PayPal is among the most trusted and popular online payment platforms, as it supports over 25 currencies. Additionally, people in more than 200 countries can access PayPal. However, your PayPal account might reflect a negative balance with a typical payment.
Why does my PayPal account have a negative balance? Insufficient funds, scams, fraud, and more can trigger such an instance. However, PayPal’s negative balance might affect both buyers and sellers. Let’s review what you can expect if your PayPal account reaches a negative balance ever.
Is It Possible to Have a Negative Balance on PayPal?
Yes, your PayPal account can go into negative balance if you make a hefty payment and your account doesn’t have a sufficient balance. Additionally, someone might obtain your PayPal account details and charge your account. Then, you can experience a PayPal negative balance.
So, it’s possible to encounter a PayPal account balance to be negative even if you don’t make any purchases using your PayPal account. What happens if your PayPal account goes into a negative balance? In short, PayPal won’t let you use PayPal services from that specific account.
Moreover, you must reverse your PayPal account balance to a positive balance from a negative one to restart its services. Your PayPal account may take the required funds from your bank or credit card account if you linked them before. Now, this can cover the negative balance consequences.
Can you close a PayPal account with a negative balance? PayPal will directly close your account if your PayPal account remains on a negative balance for a minimum of 90 days. This might not relieve the user because PayPal can take necessary steps if the negative balance is too high.
In that situation, PayPal may pass your PayPal account to a debt collection agency. Then, you must pay the negative balance and charges to the debt collection agency.
Why Did Your PayPal Account Go into Negative Balance?
You might be wondering why your PayPal account went into a negative balance. Reportedly, the following reasons might have triggered your PayPal account. Let’s check them out one by one:
Reversed Transaction Because of a Customer Dispute
Perhaps you might have received the payment for your product or service as a seller. Then, you might have withdrawn the amount from the connected bank account and used the money for another transaction. Thus, your PayPal balance might become zero.
Now, chances are that the customer never receives the product or returns the item. So, the customer will get a refund from your PayPal account. And, your account balance can hit a negative value since it was already zero. However, this reason for a PayPal account negative balance only applies to merchants.
If this ever happens to you, then you can contact PayPal’s resolution center. They help both customers and merchants with such transaction issues.
Consumers Filing a Bank Reversal
This reason again applies to merchants who offer products and services. Bank reversals or ACH returns can occur when the buyer’s account was used without consent. Otherwise, the same can happen when the buyer can’t identify the transaction.
Someone might have illegally accessed a customer’s PayPal account or debit card and used it to make a purchase. Now, the bank will file the dispute with PayPal on the buyer or customer’s behalf.
However, you might have received the amount from that illegal transaction and withdrawn the money already. If the bank wins the dispute, funds may be reversed from your PayPal account. And, this might cause your PayPal account to run into a negative balance.
The comforting part is that none of this is the merchant’s fault. So, the merchant can talk to PayPal’s resolution centre to cover the negative balance. PayPal allows a specific budget for scams and fraudulent activities for sellers and buyers.
Not Sufficient Balance in Your PayPal Account
This is one of the most trending reasons behind a PayPal account negative balance instance. For example, a debit or credit card can get declined if there is insufficient balance or you have already exceeded the credit limit on your card. Similar incidents can take place with your PayPal account.
However, a PayPal account doesn’t generally decline your transaction when you are about to purchase when the account doesn’t have enough funds. Instead, your PayPal account lets you proceed with the transaction. Thus, the PayPal account will cover the insufficiency of the funds.
Let’s clarify this instance with an example. Suppose your PayPal account has $120, and you want to place an order that costs $160. Now, the PayPal account won’t decline your transaction, but it will also run negative by $40 ($160 – $120 = $40).
However, this can only happen if you have been a loyal customer of PayPal so far. Otherwise, PayPal can decline your transaction, and you will be saved from facing a PayPal account closed due to a negative balance.
Therefore, PayPal will assume that you will return the funds later. On the other hand, you might face charges if your PayPal account runs into a negative balance. So, it’s the best practice to load your PayPal account with enough funds.
Have you already linked your bank account to your PayPal account? Then, the PayPal account can readily withdraw funds from your bank account. On a related note, you may receive a dishonour or overdraft fee from your bank if your bank doesn’t have sufficient balance.
Not Authorising Your Transaction
You might have linked your debit card to your PayPal account. In this situation, PayPal doesn’t take out funds immediately from your debit card. Instead, as a customer, you have to authorise the transaction for PayPal so that it can withdraw the money from your bank account.
However, PayPal takes the initiative and pays for the transaction. Now, this can lead your PayPal account to be running on a negative balance. If you don’t authorise the transaction, your PayPal account will remain negative.
Well, PayPal does this to avoid potential fraudulent activities and scams. PayPal waits for you to authorise the transaction in case you have linked a debit card to a PayPal account. PayPal can prevent scams and avoid the interference of a third-party bank in a scam.
So, you might notice your PayPal account negative balance until you authorise the transaction.
Compromised PayPal Credit Card
Have you lost or misplaced the credit or debit card directly connected to your PayPal account? Then, purchases made by using those cards can make your PayPal account negative.
You can be notified that your PayPal account has a negative balance if it is zero. A PayPal card works similarly to a debit card, withdrawing money from your PayPal account instead of your bank account.
So, call PayPal and request to cancel the card if you have misplaced or lost it. Thus, you can save your PayPal account from hitting a negative balance. Next, PayPal will start an investigation and allow the merchant to refund the transaction.
On the other hand, scammers might fool you so that you give out your PayPal details. They might convince you that some fraudulent activities were registered on your account, and you need to provide the card information to ‘confirm’ that you still hold the card.
Thus, scammers will get your card information and access, though they don’t physically hold them. Additionally, they can use your card to make purchases. As a result, you can come across a PayPal account negative balance.
How Can You Recover from a PayPal Account Negative Balance?
Fortunately, you can reverse your PayPal business account negative balance with a few easy steps. However, you must take the necessary action as soon as possible. Otherwise. A negative balance in your PayPal account for longer can harm your credit score.
Here are a few steps to fix your PayPal account’s negative balance implications:
Transfer Funds to Your PayPal Account
This is the simplest way to restore your PayPal account dwindling on a negative balance. If PayPal has transferred the money to the merchant when it had insufficient balance, then you should add enough funds back to the PayPal account.
Just add funds to your PayPal account from your bank account. Here’s how you can add money to your PayPal account from your bank account:
- Log into your PayPal account and navigate to your Wallet.
- Next, click on the ‘Transfer funds’ option.
- After that, click on ‘Add funds to your balance’.
- Follow on-screen instructions from the page, and you can transfer funds from your bank account, credit or debit card or mail a check in US dollars to your PayPal Wallet.
Adding funds to your PayPal account might reflect slowly and take up to 5 business days.
Authorise a Pending Transaction
Perhaps, you suffer from a PayPal account negative balance situation just because of not authorising a pending transaction. If the purchase is valid and you did it, you must sign into your PayPal account and authorise the pending transaction as soon as possible.
Afterwards, PayPal will immediately withdraw the necessary funds from your bank account. This will remove the tag of negative balance from your PayPal account. Otherwise, you can decline the pending transaction if you recognise that you haven’t initiated it.
Additionally, you must contact PayPal to report the fraudulent activity. Soon, PayPal will look into the matter and issue a chargeback. This should resolve the matter and restore the funds to your PayPal account.
Discuss with PayPal
If you have misplaced your PayPal credit or debit card or given out information to scammers, a negative balance will eventually hit you. However, it’s important to contact PayPal to resolve such a dispute.
In addition, if you are not guilty, PayPal will cancel your card, issue a new card, and restore your funds. If you are a merchant, then you can also get help from the PayPal Resolution Centre if customers raise a dispute. After all, PayPal is a safe platform, and it does everything to protect you from financial fraud.
What are the consequences of having a negative balance on your PayPal account? PayPal may disable your account temporarily or take out funds from your bank account. If you leave your PayPal account with a negative balance for 90 days or more, a debt collector may send you an email or letter.
Hence, it’s better to fix things before it’s too late. Take relevant action to reverse the side effects of a PayPal account negative balance situation.