When 24 Hours Is 23:59 Too Long

THE Haggler’s recent column about PayPal, the online money transfer company, summoned forth a fresh round of “I can’t stand PayPal” e-mail. This one stood out.

When 24 Hours Is 23:59 Too Long

Q. My company is new, and as yet has processed just three transactions using credit cards through PayPal. In all of these cases, the payment has been held up for about 24 hours because the buyer was “unverified.” This has happened even when the credit card was the corporate card of a well-known company. Twenty-four hours may not seem long, but in my case it is critical.

My company sells schedule risk analysis software. It can be downloaded from the Web for a 30-day free trial, at the end of which the user must buy a license key to continue using the software. This key is delivered automatically, by e-mail, within seconds of the purchase — except when this purchase is made through PayPal, in which case it takes 24 hours or more.


Furthermore, while PayPal informs me of the delay, it does not apparently inform the buyer. This is allegedly meant to be a protection for me, but other Internet vendors accept credit cards without question, and I don’t see why PayPal should be any different. Also, in my particular case, if I were not to get paid for some reason I can retrospectively disable the license key. So I don’t need or want this protection. I have tried to make this case to PayPal several times, but I get bland responses that avoid the key points. Can you help? Tony Welsh

A. The Haggler got in touch with a publicist at eBay, which owns PayPal, and learned that Mr. Welsh simply misunderstood a key detail about payment review, as this feature is known. Namely, that he can opt out of it.

Which led the Haggler back to Mr. Welsh: Why didn’t you just say you wanted no part of payment review?

He had. Several times. He sent the Haggler a few of the many e-mails between him and PayPal reps. One was this bracing no-way-José from an Executive Escalations team member: “You asked why you are unable to opt out of the payment review process. Payment review is an automatic process within the PayPal system that cannot be overridden. It is a tool we use to prevent loss for our customers and ourselves. If PayPal allows an unauthorized transaction to process, we are at risk for reversals from the credit card companies.”

Not only does this contradict the notion that anyone can forswear payment review, but it says that opting out isn’t possible because it’s “automatic.” Further, it contradicts the point of the program, which a publicist said was all about protecting merchants. Now we learn that it’s about protecting merchants and PayPal.

It gets better. The Haggler was told that most reviews occur in a matter of seconds; 24 hours is a worst-case-scenario number. But Mr. Walsh was told, in yet another e-mail, that a review “usually takes 24 hours, although in some cases this time frame can extend to 48 hours.”

The Haggler bundled up all this information and forwarded it to eBay/PayPal. Katherine Hutchison, a senior director at PayPal, apologetically explained that her underlings had given Mr. Welsh wrong information. She added that as a result of his experience, the company was in the process of retraining its reps so they understand that payment review is optional.

The Haggler doesn’t doubt that the PayPal phone and e-mail agents are about to be retrained. But the Haggler can’t help but notice a pattern. The previous column was about the thousands of eBay sellers who were chagrined to learn that their money would be held by the company for as many as 21 days. In that matter, as with this current one, eBay/PayPal spokespeople said that preventing fraud — not enhancing profits, by accumulating bank interest — was the point of hanging on to the money.

That might well be true, but the Haggler must humbly suggest that PayPal has a credibility problem. It stems from its policy, described in this space two years ago, of asking users to “verify” their account after transferring $10,000 over the company’s network. One can get “verified” by either handing over bank account information or signing up for a PayPal-affiliated credit.

PayPal has long described this as a “risk-prevention technique,” but that makes little sense, because even customers with perfect track records must comply. No, PayPal wants bank account information, as a spokeswoman acknowledged in that 2010 column, because it’s cheaper to scoop money from a bank than to deal with a credit card. And if PayPal has to deal with a credit card, it would like to deal with a PayPal credit card.

In short, this is more about profits than risk prevention. Nothing wrong with profits. But PayPal says not a word about the financial upsides it enjoys courtesy of “verification.” Ms. Hutchison said that the verification process is evolving and that users can now be verified without giving bank account information or acquiring a PayPal credit card. But amazingly, that option never shows up on any online menu. It’s available only to people annoyed enough to call or write.

“We are working to improve the experience,” Ms. Hutchison wrote in an e-mail.

Great. But until then, the process is a pretty shabby one for consumers. The Haggler thinks that when PayPal asks to “verify” its customers, it should level with them. Until then, in disputes like the one involving Mr. Welsh — which could either stem from poor communication, as the company contends, or be part of a strategy to enhance the bottom line — it will be hard to give the company the benefit of the doubt.

E-mail: haggler@nytimes.com. Keep it brief and family-friendly, go easy on the caps-lock key and include your hometown. Letters may be edited for clarity and length.