If you own a small business or raise money for events or charitable causes, an account freeze can cost you time and money.
PayPal, owned by eBay, has to protect itself against fraudsters that use its system to process the proceeds of scams.
But PayPal often hurts legitimate businesses or enterprises that may see a surge in money flowing into their accounts.
A PayPal spokesman told CNNMoney that the online payments giant is finally ready to remedy the issue of freezing the accounts of legitimate businesses and entrepreneurs.
PayPal promises to launch a sweeping overhaul of its system within the next several months — but there is no firm timetable and few details so far.
“These are not minor — these are aggressive changes,” Anuj Nayar, PayPal’s senior director of communications, told CNNMoney. “This is a fundamental shift in our business operations.”
PayPal routinely freezes funds for 21 days if it deems that the money could be the result of a fraud. PayPal’s terms give the company the right to extend the freeze for up to 180 days.
To get access to the funds, account owners are often asked to provide of documentation such as several months’ worth of sales records.
As CNNMoney points out, PayPal is aging competition quickly in the crowded mobile payment’s arena and can’t afford not to fix its fraud screening system that alienates many businesses
The competition includes: WePay, Square, Stripe and smartphone-based systems such as Google Wallet.
“We are committed to getting back to being the center of our customers’ financial lives,” PayPal’s Nayar told CNNMoney. “Big changes are coming.”