A customer recently lodged a PayPal dispute wanting a refund. The funds associated with the transaction were locked and my paypal balance turned negative as a result. I topped up my balance to slightly above zero in order to avoid any problems. Then it was the matter of resolving the dispute.
This should have been straight forward but when I tried to refund the transaction via the disputes screen, PayPal stated that it could not be refunded because I did not have enough funds on my PayPal account. So here is how it works: PayPal locks all funds associated with a disputed transaction and unless you have additional funds on your paypal account, you can’t refund the disputed transaction. A totally ludicrous system.
What I had to do was ask the customer to cancel the dispute so that I, in turn, could refund the transaction. The customer would have been better off not starting the dispute in the first place for it certainly did not help him get his money back. PayPal’s dispute system clearly has the principal purpose of endowing PayPal themselves with more liquidity for the time being. The idea is not to help buyers and sellers resolve anything.
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