Stacy was reveling in her recent success.
She just closed the cart on a huge new program launch for which she had massive signups. She had upped her game in a major way and achieved the results she hoped for. Needless to say, she was celebrating.
Until the next morning… when she found her PayPal account locked, with all her hard-earned cash trapped in the PayPal vault.
All too often I hear stories about killer launches and subsequent PayPal disasters. Before you think this is a PayPal bashing email, let me stop you. I love PayPal. It makes it easy for online business owners to accept credit cards, even when they’re just starting out.
However, not knowing a crucial detail about how PayPal works could leave your money locked away.
What Stacy and many other online business owners don’t know is that PayPal and other credit card processors have a few tactics for managing the inherent risk associated with taking credit cards online.
One of those tactics is monitoring transactions, both the dollar amount of a single transaction and the total volume of money going into someone’s account. What does that mean? It means that if you raise your rates or have a big launch and go over and above what you’ve done in the past, you’re raising a red flag. If you raise a flag, your money could be frozen by PayPal or your merchant services provider (from two days to two weeks or more). If that happens, there’s nothing you can do about it.
The good news is that you can take one simple action to help prevent this from happening in the first place.
For those of you using PayPal, login to your account and click on “Profile.”
In “Profile,” under “My business info,” look for “Business information.”
Click “Update.” Then at the bottom of the next screen, click “Edit.” There will be a place for you to edit your expected transaction amount and your total monthly volume.
If you’re using a transitional merchant account, contact your merchant services provider and talk to them about your upcoming sales increase. They can make some notes so your money has a better chance of sailing through.
That’s all you need to do to minimize your risk.
Before your next big launch, rate increase, or other class sales, be sure to go into your PayPal account and update your information. This way you can make sure your hard-earned cash ends up in your bank account!
Jason "J-Ryze" Fonceca says
Such a tiny, easy, super-high-leverage tip, Jenny! Thanks!
Jenny, Thank you for this blog post. I had no idea this could potentially happen. You just saved me a lot of future headaches with paypal. I’m going to update my account right now.
Thank you so much!
I had heard about this happening to someone and I thought it was like an urban legend – now it totally makes sense.
What a Brilliant post
Kylie Pengelly says
Thanks for this well timed tip! I am about to launch a new product and will be using PayPal.
Jenny Shih says
Glad you all found it helpful! It’s a true story that it happened to a friend of mine, and it’s a simple fix so it won’t happen to her again.
May your PayPal accounts overflow … and not get frozen 🙂
This is a great tip, but with the account lockdown stories that I’ve read there hasn’t been a lot of success getting the money unlocked is low. Shouldn’t there be a way for you to get this done after your sales have increased?
Or a help screen somewhere that can let you know what can happen if your sales go up?
Jenny Shih says
For the personal stories I’ve heard, once PayPal’s fraud department completed their research, the accounts were unlocked.
How PayPal specifically decides what to do when this happens is controlled by PayPal’s fraud department, so I really can’t answer your specific questions. It’s best to be proactive and stay on top of your PP account details.
If something does happen to your account, be sure to connect with their customer service department on a regular basis until the money is released.
Amy Scott says
This is super-helpful, thanks, Jenny! I’ve heard some stories about this, and it’s great to know how I can protect myself as I launch new programs this year.
Heather Thorkelson says
Love it Jenny! Super useful. Thanks for keeping us in the loop. 🙂
Nicole Begley says
Thank you!! I have heard horror stories…but never realized something so simple could help avoid it!
I had no idea! Thanks so much for sharing, this was really useful.
Thank you, Jenny! Super helpful and easy to implement. I loved this!
Thanks for sharing this with us, Jenny. Some people are trying to sell a “program” to release this “unknown” PayPal information. And here you are, a slice of integrity, with a few easy tips just because you care. Another piece of who you truly are.
Bless you!….and thanks for the edge.
Excellent, thank you, Jenny, I have just forwarded on to a friend just preparing for her big launch – much appreciated!
Would have commented sooner but had to click over to PayPal to make some changes! Thanks for the heads up, Jenny…sooo helpful!!
Thanks for the tip! I’ve heard of this happening but wasn’t sure how to prevent it!
Susan McDiarmid says
Thanks so much Jenny Shih. This was super helpful and easy. 🙂
Lou Rodriguez says
Wow, the timing of this post couldn’t have been better for me since I’m a couple of weeks out from launching my own blog and product using PayPal. I will make the adjustment ASAP! Thanks for the great and timely advice 🙂
Changing the setting will help if you go from hundreds into thousands, but if your uptick is of a greater magnitude you should CALL them ahead of time if you have a product launch. Ask to speak with the head of risk management. You can still expect a big hold-back of funds for 30-90 days. Have your refund policy handy to review with them.
Jenny Shih says
Great point, Ashley. You’re totally right. It’s a really good idea to call if you are expecting a very large increase. You’re also right about them holding onto some of your funds if you don’t prepare in advance.
Thanks for sharing that here!
linda c. thomas says
Jenny, thank you so much for the info. I think it’s time for me to look at all my options.
Great tip, thanks Jenny!
Catherine Just says
Thank you ! I kept hearing about this happening and now I know how to create a peaceful launch!
Thanks for this. Great blogpost! Great Content!
Stormy @Maoomba says
Jenny, as always, you have wonderful tips and resources to share! Thank you for this little nugget – it’s a great help!
Devani Freeman says
Great tips, thank you Jenny!
Thank you so much! I just happened to reading my FB news feed when I saw your timely link.
First off, great post!
Secondly, so would it make sense if I changed the expected sales to a “really high” number, one that I can only dream of, instead of a realistic one, just in case?
And lastly, this can only be done with paypal business accounts, or also for private accounts?
Have an awesome day!
Jenny Shih says
That’s a good idea, Lisa, but PayPal also keeps in mind how much money you bring in and how quickly. If you put in expected revenue of $10,000/month but for several months just have $1000… when you have a big spike, they may hold some of your cash as reserves. So it helps, but not fully. You’ll want to call them ahead of time.
As far as personal vs biz – I’m not totally sure. You’ll have to check with them.
Kamila Gornia says
So helpful! Thank you for sharing! I haven’t come into issues with this yet but definitely better safe than sorry especially since I am gearing up for launch of new course this summer.
I’m a new follower of yours and am learning so much from just your blog posts. Really enjoy your straight forward approach too. Would you advise a brand new PayPal business user to do this exercise as well – inasmuch as first client payments are just beginning to come in to the account? Would you advise checking to set a “standard or routine” anticipated monthly amount (thinking positively)? Thank you.
Jenny Shih says
Although it’s a little bit of a mystery how PP handles all of this, I’d suggest starting out with your account of your generally expected monthly revenue amount through PP. That should work out well. If you do grow really fast, there’s a chance PP will hold some of the $ in reserve, but there’s not too much you can do about that. Just be transparent with them and if you do expect a big, fast uptick in sales, get on the phone with them and let them know. That will definitely help.
Jonathan Everton says
I learnt this the hard way, great that this post will prevent it from happening for so many others, or at least they will understand why it has happened.