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Does paypal earn interest on monies held while verifying a sale? I am asking because my monies are held even after confirmation of USPS Delivery. if this Paypal does invest the monies "on hold" in any way, this would be an incentive to hold monies and would be a conflict of interest.
As per Paypal policy, funds are normally released when tracking shows the item as delivered + 3 days.
Here's a snippet from the User Agreement. PayPal does provide some very good info for everyone however, most people don't take the time to read through the details. Note the line in italics below, as it is about the funds in your account balance and earning interest. As for funds that are on hold and not yet in your account balance - can't really answer that one but, I'm sure there's a few theories.
Any PayPal balance you hold represents an unsecured claim against PayPal and, except as provided below, is not insured by the Federal Deposit Insurance Corporation (FDIC). PayPal combines your PayPal balance with the PayPal balances of other PayPal customers and invests those funds in liquid investments in accordance with state money transmitter laws. PayPal owns the interest or other earnings on these investments. However, the claim against PayPal represented by your PayPal balance is not secured by these investments and you do not have any ownership interest (either legal or beneficial) in these investments. These combined balances are held apart from PayPal’s corporate funds, and PayPal does not use these balances for its operating expenses or any other corporate purposes. Additionally, PayPal will not voluntarily make these balances available to its creditors in the event of bankruptcy.
Heres a theory on why it was not released on DELIVERY.
|Action||Time to release||What you need to do|
|Print a USPS or UPS shipping label||3 days after delivery||Print a USPS or UPS shipping label from your PayPal account. This will automatically update your tracking information and delivery confirmation.|
I understand the the policy of holding payments for "up to 21 days" and how to provide the tracking information. My question is about the inherent conflict of interest for Paypal to release funds quickly, because the utilizing the over-night funds markets at a simple LIBOR allows companies with significant amounts of money to earn large amount of profits, especially when using others' money. For example, in my recent sale the delivery information was confirmed and the buyer is happy, but the monies are being held for 3 extra days as part of the standard policy.
Yep because that is in their policy that you agreed to when you opened your paypal account.
However if you want them to pay you interest for those 3 days, then would you be prepared to pay them interest when you have completed the hold and you get 'instant payments' that are not actually instant but Paypal credit the funds upfront for you and Paypal take the wait for the funds to transfer from the buyers funding source?
Yes, they are earning interest on the money they hold. And they have to give it to you. I have requested, and received, that interest in the past.