise the 5% they hold out of your own pocket.
Our solution?
Up to now we have kept eBay prices in line with our website/amazon/other venues. Now however we will increase our prices by 10% and then offer a 10% discount to people who pay us directly with a credit/debit card or via bank transfer/cheque. Although this may initially slow the sales down once people get used to our policy I beleive the slump in sales will be negligible. Furthermore it will probably push more people to just buy off owr own website which charges us NO commision! 
I suggest others join this revolt!
ndc-uk (8747 ) 15-02-09 12:44 GMT 21 of 23
and if someone does decide to pay by paypal they can hold 5% if they wish as the customer would have paid 10% over our desired selling price anyway!
global_megastore (21239 ) 16-02-09 08:47 GMT 22 of 23
Will putting your prices up by 10% not badly affect your standings in Best Match, and drive customers away?
I like the idea of offering a discount for non-Paypal payments, hope this works for you.
ndc-uk (8747 ) 16-02-09 13:51 GMT 23 of 23
it depends on how unique your product is and what your sales strategy is. For us currently the important thing is getting brand recognition for our website and trying to attract as many people as possible to that. We know that our prices are keen and we have a product which has a high demand, and beleive that once customers see tehy will get a lower price than listed if they pay by credit card etc then ultimately they will buy. We anticipate 1-2 slow weeks but we're prepared to buffer that.
Also we are now advertising quite clearly the 10% discount. Have a look at one of our ads.
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eBay Garage - Do you really want eBay IN your computer?
Do you really want eBay IN your computer?
24 February 2009
EventHorizon1984
Following in the wake of the hack of eBay 3rd party service provider Auctiva, eBay has announce a protection service.
According to the reports, "eBay Garage, will run an embedded application that will scan users' PCs for any viruses or spyware" and "the user will be directed to the site of a security vendor." And "eBay is partnering with two, as yet unnamed, security companies."
One of the companies will probably be Symantec. And based on past history, the other company is likely to be owned by eBay, or eBay will have a financial stake in it, or eBay has plans to buy or invest in it.
The eBay Garage program will be run under the auspices of Dave Cullinane, eBay Marketplaces CISO (Chief Information Security Officer). It appears one of his last assignments was CISO of Washington Mutual.
To any serious user of eBay we ask, 'do you really want eBay code monkey written applications loaded onto your hard drive, and running around in your computer?'
"Life was simple before World War II. After that, we had systems."
Admiral Grace Hopper
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Tags: chief information security officer, CISO, Dave Cullinane, eBay Garage, eBay Marketplaces, Ina Steiner, Nick Heath, Symantec, Washington Mutual
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