Read This If You Use PayPal

By , Follow-Up & Stay-In-Touch Marketing Strategist

Solo-E Certified Solo Entrepreneur Expert

Marty Marsh - Follow-Up & Stay-In-Touch Marketing Strategist

If you use PayPal to take payments from your clients and customers AND you also use it to pay for purchases including things like recurring subscription payments, then be sure you read this.

I SO hate to learn my lessons the hard way but it seems that’s the only way I get them most of the time.

I wanted to relate an experience I had with PayPal this past week in hopes of saving you the same trouble one day.

I’ve never kept money in my PayPal account. I have it connected to a special bank account so when I need to pay for something, PayPal just does an instant transfer from that account to cover it. There is, of course, a back up funding source, as PayPal requires, in place. That’s a credit card.

Well, this past week, my biz partner, Suzanne and I were setting up a new product in PayPal (a product I’ll share with you soon) and doing some testing to make sure it was all working properly.

Testing means actually buying the product and seeing how things work. So once we were done with that, we canceled that transaction so Suzanne got her money back, and we went on our merry way finishing up the project.

Then the first day of June rolls around and I have several subscriptions to things that I love and value that get paid for by PayPal automatically every first of the month. All of those payments failed.

WHAT? I knew there was money in the account. I knew the backup source was okay, too. So what gives?

It appears that because I don’t keep a PayPal balance, when that little transaction got canceled and the refund issued, that PayPal keeps a processing fee of 30 cents. I do not begrudge them the 30 cents and this is not what this all about. But that lousy 30 cents put my balance into a “negative” situation. In other words, it gave me a negative balance.

I didn’t even know PayPal would allow a negative balance for Pete’s sake!

And, apparently, if you have a negative balance, PayPal will no longer use instant transfer from a bank account to pay for anything. Period.

So, even though I was steaming about this “unknown trap” I quickly decided that from here on out I would always keep a balance in my PayPal account, so I set up a transfer to the account, and wouldn’t you know it, that takes from 3-5 days to complete. So I couldn’t even eliminate my negative balance that way and you aren’t allowed to buy your own stuff, so I was stuck.

Then Suzanne saved me and sent me some moolah which instantly got rid of the negative balance. And some sanity was restored although I was still steaming. (Bless you, Suzanne.)

The point of this is: Do not ever let your PayPal account get into a negative situation.

Like I said, I didn’t even know you could. It only makes sense to me that with a bank account with plenty in it, and a valid back up funding source, wouldn’t you think they would have just taken their lousy 30 cents from one of those two places and not created all this havoc for me?

To top it off, I did not get a single notice from PayPal alerting me to this problem. Instead, I got a bunch of failed transaction notices which were not only a pain to fix, but were quite embarrassing to boot.

PayPal’s response: Sorry, this is how it works.

Now, don’t get me wrong, I love PayPal and I recommend that all my clients use it unless they have other reasons that justify having a full-blown merchant account. It is a great business tool for
people like you and me.  Even with its limitations and sometimes seemingly crazy rules.

Marty Marsh believes that your successful business is the catalyst for creating massive positive change in the world. To that end, he specializes in helping you, the entrepreneurial change-agent, to attract your perfect clients and to grow your business quickly and with ease so you have the resources to truly make a difference in the lives of the people you serve. For more business development and marketing strategies for staying in touch with your ideal prospects, visit

© Copyright 2011 Marty Marsh
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