Why Does PayPal Take so Long to Transfer Money?

A lot of people using PayPal are always frustrated when it takes a while for some of their transactions to reflect in their bank accounts. After all, wouldn’t be nice to have all transactions go through in a couple of minutes. In this article, I’ll be explaining to you why it takes so long for some PayPal transactions to go true. 

The reason why it takes some time to send money from your PayPal account to a bank is due to the payment system PayPal uses which is called ACH (Automated Clearing House) payment. Your payment is processed through the federal reserve which can take up to five days to complete. 

PayPal has no control over the ACH process so the payment will not reflect in your bank account until the ACH process completes. I’ll be talking about how PayPal transfers work in general to help you understand why your payments may reflect immediately or take a few days. 

How long does PayPal take to transfer money?

You can send and accept payments on your PayPal account from other PayPal accounts. Money can also be sent to your PayPal account from a credit or debit card. There is a difference between bank transfers and debit cards on PayPal despite the fact that debit cards are usually linked to a bank account. The reason for this is the different back-end processes that debit cards and bank accounts have. 

Sending or receiving money on your PayPal account from another PayPal account takes place in a few minutes as long as the sender is making the payment from his/her PayPal balance, a credit card, or a debit card. Using PayPal’s invoicing service to send an invoice to a client also results in fast payment processing times.

The payment will reflect in your PayPal balance in a matter of minutes as long as the client uses a credit card or debit card. Should the client use a bank transfer or eCheck, the money will arrive later (in a few days actually) as the bank needs to clear the payments first. You will get a notification and the invoice status saying ‘Paid’ when a payment is made using PayPal’s invoicing. 

For PayPal’s merchant services or PayPal powered by Braintree, payments made using a credit card or a debit card will be sent directly to your receiver’s bank account. If you are using MasterCard, Visa, or Discover card, it might take up to three business days for your funds to arrive. 

If you receive a “Money is waiting for you” message, click on the link to learn how to solve the issue.

Why does PayPal take so long to transfer money?

From the previous subheading, you should now understand that bank transfers or eCheck transfers on PayPal will take up to five days before the funds reflect in the specified bank account. And the reason for this is the ACH. ACH is one of the cheapest platforms to send money to a bank account and this is one of the reasons why PayPal uses this payment system.

ACH doesn’t run on weekends or holidays so it’s more accurate to say it takes up to five business days for your payment to reflect in the specified bank account. So if a payment is sent through ACH at the end of business hours on Friday, the payment will not be processed until Monday.

ACH operates through the Federal Reserve System which operates only during regular business hours excluding weekends and holidays. There’s also a bit of processing when the money gets to the bank. Overall, the funds should reflect in the specified bank account in or before five business days.

I must also mention that the ACH is a batch system that gathers many transactions and then later processing them at the same time. It’s now possible to do “same day” ACH at an extra fee. However, there is still the issue that your transaction will not be processed in real-time which means your money won’t reflect immediately but will still be processed on the same day. 

Another reason why PayPal’s bank transfers take some time slow is fraud and mistake prevention. A fraudster will be able to abscond with his/her ill-gotten money if bank transfers are made in real-time. So a delayed payment has the advantage of affording the platform more time to 

With a real-time payment and instant settlement, a fraudster can take the money and run. With a delayed payment, there is more time to detect fraud or correct a mistake. Float is another reason why bank transfers are slow. You see, PayPal can actually receive interest on its cash balances.

It’s true that interest rates are lower than they used to be but PayPal can still earn a decent amount of money by investing the cash. If you consider this, you’ll discover that PayPal doesn’t really have any reason to process payments faster albeit to improve customer experience.

PayPal Instant Transfer

PayPal Instant Transfer is a service that allows you to transfer money to your bank account from your PayPal balance very quickly. It takes a maximum of 30 minutes to transfer money to your bank account using instant transfer. However, any transfer you make on weekends or after 7 p.m. Eastern Time may take longer. 

This service is available at a fee of 10% or 1% of the transaction amount. PayPal uses the one that will cost you less. To use PayPal Instant Transfer, navigate to ‘Transfer’ on your PayPal account then choose ‘Instant’. You’ll have to link an eligible credit or debit card.

Scroll to Top