There are a few common reasons why a PayPal payment may fail or be declined:
Insufficient Funds
One of the most common reasons for a failed PayPal payment is that there are insufficient funds in the sender’s PayPal account. Just like a bank account, if you try to send money when there’s not enough in your PayPal balance, the payment will be declined.
Before sending money via PayPal, make sure you have enough funds available in your balance. You can add funds to your PayPal account by linking a bank account, debit card or credit card and transferring money into your balance.
Tips for avoiding insufficient funds errors:
- Check your PayPal balance before sending payments
- Add funds to your PayPal account as needed to cover upcoming payments
- Link a bank account or card so PayPal can draw additional funds when needed
Sending Limits Exceeded
PayPal imposes sending limits on accounts as a fraud prevention measure. The exact limits depend on the account status, verification level, and other factors.
For brand new accounts, sending limits start very low, often around $100-500. As you use PayPal more, verify your identity, and establish a positive history, these limits will gradually increase.
If you attempt to send a payment over your current sending limit, the transaction will be declined.
Ways to increase your PayPal sending limits:
- Upload legal identification to verify your account
- Link a bank account, debit card or credit card to diversify funding sources
- Use PayPal more frequently to establish a positive history
- Request a sending limit increase directly from PayPal
Receiving Limits Exceeded
In addition to sending limits, PayPal also sets limits on how much money an account can receive. This protects PayPal and users from issues like fraud or scams.
If you try to send a payment to someone that would exceed their receiving limit, the payment will be blocked. The recipient needs to upgrade their account status before they can accept larger payments.
How recipients can increase PayPal receiving limits:
- Complete account verification steps
- Build up a positive receiving history on PayPal
- Request limit increases directly through PayPal
- Upgrade to a Business account with higher limits
Account Restrictions or Holds
PayPal may place restrictions on accounts or transactions for suspected fraud, high-risk activity, or violations of PayPal policies.
Common restrictions include:
- Payment holds – requiring recipient authorization before accessed funds
- Sending or receiving disables – blocking all or some payments
- Account limitations – lowering sending/receiving limits
- Account suspension – completely disabling account access
If your PayPal account has any active restrictions or holds, certain payments may be declined until they are resolved.
Resolving account restrictions:
- Carefully review any notification emails from PayPal
- Contact PayPal support for assistance
- Provide any requested information to verify account activity
- Avoid behaviors that may be flagged as high-risk
Incorrect Account Details
One simple but common error is entering incorrect account details when attempting to send a PayPal payment. For example:
- Misspelled email address
- Sending to the wrong email address
- Incorrect account username
Double check all recipient details before sending a payment via PayPal to ensure money goes to the intended account. If details are wrong, the payment cannot be completed.
Tips for avoiding incorrect account details:
- Save recipient details to PayPal contacts
- Cross-check emails before sending payments
- Set up a business account with memorable username
Recipient Has Not Registered
In order to send money via PayPal, the recipient must have an active PayPal account. If you try sending money to someone who has not yet set up a PayPal account, the payment will fail.
Double check with recipients that they have signed up and activated a PayPal account before attempting to pay or transfer money to them.
Solutions if recipient is not on PayPal:
- Send a PayPal invite to have them sign up
- Offer to pay by an alternate method
- Ask recipient to create a PayPal account
eCheck Payments Pending
When funding PayPal transactions using a bank account (electronically transferring funds), there will be a few days pending period before money is cleared and available.
Known as eChecks or electronic checks, these payments take time to fully process between banks. If sending or withdrawing recently cleared eCheck funds, the payment may be temporarily blocked.
Managing pending eCheck transactions:
- Avoid sending eCheck funds until fully cleared
- Use balance funded by card or PayPal balance
- Wait out the pending period before sending funds
- Contact recipient to make them aware of pending status
Payment Review Process
PayPal may flag certain transactions for manual review as a fraud prevention measure. Payment reviews typically take 1-3 days.
High dollar amounts, large transaction volumes, patterns of customer disputes, and other red flags can trigger a payment review.
No money changes hands until the review finishes. The payment will appear as “pending” to both sender and recipient during this time.
Getting through the payment review process:
- Provide any information requested by PayPal to assist review
- Avoid actions that may trigger risk models like rapid spending
- Keep communicating with sender or recipient about pending status
- Consider lower value payments if running into frequent reviews
Reached Monthly Volume Capacity
Some PayPal accounts have monthly sending or receiving capacity limits in place as risk controls.
If your payment volume exceeds allocated capacity for the month, further payments may be temporarily blocked until the next month begins or capacity is increased.
Increasing monthly volume capacity:
- Improve account standing by building history
- Reach out to PayPal’s support team to request more capacity
- Spread payments over time to avoid volume peaks
- Upgrade account type such as to a Business account
Technical Issues or Bugs
Like any complex software system, PayPal can occasionally suffer outages or technical glitches that disrupt payments.
Problems affecting websites, apps, account systems, and internal processing can end up blocking transactions.
These issues tend to be temporary and resolved relatively quickly by PayPal’s technical teams.
Tips for dealing with PayPal technical problems:
- Check for PayPal system status reports
- Contact support to see if an issue has been reported
- Retry payment later once problems are fixed
- Use alternate funding if possible until issues are resolved
Reached Processing Limit for Time Period
PayPal also implements risk controls and safeguards by limiting how frequently payments can be made in a certain time period.
For example, an account may only be able to process 5 payments per day or 10 payments per week before hitting the limit.
These processing frequency caps help control fraud risk but can block legitimate payments once exceeded.
Avoiding processing frequency limits:
- Understand and track your account limits
- Space payments over time rather than batch sending
- Request limit increases from PayPal as needed
- Use multiple accounts or payment methods
Violation of Acceptable Use Policies
PayPal maintains a variety of policies limiting how the platform can be used. These include prohibitions on illegal transactions, regulated goods and services, and abusive practices.
If PayPal detects you have violated applicable policies, your account can be restricted or blocked from sending and receiving payments.
Policy violations can also result in account suspension or permanent closure in severe cases.
Avoiding PayPal policy violations:
- Carefully review all PayPal acceptable use policies
- Do not use PayPal for prohibited transactions
- Maintain honest business practices
- Contact support if you feel a policy violation is an error
Buyer Protection Claim, Dispute or Chargeback
PayPal offers buyers various protections against issues like item not received or items significantly different than described.
If a buyer files a dispute, claim or chargeback against your account, PayPal may restrict access to the disputed funds while investigating.
If investigation results find you at fault, you could lose access to the disputed money permanently.
Avoiding disputes, claims and chargebacks:
- Provide items or services as described in full
- Maintain accurate records of order details and delivery
- Resolve buyer issues proactively with good customer service
- Offer refunds at your discretion to avoid escalation
Government Regulations or Court Orders
In some cases, government regulators, law enforcement or court orders may mandate PayPal to block access to certain funds or accounts.
These situations are typically rare and would only occur for serious legal or compliance reasons.
PayPal is required to comply with court orders and regulatory bodies like FINCEN or the IRS.
Responding to legal blocks:
- Carefully review any notifications from PayPal
- Consult a legal professional for assistance as needed
- Comply with all applicable laws and regulations
- Provide any requested identity or transaction verification
Conclusion
In summary, there are a wide variety of reasons PayPal may decline or block payments, stemming from both risk safeguards and user errors. The most common problems include insufficient funds, account limitations, pending eChecks, recipient account issues, technical errors and policy violations.
Paying close attention to account standing, proactively managing issues, and avoiding risky or prohibited behavior can help minimize payment failures when using PayPal as a payment method.