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FAQ: Using your bank with PayPal

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What is the ACH Network?

The ACH network is a batch processing method that is used by many financial services, governed by NACHA - The Electronics Payments Association. Use of this method keeps the costs of moving money lower, which enables PayPal to keep fees lower for customers and even offer some services for free.


How long does it take to transfer money from my bank to PayPal, or from PayPal to my bank?

When transferring to or from US banks, an ACH transfer takes 3-5 business days. That excludes weekends and holidays. The time frame can vary in other countries, typically becoming 5-8 business days.


The funds have been removed from my bank. Why aren't they in my PayPal account?

When you begin a transfer to PayPal from your bank, either when you Add Money or when using Instant Transfer or eCheck as a funding method, a request is sent to your bank for the funds. Your bank will receive that request and then update your records in their system and send your funds to us through the ACH Network in a batch that will be processed later in the day, along with other requests for other customers. When that batch of requests is processed, it is sent to the clearing facility. Once it has been reviewed, it is sent to the receiving institution (which in this case would be PayPal), in another batch. PayPal receives the money typically 3-5 days after your original request when a US bank is used, with varying timeframes for other countries.


The money has been removed from my PayPal account. Why isn't it in my bank account?

Just as in the above scenario, PayPal marks the money as being removed from your account, and then the request is sent to the clearing facility in a batch. PayPal marks the withdrawal as completed because our role in the action is completed, and the bank will not inform us when the funds have reached them.


Does it take 3-5 days for the seller to receive my money?

When you use Instant Transfer as a funding method, PayPal performs a service on your behalf. We send the funds up front to your seller while we wait for the arrival of the funds from your bank. That way, your seller can begin filling your order without the delay of waiting for the funds to clear. If eCheck is used as the funding method, the seller will not receive the funds until they finish clearing from your bank through the ACH process. Either method might be available with a confirmed bank account on file, or may not be available for a specific transaction depending on several factors. Always review your payment screen before completing your payment to ensure that you know what funding method you're using.


The seller refunded my payment. Why don't I have access to the money?

If a seller issues you a refund right away on bank funded payment, the money may not yet have finished transferring from your bank. As soon as the ACH transfer is complete to PayPal from your bank, the funds are available for you to use or withdraw, as you see fit. That is typically 3-5 business days for US accounts, with varying time frames for other countries.


Can a transaction be canceled?

Once you review your transaction and complete it, the request is sent to your bank within mere moments. Once the request is sent, it cannot be pulled back or canceled. You can contact the seller to request a refund, but we still have to wait for the money to reach your account from the bank before it can be made available.


Can an unauthorized transaction be canceled?

If a fraudster gains access to your account with your password* and makes a transaction using the bank account on file, the request is sent immediately to the bank, just as if you had done it. PayPal covers unauthorized transactions 100%, but is unable to pull back the request that went to your bank, no matter how quickly the report is filed. Confirmed unauthorized transactions will be reversed back to your PayPal account, and the money can be withdrawn back to your bank. Contacting your bank to let them know that you've filed a fraud report with PayPal will enable them to offer you a reprieve from NSF fees.


* Click here to learn about keeping your passwords safe.


What happens if there aren't enough funds in my bank account?

If the bank returns a response to us that there aren't enough funds in the account, the system will wait a few days and then re-attempt the request**. This is an automatic process that cannot be interrupted. If the second attempt fails, the backup funding source will be charged. It is not possible to switch to the backup funding source after you've clicked to perform the transaction. It's important to review your funding selection to ensure that the one you want to use is chosen. While PayPal never charges Insufficient Funds fees, your bank may potentially charge a fee for each attempt.


** If the second attempt is successful, the funds will come from your bank account, but the entire process will have taken several additional days.


What happens if the bank account is no longer open or active?

If the bank returns the appropriate response, letting us know the account is closed, your backup funding source will be used immediately. Sometimes banks do not return the appropriate response. If there is no reason given for the refusal or the wrong code is returned to us, the second attempt may be made.


It is absolutely vital that you keep your PayPal account information current. Periodically reviewing your addresses, phone numbers, bank accounts and card numbers is a great idea to prevent the use of a bank you don't want to use.


Edit Oct 22 2013: A recent Wall Street Journal article describes the challenges faced with the ACH system. Click here for more information.



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