I have used PayPal for a number of years where I initially signed up for a credit agreement to purchase an item on the basis it made financial sense. At the time they had a very favorable interest rate and, the best bit was they didn’t charge you any penalties on an early settlement.
Being fair, at the time it was a good experience.
After I had finished paying off the credit (which I did early), I have to say that I didn’t use PayPal for much, not at least until the pandemic hit and then it became a good way to purchase goods online with a few simple clicks and limited the amount of sites that I had to register my card details with.
It was all going swimmingly until about two weeks ago.
My son’s birthday was coming up, so I purchased a game for his Switch via PayPal. I thought little of it – usual sort of purchase – at least until 2 weeks later (his birthday) he asked me to change some of his birthday money from physical cash to the equivalent digital amount on his own PayPal.
I logged in and saw that I had a negative balance – WTF!
Reviewing the transaction and cross referencing with my bank account it became clear to me that the payment for my lads game had “bounced” when PayPal tried to deduct the money from my bank account.
Further investigation revealed that this was because I cancelled a direct debit between PayPal and my bank.
To be fair to PayPal – they had tried to notify me of this via email, but the messages had all gone into the Junk Mail folder which is not something that I review on a daily basis.
So this is your fault then you absolute numpty?
Yes, but there is a reason for why I cancelled the Direct Debit that I offer up in slight mitigation – and aside from that – as you will read later, I still have reasons as to why I won’t be using them further.
It’s is not unusual for my lad to come into small sums of physical cash (from relatives, little jobs that he does) which he gives to me and I in turn then reimburse him via PayPal – there had never been a problem and I have never really looked at or considered the mechanics that work behind the scenes financially that make these small transactions work.
I was performing some maintenance via online banking on my current account where I noticed a REOCCURRING Direct Debit to my son via PayPal for the last amount that I converted for him. On the debit there was a “next run date” and I thought “I don’t want that to happen again” so I cancelled it, of course not thinking that this was the one DD that I had setup way back when I first opened the account for the credit agreement. I still don’t understand why it had a next run date on it as it was a one off payment – but either way I cancelled it.
Of course what that did was effectively refuse PayPal to take any further money from my account without re-confirming it again on the PP side.
Sods law then happened as the cancellation went through just before the payment for my son’s game which is where I learned that when you transact with PayPal – if your primary payment method doesn’t work and if you have no secondary, PayPal will “front” the cost for you – but that will take you into a negative balance if you do not have enough funds.
So, in other words and for want of a better term they are providing you with a line of credit. Which in turn means that you are borrowing and therefore negative balances could impact your credit rating if you do not repay it in a timely way.
This is important to understand, because if you have a direct debit fail – you can be happily spending on PayPal not knowing that you are running up a debt (unless of course you catch a notification that the payment has failed).
It is also not clear what credit consequences there are for a failed direct debit in terms of credit checking – or indeed what exact period of time you have to rectify a negative balance.
I quickly contacted their support to settle to balance and I also reactivated the direct debit and transferred an additional sum of money directly to the PayPal balance – this is where my problems started.
My PayPal experience summary: Slow, Pompous, Complicated and Difficult to understand
Now, to be upfront – the reason why I don’t want to use them again isn’t because of the negative balance. That was my fault through an action that I performed by mistake.
However I have the following issues which I squarely place at the feet of PayPal:
- They do not make things very clear on how they transact on your behalf in a situation where your payment methods fail – e.g. that it is all pretty much done on a credit basis. I am sure that it is in their terms and conditions of service somewhere – but who really reads those to the letter? – I had to Google it!
If I had known I would have chosen my debit card as the primary payment method a long time ago.
- They do not make things very clear on how long they will let you operate with a negative balance before any action is taken (depending on where you read it could be 90 or 120 days).
Credit ratings are important for everyone – It really should be made clear how something like what I have described could impact you and the dates that you have to work to.
- The mobilisation of payments is so very, very slow. The debit card payment took four days to clear on the balance (but went from my account immediately) and the direct debit from my bank account to the PayPal balance so far has taken almost two weeks.
I get / support checks and balances with any kind of online finance – but I have found that PayPal’s are painfully slow and doesn’t make a lot of sense (more on this later). They don’t stick to the guidance that they publish on expected timelines for specific transaction types and seem to change the rules with no explanation and their support staff seem to have no clue on what rule has been applied where.
- Their support is a nightmare.
PayPal support is not something that I would recommend.
There is a convoluted, automated handling system that you literally have to yell at to speak to a human being.
I am sure that it works well for minor, less complex inquiries – but when you are trying to pay off a negative balance they really make you run a Gauntlet.
After a period of keypad pressing and yelling “I want to speak to someone” I got through to a lady who, I have to say was supplied with the worst telephony headset on the planet.
I just could not hear her which isn’t the best situation in the world when you have a multi faceted issue – but made even worse when they are clearly following a script of how they like interactions to operate.
Whilst explaining my problem she would cherry pick out keywords of what she thought that I was trying to say – but missing specific nuances relevant to the situation, I had to explain probably three times that it was the negative balance that I wanted to settle via debit card – and I did want to ask about potential impact to my credit rating, but it was such an effort to get her to do the debit payment.
The payment was processed there and then – I saw that it came out of my bank account and then I waited … and waited … and waited.
On the 3rd working day I called PayPal again and went through the hellish process of getting to speak to someone. Again I experienced someone who was difficult to hear and who was determined to stick to the script of what they wanted me to talk about but in the end finally got them to listen to me and understand that I had paid a negative balance via debit card and it was still not reflected on the PayPal Balance.
The chap I was talking to had no information that I had made any payment whatsoever. He could see that I had requested a transfer of funds to my PayPal balance via direct debit – but no card payment existed according to him!
I was getting irritated by now so I reaffirmed that I had made a card payment and that it had been taken from my bank account and I could prove that if needed.
After being on hold for about 30 minutes the guy came back and confirmed that he had “finally” found the card payment and it was due to clear the following day. I spoke with him about potential impacts to my credit rating, which he said would “probably” be fine and he then went off into a lecture on maintaining accounts in good standing.
I pointed out to him that this was a result of an innocent mistake and I have personally not missed a payment on anything in the last 25 years! I also pointed out that given the direct debit hadn’t yet cleared – PayPal technically now owed me money!
Anyhow, the following day the debit card transfer finally reflected on my balance – but I was aware that the direct debit was still pending. I decided to hold off on calling them again as their terms do state that it can take 5 working days to clear.
On the 5th working day I noticed that the status of the “pending” transaction had changed to “on it’s way” but – but the estimated time for it to clear was another 5 days!
I was furious, it would be (including weekends) 14 days for a direct debit to clear – 5 working days of which PayPal appeared to have done nothing and then a further 5 working days for something to actually happen.
So, I got back on the phone to them (again) – going through the same process of arguing with an automated voice recognition system to try and speak to a human.
Once finally through – it was the usual gig; trying to explain what happened – having to stop them as they got into the script that they are given and finally getting the person to understand what the issue was (this was now very, very tiresome).
On this occasion the excuse was that because I don’t normally perform balance top ups from my bank account the transaction has to go through their enhanced checking to make sure that it was me!
What the actual fuck!!!?
So, let me get this straight:
A bank account, which has ALWAYS BEEN CONNECTED TO THE ACCOUNT, is used to add money to the PayPal balance via a direct debit warrants enhanced checking, but I can buy random stuff all over the Internet and have that charged through PayPal and they don’t care about as that is deemed less risky because I have ‘always’ done that?
This really blew my mind as it makes zero sense to me!
Consider the following hypothetical scenario:
I am a naughty person who has compromised someone’s PayPal account. I decide to take a world tour of all the best gadget shops out there and spend, spend, spend.
There is a good chance that the bank of the person who I have stolen from will pick this up, but all they are going to see is PayPal requests to the bank – they won’t see what the actual transaction is.
In the mean time, PayPal is happily honoring all of these transactions on the account holders behalf. However the bank pulls the plug.
The would lead to the situation where the poor account holder would have both a negative balance in PayPal and quite a mess to clear up with the bank, leading to what could be a quite a messy credit problem.
Surely this is where you would need the better risk management?
I know that there is an argument here that someone could transfer a massive amount of money to a compromised PayPal balance so, as it was unusual checking needed to apply – but I have only just seen the Direct Debit come out of my bank account TWO WEEKS after I requested it – so, my question here is how would I or the bank of benefited from these “enhanced checks” if the transfer doesn’t even register with the bank until half a month later?
Also, despite the transfer now registering with my bank today – it’s still not on my PayPal balance. So the enhanced checking reason is a crock of shit really isn’t it? Either something has been awry in PayPal’s systems or they are just so behind the curve with technology this is par for the course – e.g. too slow to really be anything other than a clearing house for eBay trying to be relevant in a modern financial world!
I have not seen this with any other financial organisation that has my business.
So, in summary?
Yep, this was a situation of my own making – however, the events that have transpired since I think highlight some pretty serious failings in PayPal. I have registered a formal complaint with them.
I don’t expect it to come to much as I am sure that there will be rhetoric such as “it’s in our terms and conditions that you haven’t read” – but that still doesn’t excuse their shite support for customer and the archaic and slow response to transactions.
To be honest my experience of their complaints process thus far is that it is a pointless waste of time and is based upon attrition. Their approach is to provide an answer that isn’t helpful and then recommend that if I still have a problem take it to the ombudsman.
I appreciate that PayPal’s primary purpose is still for trading online with the likes of eBay – and in that use case scenario all the situations that I have described probably work. However, PayPal branched off into the world of being an alternative means to pay for consumer goods all over the place and I would pose that the same transactional parameters don’t apply in the same way.
You cannot brand yourself as a fast means to use money in a stress free way and at the same time be slow and cause stress through poor support and lack of clarity.
That being said I do have some recommendations for folks though to help avoid this happening to them:
- Use a debit card as a primary transaction method – the one attached to your main bank account.
- Always have a secondary payment method – this could be your main bank account or another.
- Keep an amount in credit on your PayPal balance and all other accounts.
- Make sure that you have every notification you can turned on for PayPal via the app and email to try and avoid the “Junk email” situation that I experienced.
I am still waiting on my Direct Debit payment to clear on my balance – which looks like it is going to be over a full two weeks to get access to my money. Sadly, this will be the last transaction that I use PayPal for.
Personally, for me it doesn’t suit my financial needs and it’s a cumbersome and deeply frustrating way of managing finance.
There’s a significant irony here that if I owed them money and adopted a “you’ll get it when you get it” approach I would be liable for all kinds of penalty charges – but in this situation where they firmly have my money somewhere within their machine but are not giving me access to it I have no recourse.