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View Full Version : Does PayPal gouge by floating payments?



Chip-skiff
01-25-2010, 09:46 PM
This is just an impression. But I'm struck by how long it takes a withdrawal from my bank account to appear in my PayPal account.

Five days total, or three business days?

Credit card transactions are more-or-less instantaneous. What takes so long for PayPal? Unless they're gouging the interest on floated money.

PugetSound
01-25-2010, 09:52 PM
Don't know about Pay-pal but 5 business days is pretty standard for paying utilities on line. The electronic transfer part may be nearly instantaneous but you still have to have someone verify the transaction.

Steve Paskey
01-25-2010, 10:11 PM
Don't know about Pay-pal but 5 business days is pretty standard for paying utilities on line. The electronic transfer part may be nearly instantaneous but you still have to have someone verify the transaction.

Verify? What do you mean by "verify"? I can walk up to an ATM machine in say, Riga, Latvia, stick in my card from a U.S. bank, and receive cash instantly. I don't need to wait five days -- or even five minutes -- for anyone to "verify" anything.

OconeePirate
01-25-2010, 10:15 PM
I've asked representatives of various financial institutions multiple times who collects the interest on money when its in that amazing limbo place between accounts and none of them will ever give an answer.

Harbormaster
01-25-2010, 10:21 PM
That's exactly how Paypal makes their money. They take it out of the account, hold it a couple of days get the interest etc. That's why there's no charge for the transaction. Credit cards charge a few percent on every transaction and those charming interest rates they have. Oh, and late fees. Paypal isn't gouging, but they are making a profit.

OconeePirate
01-25-2010, 10:26 PM
Of COURSE they make the float ...

Just like ALL banks/financial institutions ...

HECK- you could buy a car for 75k cash ... the bank clears the check that/the next business day ... but the receiver will not clear for at least seven to 10 days!

All about interest, baby!

LOL... try buying a new car with cash. The salesman will look at you like you're a drug dealer.

PugetSound
01-25-2010, 10:27 PM
Talk to the utility companies....... I'm just passing on the facts. if it makes you feel better to believe that everyone is out to make a quick buck off your hard-earned $$$$ then more power to ya.

High C
01-25-2010, 10:30 PM
Interest? Who's paying interest these days? .01% maybe?

Uncle Duke
01-26-2010, 11:20 AM
But I'm struck by how long it takes a withdrawal from my bank account to appear in my PayPal account.
Five days total, or three business days?
Credit card transactions are more-or-less instantaneous.I'm in the biz of writing software for exactly this kind of stuff. Here's the scoop:
Card transactions can be approved (guaranteed) immediately although the actual transfer of monies from one account to another usually happen in batch mode, overnight. This means that card accounts can be safely updated in real time.

ACH transfers are different (older technology) and can vary in bank-to-bank transactions between 1 and 4 days for the actual money transfer. There is no real-time pre-approval (guarantee) for this type of transaction, so it cannot be booked (remember that your paypal 'account' is actually a paypal bank account which aggregrates all paypal user funds) at the receiving side until the funds are actually transfered.

Paypal (among others) would really prefer that you use ACH, though, since their transaction fees for those transfers are substantially lower than card fees - cutting their cost of doing business. ACH transfer fees for a company like Paypal are probably $0.25 per ACH transaction vs. $0.15 plus 2.6% of the total for a card transaction. The difference may seem small but adds up in a hurry.

Steve Paskey
01-26-2010, 01:44 PM
Here's a discussion of the issue from an article in the Wall Street Journal. I'm left with the impression that there's no legitimate reason why the process can't be completed by the end of the following day in most cases.

http://online.wsj.com/article/SB122463632484157009.html


Here's the hitch: Funds transferred between two different banks or a bank and a brokerage firm aren't really sent "online" in the way we have come to expect. Instead, these large transfers move in steps. Banks have slowed down the process further to reduce the chance of fraud, even though such fraud is fairly rare. (Years ago, Congress forced banks to speed up the clearing of checks and the availability of deposits, but it hasn't addressed electronic payments.)

You may have seen this when you tried to move money to or from a brokerage account. I ran into it most recently when I went to my ING Direct savings account first thing on a Monday morning to transfer money for a new car to my Bank of America checking account. While it showed up as "pending" on Wednesday, it wasn't mine to spend until Thursday.

What happens during that time? ING sends transactions in batches during the day to an automated clearinghouse, which sorts them and moves them to the receiving bank in a matter of two to four hours, according to Arkadi Kuhlmann, chief executive officer of ING Direct USA, a unit of ING Groep NV, and Elliott C. McEntee, chief executive of Nacha, the Electronic Payments Association, a not-for-profit group that oversees the automated clearinghouses.

In many cases, the receiving bank gets the transfer the same day. Under rules established by Nacha, money that moves on Monday should be available by the end of Tuesday. If the transfer slips to early Tuesday morning, the money should be available first thing Wednesday morning.

But the money isn't always available that quickly. Bank of America Corp. says such transfers typically take two to three days. EmigrantDirect says on its Web site that transfers take two to four days, while HSBC Direct says customers should expect transfers to take up to three days. The industry calls this a "three-day good funds model," says David Goeden, an HSBC executive vice president in personal financial services. That is, the bank wants to make sure our funds are good before it lets us have them.

The slowdown for deposits is even worse. I sign in to ING Direct to transfer funds for free to and from my Bank of America checking account. That's because Bank of America charges me $3 to transfer to another bank, which it says is typical in the industry. Because ING doesn't know if the transfer is good until the money is there, it holds deposits for five business days -- a whole week in civilian time -- before making them available ...

Paul Pless
01-26-2010, 02:25 PM
Cash is NOT king ... finance is king!Brad, when was the last time you took out a loan to buy a car?

peb
01-26-2010, 02:32 PM
LOL... try buying a new car with cash. The salesman will look at you like you're a drug dealer.

Well, I haven't bought a car in a few years, but have paid for cash for the last 7 vehicles I have bought, I never remember any strange reaction from any dealer.

Paul Pless
01-26-2010, 02:34 PM
LOL... try buying a new car with cash. The salesman will look at you like you're a drug dealer.


Well, I haven't bought a car in a few years, but have paid for cash for the last 7 vehicles I have bought, I never remember any strange reaction from any dealer.Yeah... I've never had a negative reaction from a salesman for paying cash for a car either.

Chip-skiff
01-26-2010, 05:31 PM
Thanksó Appreciate the explanations. I'm not exactly a high-finance sort, and the contrast between the near-instant verification on credit card transactions and ATM withdrawals and the PayPal bank account deal was pretty puzzling.

I assumed that someone was collecting interest on my money after it left the bank and before it appeared in my Paypal account. But I didn't know there was a cost difference in the type of transaction. I have found out that credit card firms log a rolling balance which makes it more likely that, between the arrival of your monthly statement and the time they post your payment, your balance will exceed the limit, allowing them to hit you with a $40 fee.

It's like being attacked by a thousand mosquitos with stainless-steel beaks: all those wee bites add up.

OconeePirate
01-26-2010, 07:24 PM
Well, I haven't bought a car in a few years, but have paid for cash for the last 7 vehicles I have bought, I never remember any strange reaction from any dealer.

It was cold so I was wearing my leather jacket and kutte, had funny looking hair, tattoos, and a good portion of it was money I'd been saving so it was 10s and 20s. And I was kind enough to leave out the part about paying cash until after all the haggling was done and they started talking about credit checks. I actually overheard the salesman in the hallway talking about me.

stevebaby
01-26-2010, 07:28 PM
Finance is indeed a big profit center for car dealers... but trust me, if you are immune to their finance arguments, they are more than happy to take your cash.As a former car salesman said to me, "We're not really in the business of selling cars...we're in the business of selling finance."

paladin
01-28-2010, 04:18 PM
When I bought the Jag......I was next door having a gut bomb at Burger King...they drove in a truck with the new Vanden Plas on it...a nice satin beige one....I had been with a friend working on the boat...dressed in a faded pair of levis, ratty old deck shoes, a rather well worn T shirt and my scruffy baseball cap....I probably hadn't trimmed the beard in almost 2 weeks as I had been getting the boat ready for a pond crossing.....
I walked into the showroom, walked around last years model, and a sales person walked over to me just as I was opening the door to get a closer look inside. I was asked not to touch the car....I asked if I could sit inside as I wanted to see how comfortable it was....he was a "senior" salesman. He called over a relatively new salesman. He was more polite. He asked if I was interested in that particular model, as they had the lesser expensive one on the floor. I said, no, I'm more intersted in this one, I like the color.
He was very polite, I was looking at the "seafoam green" one....he said the resale value on this color will be less if I should decide to sell. The tan or silver one had a better resale value, and he would recommend the new model that just came in as the price would be the same for last years model...I asked how much...he told me...I said get the price down a lot lower, and figure on a cash sale, no trade in.....he looked at me...went to the office and came back with a figure almost 10K down...I asked how long to get the car ready as I was waiting for a ride and I would cancel it...He said about 4 hours but he could rush it through in 2......I said make it happen......I came back 2 hours later and the car hadn't moved...he apologized...the sales manager came out and said in his best British accent, that they would not commission a car without a proper credit check......I said it's a cash deal...he wanted to see the cash.....I called the bank, just down the road and asked them to bring me a bank check for the amount....20 minutes later I had the check in hand...the sales manager wouldn't accept it as he thought it was bogus.......I walked away from him...and to the sales guy....I told him he was about to lose a good sale because of the idiot in charge...and asked if the owner was on the premises....The senior sales person lost the commission....
He went away, made a call, and another gentleman came out, looked at the check, and asked if I would be offended if he called the bank...I handed him my phone......the car was ready in 2 hours...and they threw in a set of 5 wire wheels at the same price. A year later I went back for an oil change and service, the same manager was there, the sales man had gone to work for another Jag dealer...I walked out and drove to the new location...never had trouble with service.