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I didn't tackle the apparent contradiction because I think others here did a good job. But let me try then based on your follow up: 1) Your business, without a

I didn't tackle the apparent contradiction because I think others here did a good job. But let me try then based on your follow up: 1) Your business, without a balance of funds, is an unacceptable risk and not worth them supporting 2) Your business, with the appropriate balance of funds in reserve, is now not risky to them I understand it seems contradictory/hypocritical. But it's all about whether you view it as a "freeze" (which has much more dramatic connotations) or simply a risk mitigation strategy on their behalf. Once you solve for the risk mitigation they're comfortable doing normal business with you.

lightbritefight 11y ago
The issue is that they generate the need for you to take out a loan with them by securing "the appropriate balance of funds." If they did not hold the 20k, his business would not need a 20k loan. Would paypal be on the hook if the business withdrew the 20k and they were hit by a bunch or refunds? Sure, but thats the risk they take by being a "bank." They make interest off your capital. Thats the exchange they agree to. This is them trying to make double interest off your capital by locking your funds and offering a loan for the same amount. Put another way, would you be okay with your bank holding 20k to make sure you can pay for housing/bills, and then offering you a 20k personal loan that generated them interest? No, because that would be unreasonable. Its your money. If they think you are a risky client, they should stop working with you. Its a conflict of interest, and a blatant one that could be heavily abused.
- mjevans 11y ago
  Paypal needs a cleaner distinction between: * Gift/send cash without any other expectations (services already rendered). * Sale/Escrow (pay for future goods/services). * Charity (Gift, but tax implications/validation).
mcv 11y ago
Taking money that isn't yours isn't a risk mitigation strategy; it's theft. Calling it a freeze is pretty mild. It is not PayPal's money. The customer didn't intend that money for PayPal, but for the merchant. By freezing that money, PayPal is endangering the transaction that they should be enabling.

lightbritefight 11y ago

The issue is that they generate the need for you to take out a loan with them by securing "the appropriate balance of funds." If they did not hold the 20k, his business would not need a 20k loan. Would paypal be on the hook if the business withdrew the 20k and they were hit by a bunch or refunds? Sure, but thats the risk they take by being a "bank." They make interest off your capital. Thats the exchange they agree to. This is them trying to make double interest off your capital by locking your funds and offering a loan for the same amount. Put another way, would you be okay with your bank holding 20k to make sure you can pay for housing/bills, and then offering you a 20k personal loan that generated them interest? No, because that would be unreasonable. Its your money. If they think you are a risky client, they should stop working with you. Its a conflict of interest, and a blatant one that could be heavily abused.

mjevans 11y ago
Paypal needs a cleaner distinction between: * Gift/send cash without any other expectations (services already rendered). * Sale/Escrow (pay for future goods/services). * Charity (Gift, but tax implications/validation).

mcv 11y ago

Taking money that isn't yours isn't a risk mitigation strategy; it's theft. Calling it a freeze is pretty mild. It is not PayPal's money. The customer didn't intend that money for PayPal, but for the merchant. By freezing that money, PayPal is endangering the transaction that they should be enabling.