paypal, oh boy, what a love/hate relationship. Above average user, very few disputes, great credit score, overall, an ideal customer. I usually take about $100k payments a month through PayPal (standard, not friends and family), and never had an issue until 5 months ago. In one week I did really well, and received $90k in CC payments. 3 weeks later, out of the blue I get a phone call on a Sunday night at 845pm. "Sir, we are limiting your account and need more info on these 3 large transactions. We need tracking and invoice for each sale". Not a problem, upload the info, and they say they will unlock the account the next morning. Next morning, the three separate customers who paid the total of $90k start calling. They are saying PayPal has called them asking if they received the purchase, if it was acceptable, totally in their possession, and was there any reason they would file a dispute. They all confirmed they were happy, and I was relieved and figured the limitation on our account would be lifted within a few hours.
Another phone call from PayPal later that night, and it's their merchant review dept, and they want to put a rolling 10% hold on all my payments for 60 days. Go back and forth about why this has happened and they said "paypal does not want to accept the risk that come with these large payments". I appealed and sent them bank statements showing cash on hand and they pulled my credit which is perfect. I thought it was a mixup and they would come to their senses.
Nope, next day after reviewing, same dept calls and say I have 3 choices, refund the payments and have the buyer pay with a different method (customers all already have their purchase in hand, and not one had any complaints). Two, accept a 10% hold on all future payments for 60 days, and then the 10% will be released on a rolling basis. Lastly, put a $25k deposit in my PayPal account indefinitely. Chose the 10% as It seemed less of a headache, and moved CC processing to a small local bank.
In the end, the month slowed down and was slightly above average, but nothing drastic. I still have a 10% hold on my account, with literally zero reasons why it is needed. After talking with a friend who is employed there, he said most of PayPal "top 1%" accounts went under a similiar review, and most now have the same holds on their account.
I have always heard the horror stories and thought there was always more to the story. I have been a PayPal user for 13 years and very rarely have had an issue or an outcome I thought was unfair. I had no problem paying the insane fees, As I was satisfied and chalked it up to the cost of doing business. Even though it is a lot less convenient, we moved the majority of our payments to a different processor. I still can't believe they "punished" us for doing more business, and now understand why so many people have had huge issues with them. Unfortunately they are a necessary evil for most business' and until their is legitimate competition, we are stuck with some of their more draconian practices.