| Wed Oct 17 2007 11:49:56 |
 PayPal Rolls out Payment Review
By: Ina Steiner
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I spoke to Jeff Clementz of PayPal on Monday to dig into the new Payment Review feature a little more now that it's rolling out on eBay (see this article from last Friday).
First a bit of background - Jeff explained that eBay sellers are currently notified whether a PayPal payment is eligible or ineligible for Seller Protection. (Sellers can choose to reject payments that are ineligible for Seller Protection.)
If PayPal puts a hold on a payment through the new Payment Review process and then deems it is okay, it is then eligible for Seller Protection. As long as a seller follows the requirements (including sending the package with tracking), the transaction will be covered 100 percent from "unauthorized buyer fraud," which Jeff says is synonymous with Seller Protection, which protects against stolen credit cards or bank accounts.
My biggest question was about the gap between the time the seller is notified of a payment and the notification that that payment is under review. Especially now with the pressure on sellers to get items shipped right away due to Detailed Seller Ratings, I could envision that sellers might send out packages and *then* receive a notice that the payment was under review. Jeff said that the notice of Payment Review would be sent to sellers within seconds, or as long as 3 - 4 minutes, of the transaction taking place. Toward the middle of next year, the payment notification itself will indicate whether the transaction is under review or not.
Regarding messaging to the buyer to inform them that it is PayPal holding up the transaction and not the seller, Jeff said because they don't want to tip off the fraudster, they won't immediately email the buyer. As part of doing the investigation, they will call buyers most of the time to see if they had made the purchase. That call would be made within the review time window, which PayPal published as 24 hours, but Jeff said is expected to be closer to 4 - 6 hours.
Jeff said currently PayPal will not notify buyers whose transactions are found to be okay to let them know it was PayPal that held up the payment process. He said PayPal takes the issue very seriously due to seller feedback issues, and they will monitor it closely with eBay's feedback team. But ultimately, Jeff said, sellers need to make a risk decision - "it's really a seller's risk-mitigation choice." (In other words, you can still choose to send the package, even though PayPal identifies the payment as high-risk.)
If the buyer gets a call from PayPal, will they realize that is why the seller is delaying shipment? And what about cases where the buyer doesn't get a call, even if it's a small percentage? I'm not surprised to see sellers were concerned over the lack of communication with buyers over delays, but we'll see if this is a significant problem as the program rolls out.
Jeff said he does not expect a lot of negative feedback resulting from Payment Review "because most of these reviews will be completed so quickly. We wanted to get this feature live because we think it will materially reduce the level of fraud."
I'd love to see PayPal publish statistics on how many false positives are caught in Payment Review as it rolls out.
PayPal is rolling out Payment Review in a limited release, and is not applying it to transactions that come through third-party software and shopping carts (transactions using the API or IPN), so there is no need for concern about it possibly breaking integration and carts. PayPal felt it was too risky during the holiday season and will work with the developer community to roll out Payment Review for their tools in 2008.
Jeff wanted to make a final point: if a transaction clears Payment Review, PayPal will cover unconfirmed addresses if it is the address PayPal tells you to send the item to.
I'll use the comment feature if I learn anything more, and please feel free to post your experiences with this brand new Payment Review process.
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