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Are you sure it is being confiscated? He will have a claim then. What can happen is when your credit card / other payment providers cuts you off is that you go

Are you sure it is being confiscated? He will have a claim then. What can happen is when your credit card / other payment providers cuts you off is that you go out of business. You might fail to provide services to users - so they do a chargeback / ask for a refund from payment provider. So when a payment provider is shutting you down, they usually want to hold onto some money to be able to handle those refund requests. Very common in travel situations as well.

mdoms 5y ago
So PayPal is holding onto his money in case he incurs expenses as a result of going out of business due to PayPal cutting him off? And this seems normal and good to you?
- wearywanderer 5y ago
  The beatings will continue until morale improves.
- slownews45 5y ago
  This is the way many providers that offer recourse settlements handle things. They have data showing when they cut off a business from processing credit cards etc they may receive claims from customers who have already paid whose money they are either holding or have forwarded. If they are holding it they refund that customer, and business can ask for payment using another method. If they are not holding funds, they run into an issue of asking merchant for money (which is difficult to collect). So most providers of this type when making a decision to end a business relationship hold onto the funds for a while to let everything settle. This is not unique to paypal. Some providers don't hold funds if payor has no recourse. You usually need to be settling with what are called "good funds" for that to be the case, then merchant is paid out usually within 1 day under all circumstances. A fair number of B2B wire type clearing operations work like this. I'm just explaining what happens. They don't generally closely evaluate the reasons or likely outcomes of account closures, and there is enough fraud and profit motive / cost cutting in system that the rules tilt pretty heavily against merchant. That said, if OP is not lying and they really do confiscate the funds there will be an issue for them. Especially individuals, they'll send the unclaimed funds to the state generally even if not claimed by the person.
- tzs 5y ago
  Where did you think the money comes from when a consumer complains to their bank about a charge on their credit card and the bank credits the consumer? It sure as heck ain't the consumer's bank that pays for that. Nor is it Visa or Mastercard or whichever company owns the card network the card is part of. No, it is the merchant bank that processed the charge. To be allowed to process charges through Visa, MC, etc, the merchant bank has to agree to cover all credits the issuing bank gives when consumers successfully dispute charges if the merchant cannot cover them. Merchants that want to accept credit cards have to get an account with a merchant bank. It acts as an interface between the merchant and the credit card system, submitting charges and collecting the payments from the issuing banks, and depositing them in the merchant's regular business bank. Merchant banks hold back some of those payments to maintain a buffer to cover their potential obligations in the case of disputed charges. How much they hold back and how long they hold it for varies depending on things like changes in your sales volume, how risky your line of business is, how often you've been getting chargebacks, and probably a ton of other factors their actuaries have identified. PayPal doesn't look like a traditional merchant bank from the merchant point of view, but if people are able to use credit cards to buy your stuff there is a traditional merchant bank or something else with the same obligations as a traditional merchant bank somewhere in there, and that means that for a merchant using PayPal they are going to have someone holding back a reserve. When you use a traditional merchant bank and are directly exposed to all that you know it is going to happen, and quickly realize that the whole damn credit card system is designed to make sure that if anything goes wrong anywhere in the chain it is the merchant that is going to eat it. With these services that try to do it all in one and make it easy to accept payments, such as PayPal, it is easy to not realize that credit cards work that way and so you get surprised when PayPal won't let you take all your money out right away.
  - slownews45 5y ago
    Exactly. One difference having used both services. Your merchant bank will know you, there is a relationship manager who wants the rest of your business, they may have lent you money etc etc. In short, someone spends more than 5 seconds dealing with you. And they do charge more for sure. PayPal - no one there cares at all about you. They offer something convenient, but that's it. You are SOL when things go wrong.

mdoms 5y ago

So PayPal is holding onto his money in case he incurs expenses as a result of going out of business due to PayPal cutting him off? And this seems normal and good to you?

wearywanderer 5y ago
The beatings will continue until morale improves.
slownews45 5y ago
This is the way many providers that offer recourse settlements handle things. They have data showing when they cut off a business from processing credit cards etc they may receive claims from customers who have already paid whose money they are either holding or have forwarded. If they are holding it they refund that customer, and business can ask for payment using another method. If they are not holding funds, they run into an issue of asking merchant for money (which is difficult to collect). So most providers of this type when making a decision to end a business relationship hold onto the funds for a while to let everything settle. This is not unique to paypal. Some providers don't hold funds if payor has no recourse. You usually need to be settling with what are called "good funds" for that to be the case, then merchant is paid out usually within 1 day under all circumstances. A fair number of B2B wire type clearing operations work like this. I'm just explaining what happens. They don't generally closely evaluate the reasons or likely outcomes of account closures, and there is enough fraud and profit motive / cost cutting in system that the rules tilt pretty heavily against merchant. That said, if OP is not lying and they really do confiscate the funds there will be an issue for them. Especially individuals, they'll send the unclaimed funds to the state generally even if not claimed by the person.
tzs 5y ago
Where did you think the money comes from when a consumer complains to their bank about a charge on their credit card and the bank credits the consumer? It sure as heck ain't the consumer's bank that pays for that. Nor is it Visa or Mastercard or whichever company owns the card network the card is part of. No, it is the merchant bank that processed the charge. To be allowed to process charges through Visa, MC, etc, the merchant bank has to agree to cover all credits the issuing bank gives when consumers successfully dispute charges if the merchant cannot cover them. Merchants that want to accept credit cards have to get an account with a merchant bank. It acts as an interface between the merchant and the credit card system, submitting charges and collecting the payments from the issuing banks, and depositing them in the merchant's regular business bank. Merchant banks hold back some of those payments to maintain a buffer to cover their potential obligations in the case of disputed charges. How much they hold back and how long they hold it for varies depending on things like changes in your sales volume, how risky your line of business is, how often you've been getting chargebacks, and probably a ton of other factors their actuaries have identified. PayPal doesn't look like a traditional merchant bank from the merchant point of view, but if people are able to use credit cards to buy your stuff there is a traditional merchant bank or something else with the same obligations as a traditional merchant bank somewhere in there, and that means that for a merchant using PayPal they are going to have someone holding back a reserve. When you use a traditional merchant bank and are directly exposed to all that you know it is going to happen, and quickly realize that the whole damn credit card system is designed to make sure that if anything goes wrong anywhere in the chain it is the merchant that is going to eat it. With these services that try to do it all in one and make it easy to accept payments, such as PayPal, it is easy to not realize that credit cards work that way and so you get surprised when PayPal won't let you take all your money out right away.
- slownews45 5y ago
  Exactly. One difference having used both services. Your merchant bank will know you, there is a relationship manager who wants the rest of your business, they may have lent you money etc etc. In short, someone spends more than 5 seconds dealing with you. And they do charge more for sure. PayPal - no one there cares at all about you. They offer something convenient, but that's it. You are SOL when things go wrong.