Flaw in Paypal refund system

[Guest]

[blackcat20]

I need to issue a buyer a refund, but have already transferred the money from my Paypal account to my bank account. When you click issue refund, it states that there is not enough money in the account, but that if there is a backup funding source, this can be used. However, this apparently only applies to US accounts.

It seems a touch rediculous that I can pay people from my bank account or credit card, but to issue a refund I have to wait 5-7 days for money to be transferred into my paypal account... certainly hope my buyer is understanding about the wait 

[kbmum]

That's the way it is in the US, too.  If the refund comes from a bank account, the money takes a number of days to transfer.  Your buyer should be fine with it if you explain that the refund is being processed and since the money is coming from your bank account, it will take about a week to complete the transaction.

[blackcat20]

I hope so; it seems pretty poor that a payment can come through straight away, but a refund cant. Havent heard back from my buyer yet; fingers crossed they dont want to leave negative feedback for me.

[kbmum]

In the U.S., a payment from a bank account will go straight through only if a credit card is listed as a backup source.  If the account doesn't have a credit card, it takes four or five days for the payment to clear.

[rns91294]

The person should also get an email that the transaction is being processed and when it should clear, so they will know you really are issuing them the refund. I just had someone pay me with this method. It took a week for the money to come through, but I got an email about it when they applied the payment, and another when the payment cleared.

[allender]

In the U.S., a payment from a bank account will go straight through only if a credit card is listed as a backup source.  If the account doesn't have a credit card, it takes four or five days for the payment to clear.

Or to be even more technical, it takes four or five days for the funds to be available inside PayPal for you to draw upon them.

The transfer happens almost at the speed of light. The money is no longer available in your bank account. PayPal (and everybody like them) will then wait a few days to make sure everything is legit.

This used to make sense when checks and transfers traveled around the country as pieces of paper. There's legislation brought up from time to time in the U.S. and elsewhere to eliminate the long "hold" on a transaction that was completed electronically. Because, during those 2-4 days, you aren't using that money; your bank isn't using that money; only PayPal is. A significant part of their bottom line comes from investing the "float" of money that is in their hands but not yet disbursed.

I was delighted with the explanation by PayPal's predecessor, X.Com (which was later bought out by eBay and renamed PayPal to replace their home-grown version). One of their FAQs was "How can you afford to provide those basic services for free?" and the answer was "We make money on the float." If they use $1000 for four days, they can earn about a buck. It adds up.

[blackcat20]

You cant even begin to initiate the refund transaction until you have added money to the paypal account. I just have to wait for it to process from my bank account, and then undertake the refund. Fortunately my buyer was very understanding.