WTH is a Paypal sending (not spending) limit?
March 31, 2013 12:51 PM   Subscribe

Had a payment through Paypal declined due to reaching "sending limit." What is that and how to handle?

I was attempting to make a payment to Ebay through Paypal, after years of trouble-free transactions, and the transaction was declined. I received an email from Paypal, quoted below.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Unfortunately, you've hit your initial PayPal sending limit of $__ USD. That's why your recent payment was declined.

Your sending limit is the maximum amount of money you can send or use for purchases before you need to become Verified.

Why do I need to verify my account?
We place initial limits on all accounts to increase security and help prevent fraud. Once you link and confirm a bank account or get approved for PayPal credit, your account will be Verified and you'll be able to make as many payments as you like with PayPal.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

It is worth noting that this is not a spending limit that has been reached on the credit card. This
whole thing smells rotten and I hoped to learn from fellow Mefites :
a: what is the reason for this?
b. how can I work around this? I have no need for another credit card and no intention of giving out checking account information.

Thanks for your collective insight.
posted by Ginesthoi to Shopping (9 answers total) 4 users marked this as a favorite
 
what is the reason for this?

To induce you to give PayPal your checking account information.

how can I work around this?

Stop using PayPal.
posted by grouse at 12:54 PM on March 31, 2013 [3 favorites]


It's mostly for legal reasons - unlike banks, PayPal doesn't see your drivers license when you sign up so at some stage it needs to verify you in some way. You could call customer service and ask about other ways to fix this. But it's pretty safe to link your checking account, and you can always unlink it later. You give out your checking account number every time you write a check. I would trust PayPal over some random dude doing my gardening, for instance.
posted by yogalemon at 1:01 PM on March 31, 2013 [2 favorites]


You have to link a checking or saving account to become verified and get around this -- but

1) you don't have to link an account you care about and

2) you don't actually have to use money from that account to send money.

I don't trust PayPal with any account I care about, I've read too many bad things about them. I set up a free checking account with a bank, and put $10 in it, and then linked it to PayPal. That gets you verified. I have a credit card that I use with the account tied to it, and every time I use it, I just am sure to check the "alternate payment method" radial button.
posted by instead of three wishes at 1:07 PM on March 31, 2013 [3 favorites]


Verification is why I got a small free online checking account only for use with PayPal.
posted by tilde at 1:08 PM on March 31, 2013


Regarding these comments from earlier posts:

But it's pretty safe to link your checking account, and you can always unlink it later. You give out your checking account number every time you write a check. I would trust PayPal over some random dude doing my gardening, for instance.

I don't trust PayPal with any account I care about, I've read too many bad things about them. I set up a free checking account with a bank, and put $10 in it, and then linked it to PayPal. That gets you verified. I have a credit card that I use with the account tied to it, and every time I use it, I just am sure to check the "alternate payment method" radial button.

Verification is why I got a small free online checking account only for use with PayPal.

Here is a quick note on the limits of this strategy. Let's say you get scammed somehow on ebay/paypal. Here is an extremely common scenario:
- Someone buys your item on ebay
- They send you the payment via paypal
- You send them the item
- Later, they dispute something (item was broken, lost, never received, etc.)
- PayPal gives them back their money by taking it out of your account.
- Now they have the item and your money.

You might think "but hahaha! PayPal can't get my money! I've only got $10 in that account!" Or "I'll just close the bank account!" Or "but clearly I am the upstanding citizen who did everything right here, Paypal won't screw me, I'll just talk some sense into them. I mean it's not fair!"

You would be wrong.

What PayPal will do, even if you unlink your bank, credit cards, etc. from your account, is send your account into "negative balance" mode. For all intents and purposes, this is the same thing as any other type of bill. Whether or not PayPal can collect on that bill themselves (by say, taking the money out of your linked checking account) is irrelevant. Since you got verified, PayPal has your real name, address, etc. The PayPal terms of service basically say "You give the right for PayPal to fuck you over to an arbitrary degree and will thank them for the privilege."

First, PayPal will just keep calling you, writing you, etc. and telling you you have to pay the bill. And if you don't, they will just send the bill to a collection agency, report you to the credit bureaus, etc. Note: there is no meaningful appeal process here, other than suing PayPal. PayPal decides you owe them money, they issue a bill to you, and you do. They are basically the credit bureau-system version of thugs. There is no recourse. It doesn't matter if you are in the right. PayPal cannot lose money. They can do whatever they want, and they are assholes, and they will do it.

This is the big difference between PayPal and the earlier poster's comparison to writing a check. If I write a check to my gardner, I don't also sign an agreement with him that says if he feels for any reason I owe him any money, I do, and he doesn't have the practical power of reporting me to credit bureaus, selling my account to collection agencies, etc. He also can't just debit my bank account directly, like PayPal can, once it's linked to your account.

Any large organization of people functions a bit like an organism, trying to prolong its own existence, its behavior a function of its environment and its internal culture. But PayPal & eBay are a dead deer on the side of the road. I don't think they are Evil, per se, I just think they are so grossly incompetently run that parasites naturally flourish there, and where once there was muscle & bone is now just rot and maggots.

So, this is why PayPal so wants you to have a Verified account. When they say stuff like,
"We place initial limits on all accounts to increase security and help prevent fraud," they aren't lying. They are just relying on you to confuse your security with PayPal's.

Their interests are not aligned with yours: they do not care about increasing your security or saving you from fraud. The only reason they would is if there was an active, competitive marketplace of money-sending tools, and if PayPal was managed by people who had a vision of being the world's next great way to transfer money, replacing credit cards, cash, checks, etc. But it's not. PayPal is run by drooling morons who've squandered one of the biggest opportunities of the commercial Internet era. This is a company that was founded in 1998. That had deployed software on personal mobile devices that could "beam" payments to each other over a decade ago. Years before Square, Stripe, Google Wallet, Amazon Checkout, Dwolla, NFC and the iTunes store. That raised hundreds of millions of dollars just as the dotcom crash was eliminating all of their competitors. How fucking terrible at your jobs do you have to be to blow an opportunity like that?

They have no vision beyond "being ebay's payments processor" and there is no real competition there, so they don't give a shit about users liking them. eBay is, of course, the worst-run large technology company in the world, so that's not doing them any favors either. Their only goal is to keep the loss ratio as low as possible. If I think about it enough, I start to feel bad for the people who work there, but then...nope, RAGE IS BACK! STILL PISSED AS HELL!
posted by jeb at 2:16 PM on March 31, 2013 [22 favorites]


I like using Paypal, but yeah, it's an adversarial relationship.
A dummy bank account is a good plan, if your bank will go along with it and not charge you a fee or demand a minimum balance, but you can also get the PayPal credit card.
If you decide to sign up for the Paypal credit card, you dont have to use it. use it once or twice, take their $20 " use me" credit, then put it in a drawer. Be aware that that is a crumbum credit card company, GE Capital, by name. they will fuck with you by sending the billing statements late and so on, and their customer help line is deplorable.
Now you can choose to pay on Paypal with your prior credit card on file, and everything will be be back to normal.
posted by Abinadab at 3:18 PM on March 31, 2013


What PayPal will do, even if you unlink your bank, credit cards, etc. from your account, is send your account into "negative balance" mode. For all intents and purposes, this is the same thing as any other type of bill. Whether or not PayPal can collect on that bill themselves (by say, taking the money out of your linked checking account) is irrelevant.

Exactly. When you give someone like Paypal EBT access to your account, you're protected only insofar as your bank will or won't honor that EBT transaction.

Forewarned is forearmed. I had to deal with a situation very similar to this (where the payee was a nursing home). I had an agreement with them to cover payments (about $500) over the insurance payment (about $4000) each month. They screwed up and did not submit the paperwork to the insurance company, and when EBT day came around they drew $4500 in one lump sum. The account only had a little over $500 in it per our expectations, and as a result it went $4000 negative. Guess what? We didn't have $4000. In the end we considered legal action but the home would have then evicted my family member. We ended up reported to ChexSystems as a result -- basically a black mark across the entire US banking system.

Not saying this will happen to you, but it's worth consideration.
posted by dhartung at 5:54 PM on March 31, 2013 [1 favorite]


It's worth noting you can pay for items on eBay that only accept Paypal without a PayPal account. Yes, seriously.

On the page it asks you to sign in to PayPal once you hit "pay now" or whatever the little button says, there's a "pay with a debit or credit card via PayPal" type button. Its below the username/password box. It runs your card through PayPal, and you don't even have to sign in.

There are a few limitations here. For one, that card can't be tied to ANY PayPal account or it goes "PLEASE SIGN IN SORRY"

My boss does this all the time though, since she flat out refuses to create a Paypal account. I've even seen her buy things in the multiple hundreds of dollars this way. I have no idea if there's a price limit at which this Button disappears though, but I have seen it mysteriously not show up. For instance, my Paypal and eBay accounts are linked to cover sellers fees, etc. that button disappeared. They definitely try and shove you in to using PayPal, but if you aren't that entwined it seems to let you.

And probably, because you know PayPal is lopping their fat processing fee off what the other person gets.
posted by emptythought at 6:38 PM on March 31, 2013 [1 favorite]


Thanks so much to all of you...I have a much better understanding of what is going on and what to do about it.
posted by Ginesthoi at 11:49 AM on April 1, 2013


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