3 ms·

(Random, honest question)... is this acceptable? Should one have to pre-clear it with PayPal if they think they might hit some non-specified limit upon which Pa

(Random, honest question)... is this acceptable? Should one have to pre-clear it with PayPal if they think they might hit some non-specified limit upon which PayPal will seize your funds?

dangrossman 15y ago
> (Random, honest question)... is this acceptable? That's how it works everywhere. It's written into any merchant account agreement with any payment provider. If your average ticket size, average monthly volume, or the business you're in changes, you have to notify them and get approval because it changes your risk profile. Because Visa and MasterCard mandate a <1% average chargeback rate from their members, that carries through to every level of payment processing service to make risk management a core piece of the business. 3rd party processors make it easy to sell an item or two on eBay without having to fill out pages of work history and references as you'd have to in order to accept credit cards directly... because there's very little risk. If you scam someone out of $100 and they charge it back, that $100 is going to be too small a portion of the processor's business to impact their rate. But if the next month you sell $100k of product, and they don't even know who you are or what you're selling, it's time to pull back and ask you who you are. PayPal will do this. Amazon Payments will do this. Google Checkout will do this. 2Checkout will do this. Heck, 2Checkout will also call a random sampling of your customers to make sure you're actually selling what you say you're selling. So in exchange for not having to fill out a 6 page application up front and tie yourself to a contract with monthly fees, PayPal and every other 3rd party processor will suspend your account for a business day or two to get the information from you only when it becomes necessary, then set you back on your way to continue doing business. Most people never think about things like chargeback rates and risk to the processor, so when their account gets suspended, they freak out and spam a blog post assuming someone's trying to steal their money. A few days later they always have to follow up that everything's actually OK... there's no conspiracy to lock accounts and earn interest on the balance (reserve funds are held in non-interest-bearing accounts), they really just want to make sure you're not something so risky it's going to hurt their average chargeback rate.

(Random, honest question)... is this acceptable? Should one have to pre-clear it with PayPal if they think they might hit some non-specified limit upon which PayPal will seize your funds?

dangrossman 15y ago

> (Random, honest question)... is this acceptable? That's how it works everywhere. It's written into any merchant account agreement with any payment provider. If your average ticket size, average monthly volume, or the business you're in changes, you have to notify them and get approval because it changes your risk profile. Because Visa and MasterCard mandate a <1% average chargeback rate from their members, that carries through to every level of payment processing service to make risk management a core piece of the business. 3rd party processors make it easy to sell an item or two on eBay without having to fill out pages of work history and references as you'd have to in order to accept credit cards directly... because there's very little risk. If you scam someone out of $100 and they charge it back, that $100 is going to be too small a portion of the processor's business to impact their rate. But if the next month you sell $100k of product, and they don't even know who you are or what you're selling, it's time to pull back and ask you who you are. PayPal will do this. Amazon Payments will do this. Google Checkout will do this. 2Checkout will do this. Heck, 2Checkout will also call a random sampling of your customers to make sure you're actually selling what you say you're selling. So in exchange for not having to fill out a 6 page application up front and tie yourself to a contract with monthly fees, PayPal and every other 3rd party processor will suspend your account for a business day or two to get the information from you only when it becomes necessary, then set you back on your way to continue doing business. Most people never think about things like chargeback rates and risk to the processor, so when their account gets suspended, they freak out and spam a blog post assuming someone's trying to steal their money. A few days later they always have to follow up that everything's actually OK... there's no conspiracy to lock accounts and earn interest on the balance (reserve funds are held in non-interest-bearing accounts), they really just want to make sure you're not something so risky it's going to hurt their average chargeback rate.