Widely criticized for an opaque method of releasing merchants’ funds, it is being widely reported that PayPal is preparing to make changes to its policies. Impacting small merchants and non-profits disproportionally, the company also faces much stiffer competition for these bread-and-butter segments than it has in the past.
In addition, managing the dispute process only serves to increase costs and to what end? For a company that widely touts its industry-leading risk management strategies, the expectation is it will solve this problem, not simply modify some rules. Moving the industry forward to new and better risk management practices would speak well to the company’s focus on growing into a new position in the market.
From CNN Money:
The company routinely freezes funds for 21 days if it thinks there’s a fraud risk, and its terms give it the right to extend the freeze for up to 180 days. To get access to their money, users are often asked to provide the kind of documentation that a product seller would have, like several months’ worth of sales records. But if you’re running a fundraiser or selling tickets to an upcoming conference, you don’t have that paperwork.
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