EBay's new policy of holding PayPal funds on "high-risk" transactions for up to 21 days has business owners spooked. (FORTUNE Small Business) -- In the uproar that erupted over the planned fee hikes and other policy changes eBay announced last week, one drew particular ire and incredulity: eBay's plan hold payments sent through its PayPal payment service for up to 21 days in certain circumstances.
The freeze will apply to transactions eBay (EBAY, Fortune 500) considers high-risk, and is intended to protect buyers from the hazards of a bad transaction. By hanging on to funds, eBay can easily refund them if a seller doesn't ship a purchased item or sends damaged goods.
What is sparking reactions ranging from annoyance to panic among some of eBay's sellers is the company's criteria for determining what transactions fall into the "high-risk" category. Factors beyond sellers' control, including the number of "feedback" comments they have from previous buyers and how many of those comments are positive, can trigger the freeze.
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Representatives from PayPal, which eBay acquired in 2002, declined to comment on how the new policy would affect individual cases, but noted that the changes are paired with increased protections for merchants who use the service.
Fortune Holding and have use of money for
21 days? What happen to the benefits of electronic transactions? Can you imagine the chaos if all banking institutions decided to do the same?
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