So, you’ve either deposited or withdrawn money from a PayPal account to your bank account, but are noticing it takes days for the funds to arrive.
This is in stark contrast to when you send or receive money from other PayPal accounts, which is pretty much instant.
This, of course, raises the question: why do PayPal transactions take so long?
PayPal transactions take a long time to process because they are done through a payment system called ACH, which requires extensive verification and multiple steps before authorizing a transaction to take place. In other cases, PayPal’s own security systems might delay a transaction to complete extra safety checks.
However, transactions between PayPal accounts are instant because they aren’t processed on the ACH but rather on PayPal’s own servers, through their own algorithms and software.
As such, transactions between PayPal accounts are done almost instantly.
ACH, SEPA, and other payment clearing systems
The processing speed of a transaction between a bank and your PayPal account depends on what financial technology a country uses to process payments.
The USA uses a system called ACH, short for Automated Clearing House Network.
An ACH transaction is quite complex and involves multiple steps where PayPal, your bank, and a Federal Reserve clearing house all communicate with one another to complete the transaction.
During this time, they verify who is involved in the transaction, what sums are sent, whether the sender has enough money in their account, etc.
The problem with ACH is that it’s built on technology from the 1970s. Some steps even require manual human input to complete the payment process.
Because of how many transactions there are and how thorough ACH verification is, a transaction can take 1-3 business days to be complete.
One thing you may have noticed, however, is that sometimes sending money to PayPal from your bank account is instant, but withdrawals take days or more.
This is because for trusted accounts, PayPal won’t wait for the transaction to complete and will instead instantly “loan” you the money until the ACH transaction is finished in the background.
Thus, depositing money to PayPal takes just as long as withdrawing it, but PayPal does a financial magic trick to make it seem instant.
This is also why, in some cases, it’s possible for a PayPal account to have a negative balance.
It’s because PayPal credited you the money; you spent it, but the ACH transaction was cancelled or denied. As a result, PayPal never received your money, and so it shows you as having a negative balance.
However, this doesn’t work when depositing money from PayPal into your bank account, so you’re stuck waiting for the transaction to clear and the money to arrive.
Similar rules apply for non-USA countries and international transactions.
The only exception here is that some countries and regions use different processing systems.
Europe, for example, mostly uses SEPA, a system built in the 2000s with more modern technology. As a result, most SEPA transactions are either instant or completed in under a day.
You started the transaction late in the day
Transaction processing systems such as ACH are not 24/7, but instead only Monday to Friday, starting from 7.30 AM to 6 PM.
This means that if you withdraw PayPal funds at 9 AM, there is a chance the funds will be in your account by 6 PM.
However, if you perform the withdrawal at 6.01 PM, you will usually receive the money the next day at the earliest.
You started the transaction on a Thursday or Friday
As mentioned previously, the ACH system only works during normal business days. This means that no transactions are processed during the weekend.
Thus, in some situations, it’s possible to initiate a PayPal fund withdrawal on a Thursday evening, but the transaction will only finish processing the next Monday, almost 4 days later.
Bank holidays can also affect this schedule since transactions aren’t processed during this time.
Transaction is delayed for legal reasons
If you haven’t used your account in a while, it’s possible PayPal may place your payments on hold for 24 hours as a security measure.
During this time, their algorithm will check if the payment was legitimate and if it was really you who initiated it.
If you run a business that sells stuff and are using PayPal as a payment processor, then it’s possible PayPal is delaying releasing funds as part of its anti-fraud policies.
These policies are in place to protect consumers (and PayPal’s reputation) from scammers and fake merchants who don’t actually sell anything.
This policy usually applies only to new merchants and will end after properly verifying yourself and your business or by building a positive selling history on PayPal.
PayPal Instant Transfers
As an exception to the above, PayPal does have an Instant Transfer feature which allows you to process transactions much faster, but at a considerably higher fee.
This Instant Transfer feature is usually either a normal wire transfer or a more expensive version of ACH transfers, which cost more but allow you to “jump the queue,” as it were.
Overall, it’s not really worth using, since it’s mostly PayPal dressing up a common feature with a marketing slogan as a way to extract more money from you.
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