Will Paypal Freeze me ? (LOADS of Paypal Money comming in)

Congratulations on all the money coming in. I have read through a lot of paypal issues here and the main thing that seems to work for most people is giving Paypal a call and telling them how much money you expect to be coming in. They will then note your account and you should be fine.

yes I have heard of people getting their paypal froze because of a launch but I never did hear the solution of not having that happen... I will be looking for the answer and perhaps it has already been given... by giving them a call... sounds reasonable enough

There is 2checkout which still gives your customers the option of paying with Paypal but it goes through the 2checkout paypal account instead of your own so it's not putting your paypal account at risk.

I think if I were going to be expecting large payments coming in I would go with something like this.

any recommended merchant accounts?

Do they accept Payments VIA Paypal from customers? (have paypal integration in them)? - and i receive the money from the Merchant account direct?

and how do they pay me? by Check ?

I just went through a similar issue.

Made 30k in September and they froze me because I was a "credit risk."

Heard of many stories about froze paypal account after large payments. Just like regular banks, they can suspect other illegal financial activities so they may need to freeze the account. The good news, as stated above, is you can contact them beforehand for large transactions. With this being said, you should be okay divulging several information about how you obtain the money.

Here are some steps you can take to minimize the possibility:

1) Call them up before your expected large payments start coming in.
2) Don't withdraw all your money at one time, and keep some money in your account.
3) Apply for a Paypal debit card if you haven't done so already.
4) Try to make regular purchases with the debit card.

This should keep you safe for the most part, don't forget to inform them whenever you expect large payments coming in.

Paul

I was wondering if anyone is familiar with - Free Merchant Account, PayPal Alternative, Credit Card Processing - Home and if they are any good?

This gets thrown around all the time. I have never had a problem with PayPal. That being said I also haven't had massive changes in my incoming cash. I tend to use paypal for my writing services only, and while I make a good penny or two, it tends to be a relatively steady, continuous flow, after all I can only take on so many clients at one time.

Now what I can say is that a common theme in many, not all, of the PayPal horror stories is that people immediately withdraw all of their funds. A good rule of thumb, keep 20% of what you bring in, in the account until the 60 day refund period has passed.

And yes I'm sure I'm going to get flamed for saying that. I'm aware that PayPal isn't a bank. I'm aware they most likely earn money on your money as you wait out the refund period. Oh well. It's the cost of doing business when you use them as your payment processor. Hold 20% back to cover refunds. Once you hit the 60 day refund limit, transfer it out. That means that every night, or every week, or whenever you can immediately take $.80 on the dollar out of your account. That seems to be the prevailing theme when it comes to keeping PayPal off your back.

Note that I said I haven't dealt with this situation, this is only my observation from the conversations that have taken place on this forum and in other places about this very topic.

Like most people are saying the easiest thing to do is call paypal and let them know ahead of time.

But I have had massive amounts of money come into my paypal account in really short amounts of time and I have never had a problem.

As long as everything is above board and legit you shouldn't have a problem.

I also agree with Paul have a backup system in place.

Cheers,
Tristan

I will definitely look out for that post! Way to go!

- Ryan

Here is the reality on PayPal, payment systems and merchant accounts.

Anytime money changes hands there is a risk to the CC processor - who ever it happens to be.

Someone pays you $1,000 but then changes their mind and does a chargeback its the CC processor that has to collect from YOU. The risk is on them.

The poor economy has brought out more refund requests, chargebacks and fraud reports of "product not received" as more and more people try to get out of their responsibilities.
This makes the processors nervous.
It doesn't matter who the processor is. PayPal, 2checkout, authorize.net, PowerPay, etc they are all wanting to decrease their risk by making sure you are able to pay.

I opened my Paypal account a long time ago so I don't remember what i had to do to establish it but I know now they still don't ask for as much information as a pure merchant account does.
To get a "real" merchant account usually involves an in depth credit application and credit check. I have 2 through QuickBooks. I know what I had to do for them was more than what I did for Paypal.
Why do they they do this? They want to feel satisfied that you aren't a poor risk should you have a lot of chargebacks.

Another thing a "real" merchant account processor will do is ask you what you are processing payments for.
One of the factors used to determine risk is the product you are selling.
Downloaded products, ebooks, virtual material, memberships are a lot higher risk then physical products.

Paypal isn't the only one who will freeze funds. Places like PowerPay will place a hold on your funds as well. I have 2 clients using them and one has 5% held back and my other client has 10% held back. PowerPay has also asked to "approve" the sales pages and sales funnel and they have asked who the affiliates are as some affiliates have a history of high risk clients.

So getting back to PayPal. They have a tendency to get nervous with a lot of transactions - especially on a new account because whats stopping you from taking all the cash and "running"? 45 days latter when your customers ask for refunds or do chargebacks on their CC, PayPal is left holding the bag. That's why they get nervous.

To make your life easier with these payment systems, establish a relationship with them and try putting yourself in their shoes.
Understand the type of activity that sends red flags and know that online transactions (not physical products) are the riskiest ones for payment processors. Online transactions are risky for processors as the chargeback / fraud % is higher then with Online physical products and in person transactions.

They may freeze you if the spike is unusually large. If you contact them first and alert them to what is going to happen, there shouldn't be a problem though.

Woah, thanks for this thread. I had no idea that PayPal freezes accounts. That's really important information. I'll look into that 2Checkout thing when I get to doing some type of launch.

At the moment I can't afford a merchant account, but looks like that is the way to go if you can. Thank you to all who have also commented here. This is really good to know.

Mark.

In addition to Debbie's excellent post, look at the incentives.

PayPal makes money based on the funds in your PayPal account moving around within the PayPal system. So the longer you can keep the money in their hands, the happier they are.

So the people who get money in PayPal and then race off to move it into their bank? PayPal doesn't like them. This takes the money out of PayPal, where it no longer makes PayPal money.

PayPal's great economic incentive is to do something that will make these people keep their money in PayPal longer. Limiting accounts and placing holds on funds will do exactly that.

Now, if you have a HISTORY of putting money in PayPal and KEEPING it there... PayPal will be a lot less nervous if a bunch of money shows up all at once. But when your history is of sucking your money straight out of PayPal and putting it elsewhere, they get a little antsy.