Why is it that if I pay for something on PayPal its debitied from my account almost straight away.

BUt to get money from paypal into my account takes five days?

what they doing with my money and everyone elese money in that time?

Smells like the old banks 3 day clearence scam for cheques.

Yep Gary you got it. They and pretty much every other bunch or robbers in the financial system are making lots of interest for themselves using your money and that of millions of others for 3days. Why should PayPal be any different?

David

Thing is David, why is this allowed, is there something in it for the government or something?

At the end of the day paypal got their money they shoul dbe making the owners money accesible immediatly.

The gits

This is an interesting kind of case. To my knowledge, PayPal is unlike banks in that they don't extend standard loans, although they do have a credit card. So they aren't making money on the interest rate differential between their loans and their deposit accounts. Their 'deposit accounts' would seem to be limited to this kind of holdover (which, I suspect, you concede to as a part of their lengthy terms of use).

Already in 2001 Paypal saw over $8 billion in transfers; presumably it's much higher now. If they held transfered funds for 3 days, that means that they averaged about $66 million in current account 'deposits' in '01, and if they somehow got some modest (5% or higher) return on that money, they could have made $3 million or more in interest (on top of all their fees).

I don't know if they do this, though, or if it's legal.

Eric

Yes, but they charge a lot less than BIDPAL.

Emmanuel

All opinions are my own, and reflect those of the organisation i work for, even if not stipulated.

Gary, if you're worried about PayPal don't go Here, you'll be scared shitless.

In a former incarnation I was involved with the setting up of some early UK debit card systems. We were told at the time that the banks had been really keen on same day or next day clearing thinking most customers would be overjoyed at the end of the 3 day clearing associated with cheques.

Not so. Repeated customer surveys should that customers valued the 3 day thing as they could pay for lots of things by cheque 3 days before they actually got paid. Hence the artificial 3 day delay in many early debit card schemes was not, as is popularly assumed, so the banks can earn 3 days extra intrest on your cash but so that the banks customers can "borrow" money for 3 days at the end of the week or month when they are skint and need to pay the rent.

Sadly the increased practicality of real time balance checking at the point of sale rendered this all rather obselete and so the quaint custom of paying for everything via cheque from the 28th of the month on has died out although many debit transactions still take 3 days to clear.

Matthew

I'm surprised to hear the 3 day delay was retained by 'popular demand' - stretches credibility a bit that

As far as PayPal is concerned I prefer not to use them, but if you are transacting internationally you have little real choice. Also, despite their deplorable reputation, buyers prefer PayPal because the (not inconsiderable) costs are paid by the seller.

However things are much better for internal UK transactions. FastPay (run by RBS/NatWest) offer a very credible alternative, which I believe is far better than PayPal.

FastPay has a quicker and easier sign-up process, its Ts & Cs are far les 'opaque' than PayPal and it's lots cheaper. You get charged nothing to receive money and the sender pays only 20p, i.e. less than the 1st Class postal cost to send a cheque.

The only (surprising) downside of FastPay is that so far it's failed to make many people aware of its existence, even though it has the resources of a major UK clearing bank behind it.

David

I was told this by a senior executive of a UK retail bank although I suppose, like most things, it could be urban myth.

Like the purported tale of the then Chairman of Barclays vetoing ATMs as he claimed that "Barclays had no interest in the custom of the sort of people who need access to cash at 3am" which is apparently why early ATMs were inside the bank so you couldn't actually use them after the place shut.

Matthew
Who has £250+ of Poker winnings in his online e-Cash account and is wondering if he should actually try and get the money out