As one of the world's highest-volume means of online payment, PayPal is held to very high standards by the businesspeople and customers who use it. The service is designed to shuttle money quickly from the liquid bank accounts of its individual account-holders into accounts from which bills for goods and services can be settled. Although the company used to operate a money-market fund that permitted its users to earn interest on large amounts of money stored within the service's accounts, it discontinued this feature during the recent recession. However, PayPal is still the preferred payment choice for individuals who conduct business online.
It appears likely that the company's former dominance of the online-payments sphere will slowly give way to a more fragmented environment in which several of its still-small competitors threaten to undermine its business model. Already, alternative payment options like Square have begun to make PayPal's "Web 1.0" interface seem quaint and slow. If PayPal's management team doesn't launch a proactive effort to keep in front of its customers' changing tastes, the service could lose some business to similar competitors.
PayPal's waning competitive advantage is epitomized by its archaic bank-transfer protocols. Whereas PayPal is extremely useful for conducting nearly instantaneous transfers between two existing PayPal accounts, it's considerably less functional as a medium for PayPal-to-bank transfers. Any EFT transmissions made from a PayPal account can take between three and five days to appear in a U.S. bank account.
Transfers made from a PayPal account to an international bank account may take even longer than this. In addition, international transfers must be properly denominated in the currency of the country to which they're being sent. An incorrectly-denominated transfer will automatically fail and may be subject to a reprocessing fee. Likewise, bank transfers that target nonexistent, restricted or closed bank accounts will automatically fail.
Although PayPal doesn't levy fees for single failed transfers that take place within the United States, the company may penalize users who repeatedly make bogus transfers by suspending or closing their accounts. As such, it's important for infrequent PayPal users to keep their user information current and ensure that any bank accounts that are tied to the payment service remain in good standing.
If a bank-to-PayPal transaction that originates in the United States fails to post in the appropriate account within five business days, a technical error may be to blame. Fortunately, PayPal has a dedicated team of customer service representatives and technicians on call for just such an eventuality.