Start selling confidently with PayPal Seller Protection

Apr 17 2024 | PayPal Editorial Staff

Worried about unauthorised payments or fraudulent claims affecting your bottom line? Discover how PayPal Seller Protection can protect your sales be it physical or digital goods as well as services.

Selling online is a challenge and often, it comes with risks that may put a dent in your profitability. These risks could include unauthorised transactions from the buyers’ end. In other cases, it could be claims where the buyer complains about not receiving an item they had paid for—all of which is then borne by the seller.

These risks shouldn’t impact your bottom line, and that’s where PayPal Seller Protection can come in handy to safeguard your transactions so you can continue growing your profits with peace of mind. Ahead, discover everything you need to know about PayPal Seller Protection, from which eligible transactions are covered, to how to claim refunds under Seller Protection for eligible transactions.

What is PayPal Seller Protection?

PayPal Seller Protection is a programme that protects your business and eligible sales from potential loss due to chargebacks, disputes, payment reversals, unauthorised transactions, and fraudulent claims. All merchants have to do is provide sufficient evidence against these complaints to receive a full refund on the eligible amount from PayPal. There’s also no limits to the number of payments that PayPal protects, as long as you meet the eligibility requirements.

How does PayPal Seller Protection work?

Here’s how sellers can get reimbursed under Seller Protection for eligible transactions.

  1. When a buyer files a claim or chargeback against your sale, we’ll place a temporary hold on the funds in your account.
  2. We’ll request merchants to provide proof of shipment or delivery generally within 10 days. This acts as evidence that the service was fulfilled and we’ll use this information to determine if the sale is eligible for PayPal Seller Protection.
  3. If the sale is eligible, we’ll release the held funds back into your account.


What does PayPal Seller Protection cover?

PayPal Seller Protection covers two types of buyer complaints:

  1. Unauthorised Transaction
    A payment was processed, but the buyer claims they didn’t authorise the transaction.
  2. Item Not Received  
    The buyer purchased an item, but claims through PayPal's Buyer Protection that they didn’t receive it.

Here’s how you can prevent issues related to Unauthorised Transaction and Item Not Received complaints:

Unauthorised Transaction Item Not Received
  • Look for warning signs such as unusually large orders or shipping to a high-risk location.
  • Make your business name clear on invoices. This will help ensure customers recognise your business as a seller from whom they purchased goods or services.
  • Contact customers before you deliver the goods or services for an opportunity to correct any errors.
  • Provide realistic delivery dates with online tracking.
  • Consider purchasing insurance for high-value items.
  • Delay shipping out high-risk international orders by 24 to 48 hours.
  • Get signed Proof of Delivery (POD) for transactions over $950 SGD or its foreign currency equivalent provided in our User Agreement.
  • Choose a reputable shipping provider to avoid losses.
  • Have open channels of communication with customers to resolve complaints.
  • Provide delivery updates and respond to customer enquiries promptly.
  • Be clear with your refund policy and issue refunds quickly.

What is not covered under PayPal Seller Protection?

Most PayPal transactions are covered under Seller Protection as long as the eligibility requirements are met. However, here are some instances where PayPal Seller Protection is not applicable:

  • Payments equivalent to cash, including stored value items such as gift cards and pre-paid cards.
  • Donations and personal payments sent using PayPal’s friends and family functionality.
  • Payments for gambling, financial products or investments, gaming, and/or any other activities with an entry fee and a prize.
  • Significantly Not as Described claims filed by the buyer (either with PayPal or the card issuer) where they receive an item that looks different or does not match the description of what they ordered.
  • Item Not Received claims filed by your buyer directly with their card issuer
  • Tangible items delivered in person, unless the buyer paid for the transaction in person using PayPal’s goods and services QR code.

Please refer to our User Agreement for the full and most up to date terms.

View User Agreement

While Significantly Not as Described issues are not covered by Seller Protection, there are steps you can take to lower your chances of running into them. Here’s how:

  • Manage customers’ expectations by describing items accurately and in detail.
  • Provide clear images of items from several angles.
  • Clearly and accurately disclose any defects or damages.
  • Answer queries promptly and clearly with a positive tone.
  • Provide proof of authenticity, if available.
  • Be open to resolving cases (such as returns, refunds, and exchanges as well as chargebacks, disputes, and claims) when they arise to prevent a formal complaint being filed against you.

What are considered eligible transactions?

Eligible transactions under PayPal Seller Protection include both tangible and intangible goods as well as services that the buyer pays for with their PayPal account. For example:

  • Tangible goods: apparel, electronics, toys, etc.
  • Intangible goods: digital products, event tickets, etc.
  • Services: transportation, business services, plumbing repairs, etc.

Tip: For tangible items, it’s also important for sellers to ensure that the buyer has provided their shipping address as part of the transaction. The seller should then ship the item to this particular shipping address logged on the Transaction Details page in their PayPal account. This would greatly help sellers because as long as the proof of shipment matches the shipping address provided by the buyer, the transaction is eligible to be claimed under PayPal Seller Protection.

How do I claim for eligible transactions?

To claim your eligible transactions, follow this step-by-step guide:

  1. Log in to your PayPal Business account.
  2. Go to your Account Transaction Details page and check if the transaction is marked “eligible”.
  3. Promptly respond to our request for information, by providing proof of delivery or proof of shipment*, within the deadline given in the Resolution Centre.
  4. While holding the payments temporarily, we’ll investigate the matter and confirm whether the transaction is eligible for PayPal Seller Protection.
  5. Once confirmed, we’ll notify you and make the payments available to you.

*Additional requirements: For tangible goods, sellers must provide proof of delivery for Item Not Received issues. For Unauthorised Transaction issues, sellers must provide either proof of shipping or proof delivery. For intangible goods, sellers must provide proof of delivery.

What is proof of delivery or proof of shipment?

Proof of delivery refers to online or physical documentation from a shipping company that includes:

  • The date of delivery and a “delivered” status.
  • The recipient’s name and address that matches what’s shown on the Transaction Details page.
  • Signature confirmation or an online documentation that can be viewed at the shipping company’s website, indicating that the item was signed for on delivery.

Proof of delivery for intangible goods refers to any compelling evidence that proves that the purchase order was fulfilled, such as:

  • The date the item or service was provided.
  • The recipient’s address.

Meanwhile, proof of shipment refers to online or physical documentation from a shipping company that includes:

  • The date of postage and a “shipped” status.
  • The recipient’s name and address that matches what’s shown on the Transaction Details page.
  • The sender’s name and address must match the seller’s name and address.
  • Online tracking information showing status of shipment.

Are there any fees associated with PayPal Seller Protection?

There are no fees involved for PayPal Seller Protection if you have a PayPal Business account. PayPal Seller Protection automatically applies to your sales when buyers pay you from their PayPal accounts. We want to make it easy for you to protect legitimate sales, so as long as you fulfil the eligibility requirements, you can rest assured knowing that we have your back.

We understand how important it is to be able to sell online securely. PayPal Seller Protection allows you to set up shop confidently by protecting your online sales against loss due to claims and chargebacks. Learn more about PayPal Seller Protection here.

The contents of this site are provided for informational purposes only. The information in this article does not constitute legal, financial, IT, business or investment advice of any kind and is not a substitute for any professional advice. You should always obtain independent, professional accounting, financial, IT and legal advice before making any business decision.

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