Credit and prepaid card companies are dragging their heels when it comes to making refunds, and yet loading money from a current account onto a card is almost instant. What’s going on?
You can load a prepaid card (like PayPal’s Top Up card) with money from your current account instantly. Similarly, purchases made with your credit card hit your account almost immediately and start racking up interest pretty quickly.
And yet, if you decide to cancel a prepaid card or you get a refund on your credit card that puts your account into credit, some banks will offer to send you a cheque for the positive balance rather than pay it immediately into your current account. By the time you get the cheque in the post and find the time to cash it, at least a week has gone by.
And credit and prepaid cards don’t pay interest while they hold your money, so it’s in these companies’ interests to delay the payment for as long as possible.
We’re bored of waiting
We recently heard from a Which? member whose PayPal Top Up card was not renewed as the company had discontinued the service. Amazingly, she faces a wait of almost four weeks to get her money back.
PayPal’s terms and conditions state that if you choose to cancel your card, the balance will be paid either to the cardholder’s PayPal account or by cheque.
This can take up to 15 business days (i.e. three weeks, or even longer if there’s a royal wedding on). It can then take two to three working days to get the money out of your PayPal account and back into your bank.
So while a top-up payment from your bank to your PayPal card would have taken less than a day, a payment in the other direction can take the best part of a month. Huh?
Stop holding on to our cash!
PayPal’s official line is that the 15-day period is in place ‘to ensure that details of all transactions have been received’. To me, that’s not good enough.
And what’s worse, PayPal’s own website specifies that:
‘Claims relating to a card are not covered by the Financial Services Compensation Scheme. In the unlikely event that the Bank becomes insolvent and is unable to satisfy any claims made for the balance held on a card, the card will become valueless and unusable and the Cardholder may lose this money.’
So PayPal is holding your cash for almost four weeks, during which time your balance is unprotected and earning you no interest. In these days of instant payments, it is unacceptable for a bank to hold onto your cash for so long.
Of course, it’s not just banks – horror stories about trying to get overpayments back (from utility companies for example) are common. But which are the worst companies for dragging their heels in making repayments, and thereby making money out of their own inefficiency?
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