The PayPal "Float"

Is there any way to shorten it?

[travelin cat]

One of our suppliers pays us through PayPal. While I'm not privy to their relationship with PayPal, they have informed me that it takes between 3-4 business days for PayPal to process the money and make it available to me. Then of course, when I receive notice that the money is in my PayPal account, I transfer it directly in to my bank account. This takes 1-2 business days before it appears in my account.

Basically, PayPal has the use of my suppliers money for an entire week. I assume this is part of their business plan because that can be a tremendous amount of interest income for them.

My question is this, what can we do to shorten this "float"? I'm not sure anything can happen on the suppliers end, but is there any way to get the money in to my account faster after I have been notified of its availability?

[jecasc]

While I'm not privy to their relationship with PayPal, they have informed me that it takes between 3-4 business days for PayPal to process the money and make it available to me.

If the supplier has the money ready in his Paypal account it takes about 2 seconds to process a payment and to make it available to you. If it takes three days this means probably that he makes a bank-transfer from his bank account to Paypal which takes that long to process. Or he uses another non instant payment option like direct debit to put money in his Paypal account. So it is not surprising it takes that long. He makes a payment from his bank account to Paypals bank account. That takes 1-3 days. Than Paypal has to process the payment and credit it to his Paypal account. Then it takes about 2 seconds to transfer it to your Paypal account.

For the withdrawal: 1-2 business days for a transfer from Paypal to your bank account is a normal time span for a bank-transfer. You have to realize that Paypal does not transfer money from the Paypal system directly to your bank account but they do a normal bank-transfer from one of their bank accounts to your bank account. The only way you could speed up things a little would be to open up an account at the same bank Paypal is transfering the money from. When I withdraw money from my Paypal account it is usually transferred to my bank account from Paypals Deutsche Bank bank account. So if I wanted to get my money faster a little I could open a bank acount with Deutsche Bank since intra-bank money transfers are usually faster. However since Paypal has bank accounts with many banks, there is no guarantee the next payment comes through the same bank as the last payment.

If you need your money faster ask your supplyer to put money in his Paypal account in advance.

By the way: What kind of supplier is this, that pays you for taking his goods? I always have to pay my suppliers.

[jwolthuis]

Is this what you described?:
Their bank account --> 3 or 4 days -->
their PayPal account --> minus 2% fee -->
your PayPal account --> 1 or 2 days -->
your bank account


Can they do this?:
Their bank account --> 1 to 2 days --> your bank account

[travelin cat]

jwolthuis, that is correct. In order for them to apply it directly to my account, they would have to do an ACH deposit, something they do not offer.


jecasc, suppliers was not the proper term, it is more like an affiliate relationship.

[LifeinAsia]

They could do a wire transfer directly between bank accounts. They generally cost $10-30 and should be same day. Depending on how much is being transferred, it might be cheaper than PayPal's fees.

[jecasc]

They could do a wire transfer directly between bank accounts. They generally cost $10-30 and should be same day.

Wow, I have heard that wire transfers in the US and some other countries are more expensive than here in Europe - but $10 to $30 for a wire transfer? Thats insane. With my bank the fee for an international wire transfer outside Europe is 1.50 EUR and domestic and EU wire transfers are free.

Not surprising Americans still write cheques.

[travelin cat]

Wire transfers in the U.S. use the Automated Clearing House (ACH) which is an electronic network for financial transactions. I have seen pricing for these up to $50 per transfer.

For some reason, they will not use ACH. This whole 2-3 day wait for bank transfers between PayPal and the banks really is taking advantage of the use of other peoples money unnecessarily. With today's technology, you would think that funds should be available instantly.

[Brett_Tabke]

> This whole 2-3 day wait for bank transfers between PayPal and the banks

Is a fraud defense waiting period. A good portion of fraud via paypal uses bank transfers to get the money out of pp. By waiting, pp cuts their fraud rate by a stupid amount (80% is what I overheard).

[travelin cat]

That makes sense Brett, but it would be nice if they had some sort of "Preferred Customer" account for people that have been getting transfers for many years from the same company and have thus proven their authenticity.

[jwolthuis]

For some reason, they will not use ACH.

Their bank doesn't have free online bill-pay? How do they pay those that don't have PayPal accounts?

[travelin cat]

These are not bills, they are commissions.

If you do not have a PayPal account, they will send a check, but that takes days to get here across the country and then sometimes the bank will hold the larger checks until they clear. This takes even longer.

[LifeinAsia]

I agree, our (U.S.) banking industry is woefully behind much of the rest of the world when it comes to online banking. From our bank account in Korea, we can make instantaneous transfers to any other Korean bank account online. It's free if the destination account is at the same bank, about $.50 if at another bank (that's for our commercial account- personal accounts may be fee).

ING Direct seems to be a bit better than other banks here. But there are still some major issues. For example, we can't directly transfer money between our business account and personal account there, we have to first send money to another linked account at another bank (2-3 business days) then send back to the other account at ING (another 2-3 business days).