The Nightmare of Echecks

Paypal doesn't like credit card fees, which is understandable, but at odds with the basic flow of money in mail delivery commerce these days.

Somewhat unadvertised, an Ebay buyer can buy with no paypal account, and pay by credit card through paypal. This is recommended, but Paypal sets up some gotcha's, on a path which seeks to drive payments away from credit cards and toward direct debit from a checking account (which is much cheaper for PayPal). Once a credit card has been used for a paypal account, it will not be accepted for payment outside of a paypal account.

It's actually convenient to have a credit card on file with a Paypal account. I have such an account. Near as I can tell, the worst nuisance is that they start bugging you to add a bank account. A buyer who adds a bank account is set up for the Nightmare of Echecks.

Once a bank account is on file, it becomes the default payment source for all paypal payments. This can be overridden on each payment, by selecting the credit card on file.

However, if the credit card:
1. is selected for use, but the charge is declined for any reason
2. is or is not selected for use, but has reached its expiration date

Paypal will convert the payment to type "Echeck".

If this meant simply that the amount was debited from the checking account, failing if funds were not available, it wouldn't be so bad. That's not quite what it means. It means that Paypal tried to debit the checking account, with no immediate reporting of the result. If it failed, they will try again later. Echecks take 4-6 days to sort out, regardless of whether the buyer has funds in the checking account or not.

During this time:
-Seller is advised that payment has been made by echeck, which has not cleared as yet.
-The money has usually been debited from buyer's checking account. Buyer has paid.

This might be good for Paypal, but it's bad for buyer and a nightmare for seller.

Buyer has paid, but seller is not going to ship for most of a week. Buyer will understandably see that as less than 5 star shipping time. Seller ends up with undesirable feedback, that being a shipping star ding, for nothing more than bad luck.

Seller cannot refuse to accept eChecks.

While the eCheck is awaiting clearing, even if seller is willing to take the chance and ship before it cleared (to protect feedback rating), Paypal shipping does not allow that. The shipping label cannot be generated. It is presumably possible to go back to ebay, mark the item as "paid", and then generate the shipping label through paypal.

Solution.
Eliminate echecks. In cases where seller fraud seems some potential threat, hold the funds while reporting them as cleared, such that seller can ship immediately. In cases where the bank declines the charge, report that to buyer as a failed payment.