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PP requiring a 6% revolving reserve for 90 days WTF

Discussion in 'Ebay' started by Defon, Jul 8, 2014.

  1. Defon

    Defon Regular Member

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    So one of my Joint Partner's is doing great. His selling limit has gone for $5K selling limit to $850K monthly selling limit in like 5 months. Sales are breaking $100K a month and life is good... till last week.

    PP likes to limit the account every month and hold about $10k to $15K while we send in invoices and the like but it is expected at this point. We are completely white hat so no worries, after a few days we are good to go and continue to use PP with no problems. But last week they played the same old game asking for invoices and such. Of course we spent hours and hours on multiple calls getting transfered and finally they unlimited the account with a new rule for us. They are holding 6% of all income for 90 days.

    We had a few open cases but it was not that we did anything wrong and we always settle for the customer to be happy, even lose money on some transactions to keep the customer happy. 80% of the transactions were the customer didn't read the shipping times. So with a 5 days handling time they open a case on day 3 for "where is my item".

    Anyway, it isn't like we had more open cases than normal. At first the 6% didn't seem like the end of the world and we were just happy to have the account in good standing (BTW this is NOT a stealth account) and now we are doing the math and we are looking at keeping between $20K and $26K on deposit with PP during 6% with holding. WTF!! So even with a 20% to 25% profit margin we can manage but we have 3 employees and some other overhead... lending $20K to PP just seems F***ED up.

    We are thinking of trying Propay or another one of the alternative payments allowed on EB but since this account will be new our volume needs to be low for the first month or two.. grrrrrrr. Seems like even when you are playing by the rules PP seems to F you over sometimes.

    We are afraid the PP alternatives will reduce our closing ratios, and reduce sales volume.

    Anyone here have an alternative for payment that they suggest or a general suggestion for this F--ked up situation?

    Thanks
     
  2. kacperp94

    kacperp94 Regular Member

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    How about 2checkout?
     
  3. ronywilliam

    ronywilliam Senior Member

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    if you got a high risk MID it would be 5-7% fees + 10% rolling reserve

    So thats actually cheap tbh.
     
  4. KT1990

    KT1990 BANNED BANNED

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    Message Paypal and say fine. I will transfer the rest of my money out of Paypal and wait 90 days and then transfer the rest out and never use Paypal again. See what they say.

    Maybe they won't care because 100k is nothing to them and it's not like their employees give a fuck, but maybe they will, you can only try.
     
  5. RosuC

    RosuC Regular Member

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    Try to use Avangate if you really have a good product to sell. PayPal is very bad in handling lots of transactions and they like to "play" dirty, they did with me the same, luckily I succeed to get a direct contact with them by phone and then in their office in Madrid, like this they stop playing stupid games and they sustain the account proper.
     
  6. blackpackets

    blackpackets Jr. VIP Jr. VIP Premium Member

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    Or try Authorize.net they are pretty good too. Not sure but I think your business has to be in US, Canada, UK, or Australia to use them. Whenever paypal acts up is a good idea to have them as the secondary processor. Look around online plenty of resellers of Authorize.net service that have better deals even then the parent company.
     
  7. Defon

    Defon Regular Member

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    Interesting comment. I use to resell merchant accounts and I was kind thinking of this.... I guess it sucks becuase normally in merchant services it is known at the start of the relationship if your business is HIGH risk.... but maybe we should be thankful....hmmm
     
  8. Defon

    Defon Regular Member

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    This is tempting but from what I have read online about PP they could care less. Sh*t even getting a class action lawsuite every couple years doesn't seem to phase them...
     
  9. RushingStar

    RushingStar Newbie

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    In any processing company, a 16,900% increase in revenue in just a 5-month period is beyond alarming and you would experience similar issues anywhere. You're honestly lucky they didn't just terminate the account or implement a far higher reserve.

    You mentioned you'd need to keep your volume low "for a month or two" at a new processor, but any increase even close to that after 1-2 months would have your account closed in seconds. Processors like 6-12 months minimum of stable processing before there is major growth.

    Anyway, without knowing your average ticket or your chargeback rate, it's hard to tell who's got the better side here. If your average ticket is $1k+ (since the volume is high I assume the tickets are fairly high), then PayPal needs to hold that money to cover your partner's disputes. If you went with a regular processor like Authorize, for example, they would make you show bank statements to prove you had tens of thousands of dollars on hand at any given time to cover chargebacks, which is essentially the same concept, because they would implement a reserve, a higher rate, or just reject you if the bank didn't have enough on hand.

    As far as disputes, they are bad for both you and the processor. By allowing disputes and blaming the customers for not reading, you are doing your processor - PayPal in this case - a disservice by not being vigilant in lowering them. The standard chargeback rate maximum is 1% of all transactions, though preferably far lower than this and even lower if you've got high tickets. You can send flowers and refunds to your customers all day long, but as soon as that dispute hits the account, the processor doesn't care what you do afterwards. All your processor sees is another transaction contributing to your chargeback rate.

    When a chargeback/dispute happens, the customer must be paid back immediately. The customer always wins up front. This means if it's a chargeback, the credit card company must credit back the customer right away. The credit card issuer isn't about to be held liable for that money, so the issuer chases down PayPal for that money. PayPal isn't about to be held liable for your dissatisfied customer, so it has to chase down you to pay back the card issuer to pay back the customer. When you get a dispute, there are a chain of people who get fucked over and everyone loses money or at least doesn't make as much as they could have, so beyond that, it doesn't matter what happens afterwards.

    So if you have a consistent chargeback rate rather than one that is decreasing by, say, making the shipping information very evident, then your risk continues to increase because as your volume increases, so does the potential for chargebacks. And if the processor sees the same dispute reason over and over - in this case miscommunication about shipping - then they know there is no effort being made to resolve the issue, so they must assume their profit and revenue from your account will continue to be threatened and thus, the reserve was implemented.
     
  10. FrEEzEKoN

    FrEEzEKoN Newbie

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    paypal...never ceases to amaze