Your PayPal Account: How It Works

Q: "Somebody paid me via PayPal a month ago, but the amount hasn't yet shown up in my bank checking account. Can I report this to eBay as an unpaid item dispute?"

A: When you open a PayPal account, it is entirely separate from your bank checking account. When a deposit is made to your PayPal account, it stays in the account—PayPal cannot and does not sweep funds from your PayPal account to your bank checking account unless you specifically authorize them to do that. Check your PayPal account balance, and you should see that the buyer's amount has been credited to your account. If you want to withdraw those funds to your bank checking account, simply tell PayPal to do that and they will, although it may take a day or two for the amount to show up on your checking account balance statement.

Q: "What happens if PayPal debits my account and there are insufficient funds in the account? Can PayPal automatically charge my bank checking account?"

A: If there are insufficient funds in your PayPal account, PayPal will send you a notice by e-mail demanding that you deposit funds into your account to pay any current debts. They may suspend your account if you don't respond promptly to this e-mail. But PayPal will never charge or automatically debit (ACH) your bank checking account.

Using PayPal Off of eBay

Q: "If I have multiple business channels, can I use PayPal outside of eBay?"

A: Absolutely. PayPal has a variety of features that allow for integration with websites. Simply log in to your PayPal account and click on the Merchant Services tab to learn more.

"PayPal offers functionality for building buttons on your website for buyers to make payments, shopping cart functionality for multiple purchases from the same buyer, and even processing payments through PayPal when your buyer doesn't have a PayPal account," says PayPal Community Education Specialist and PayPal Radio host Jason Miner (, adding that "the 'Merchant Services' tab on the PayPal home page allows you to tailor website solutions around the size and scope of your business and offers demonstrations of how many of its features work."

PayPal's Seller Protection Policy

Q: "How do I know if a transaction on eBay qualifies for PayPal's Seller Protection Policy?"

A: You can learn more about PayPal's Seller Protection Policy by visiting the Security Center link available at the top and bottom of any page at PayPal. Once in the Security Center, click on the Selling Safely link. There's a Seller Protection Policy overview that explains the protection and steps required to have a covered transaction. The policy covers most sellers for up to $5,000 (United States) and comparable amounts in foreign currencies on transactions that PayPal deems fraudulent.

"It should be noted that not all countries are covered by PayPal's Seller Protection Policy," cautions PayPal Community Education Specialist and PayPal Radio host Jason Miner ( "Currently, if you're selling in the United States, you can qualify for Seller Protection by meeting the appropriate criteria when receiving payments from United States, United Kingdom, and Canadian buyers. It is up to each individual business to determine an appropriate comprehensive risk management strategy, of which PayPal's Seller Protection Policy should only be one part."

PayPal's Seller Protection Policy is an actual insurance policy and can be found by clicking on the Protect Sellers link under the eBay Sellers tab on the PayPal home page, then scrolling down and clicking on the Seller Protection Policy link.

Section 11.3 of PayPal's user agreement, which describes the circumstances under which a transaction will be covered by the Seller Protection Policy, is so important that it deserves to be quoted verbatim:

11.3 Qualification Requirements. In order to qualify for coverage under the Seller Protection Policy, you must meet the following requirements:

a. You must have a Verified Business or Verified Premier Account at the time of the transaction,

b. The transaction must be between a United States, United Kingdom or Canadian buyer and a United States, United Kingdom or Canadian seller,

c. The payment must be listed as "Seller Protection Policy Eligible" on the "Transaction Details" page,

d. You must accept a single payment from one PayPal Account for the purchase,

e. You must not charge a surcharge for accepting PayPal,

f. You must ship the purchased item to the address listed on the "Transaction Details" page, and that address must be identified as a Confirmed Address, g. You must ship the item to the buyer within 7 days of receiving payment,

h. You must have trackable online proof of delivery from an approved shipper to the address on the "Transaction Details" page. For transactions involving $250.00 U.S. Dollars or more, you must provide a proof of receipt that was signed or otherwise acknowledged by the buyer and can be viewed online (if you paid in a currency other than United States dollars, the following amounts apply for this section: 325.00 Canadian Dollars, 200.00 Euros, 150.00 British Pounds, 28,000.00 Yen, 350.00 Australian Dollars, 330.00 Swiss Francs, 1,600.00 Norwegian Kroner, 2,000.00 Swedish Kroner, 1,500.00 Danish Kroner, 800.00 Polish Zloty, 55,000.00 Hungarian Forint, 6,000.00 Czech Koruna, 400.00 Singapore Dollars, 2,000.00 Hong Kong Dollars, and 380.00 New Zealand Dollars), and

1. You must respond to PayPal's requests for information within the time period PayPal specifies.

Please note that in order to qualify for our Seller Protection Policy you must ship the item as required in this section. If you hand deliver an item, or provide delivery in any manner other than required in this section, your transaction will not qualify for the Seller Protection Policy.

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