Does Paypal Hold Money In Escrow

Why your PayPal money is on hold or pending, and how to resolve the issue

business owner looking at laptop shipping a box in clothing store — There's a number of reasons why your PayPal money may be placed on hold, but there are a few solutions.

Why does PayPal put payments on hold?
Why is my payment on hold?
When can I access my payment?
How can I access my money faster?
How to prevent the delay of funds

PayPal puts money on hold to help ensure the platform is safe to use for both buyers and sellers.
Your PayPal money might be on hold if you're a new seller or your account has been inactive.
To help release funds faster, add tracking information to your orders or print a shipping label via PayPal.
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PayPal is a convenient platform for small business owners to collect payment for their goods and services in a secure manner.

Sometimes, PayPal will put funds on hold for up to 21 days to ensure there is enough money in your account should any issues arise with the order. There are several reasons why a payment may be on hold, and ways for sellers to expedite the release of funds.

Here's everything you need to know.

Why does PayPal put payments on hold?

PayPal notes that the company puts payments on hold to help ensure that the platform is safe and secure for both buyers and sellers. Although the money belongs to you, PayPal will temporarily keep you from accessing it to make sure there's enough money in your account to resolve issues like chargebacks or disputes. Funds are released when the buyer confirms that they received the item they ordered in the condition that was advertised.

Some specific reasons why your payment might be on hold include:

Your PayPal account has been inactive.
The payment you received is unusual for your typical selling pattern.
PayPal found an unusual change in selling price for a particular transaction.
You're selling an item that customers may be dissatisfied with.
You've only recently started selling items outside of eBay.

Why is my payment on hold?

There are a number of reasons for why funds could be placed on hold, including:

You're new to selling. New sellers need to build up their buyer-seller credibility and history. Once you've established a successful transaction record, your status can change.
You haven't sold anything in a long time. Similar to being a first-time seller, if you haven't sold an item in awhile, you'll need to rebuild your credibility.
Customers filed formal complaints for a refund, dispute, or chargeback. If you've been flagged by multiple customers for various issues, PayPal may delay the availability of your funds. According to PayPal, the best way to remedy this is to work directly with buyers to ensure that issues are resolved as quickly as possible. To prevent complaints, be upfront about shipping costs, item condition, and return policy. You can also set up a customer service message to let customers know if an extreme incident — like a natural disaster in your area — is preventing you from shipping on time.
You have a suspicious selling pattern. PayPal will flag an account that has unusual activity, including a higher than normal selling pattern or a distinct change in the type of items sold.
You're selling riskier items. Examples of these kinds of items include tickets, gift cards, consumer electronics, computers, and travel packages — anything that is more expensive or event-related.

When can I access my payment?

As long as there aren't any issues with your transaction or account (like an undelivered package or a customer filing a dispute), PayPal will release your funds within 21 days.

How can I access my money faster?

There are some steps sellers can take to help release PayPal funds faster. These include:

Add tracking: Use one of PayPal's approved shipping carriers, and PayPal will release the hold on funds one day after the courier confirms delivery.
Print a USPS or UPS shipping label via PayPal: PayPal will track your package and release the hold on funds one day after the courier confirms delivery.
Update the order status for services or intangible items: For items that aren't shipped, like e-books or knitting lessons, update the order status and PayPal will release funds in seven days.

How to prevent the delay of funds

Check your email: Review the email sent from PayPal (with the subject line "An important message about your PayPal balance") as well as the alert located in your Account Overview page. It will include information about why your funds aren't available and what you can do to avoid this in the future.
Post real photos: Prevent refunds, disputes, and chargebacks from buyers by posting real photos of the items you're selling, including detailed and accurate descriptions, being transparent about shipping and handling times, costs, and methods, processing orders promptly, packing items with care so that they arrive in good condition, and being clear on your return policy upfront.
Provide customer service: Do your best to communicate with and help your customers when they reach out. If you have a buyer dispute, work to resolve it as soon as possible.

Abigail Abesamis Demarest is a contributing writer for Insider based in New York. She loves a good glazed donut and nerdy deep dives into the science of food and how it's made.