PayPal eCheque/eCheck versus PayPal direct/instant payments.

After much googling, I think I have this all sorted out. PayPal have not helped with the confusion.

Your PayPal account can have money in it, it can also be linked to a bank account, and it can also be linked to a credit/debit card. One of these can be designated the “backup” account.

PayPal has two different payment methods, which are called different things in different countries.

eCheque/eCheck takes the money out of your bank account, and thus has to wait for a bank clearing period before being available in your PayPal account.

Direct/Instant takes the money from your PayPal account, or credit/debit card, and the money is instantly available in your PayPal account.

In my case, once the money is available in my PayPal account, I can spend it straight away with merchants that accept PayPal, or transfer it to my local bank account. The bank transfer has a bank clearing period.

According to google, these bank clearing periods can be anywhere from three to fourteen days in practice, even though PayPal usually quotes three to four or three to five working days. In my case, the eCheque bank clearing period usually takes four working days, and the transfer to my bank clearing period is usually three working days. Both together add up to seven working days, so one or two weekends must be added. So an eCheque/eCheck payment to me could take two weeks to get to me, while a direct/instant payment will probably get to me in less than a week.

Now comes the hard part. I would prefer direct/instant payments, as would a large number of web sites I have seen. How do you get the payer to do a direct/instant payment? As far as I can tell, the process is this -

If the payer believes all the PayPal “payment is instant” propaganda, they may just ignorantly select an eCheque/eCheck payment, or the payer may select a direct/instant payment.

If the payer has not enough funds in their PayPal account for the direct/instant payment, then PayPal has to use a “backup” funding source.

This is where it gets interesting. The backup source could be a credit/debit card with enough funds AND an expiry date in the future. In this case, it is still a direct/instant payment.

With no credit/debit card, or one that can’t cover the funds, or one that expires soon, the payment is converted to an eCheque/eCheck payment made from bank account funds.

Any conspiracy theories about banks or PayPal using these “clearing periods” as piss poor excuses to just abuse the money on the short term money market are left to the readers imagination. I’ll just point out that PayPal and credit/debit companies can send money around the world instantly, but banks can’t.