PayPal announced today that any account that has not logged in
before December 16th 2020 will be deducted £12 from their balance.
We are establishing an inactivity fee for accounts that have been inactive for at least 12 consecutive months - Paypal's Official Statement
While it has no plans to close inactive accounts, this means that sitting accounts with small amounts of money will be drained away over the years.
If the user has £2, then £2 will be taken.
If the user has £20, then £12 will be taken.
PayPal has quite a painful process of linking a bank account to your paypal wallet, they also have no available mechanism to allow users to automatically withdraw their balance.
It's a clever way to shore up the mass of money that must be sitting around not doing anything in people's account.
Log into your account before December 16th 2020.
But we all know this isn't going to happen to all the users.
How much is there available?
There's a parrell to be drawn to the Oyster Card £321M sitting idle in people's cards. Here's what I found out:
- The UK makes up 10.7% of PayPal's revenue in 2018.
- PayPal has 2.9% rate for the UK, ignoring all their other charges.
This would mean 5.7 billion processed in the UK alone.
- This also lines up with their 600 bn total transactional volume in 2018.
- The oyster card scheme had £60M increase in one year.
TFL Revenues were £4.8bn for 2018, with a "loss-rate" of 1.3%
- If we apply this loss rate to PayPal, this would mean 74M winds up in dormant accounts each year.
There's a shed-load of problems with this analysis. As we can lose oyster cards quite easily, tourists visiting the city, drive-by uses but even at a fraction of this rate, there's still plently of money for PayPal to withdraw from their own accounts.
This is all conjecture.
A better angle is their active usage:
- 2.5M Active UK users
- Say they retain 75% of all their users who have cash in their wallets.
- 800k users with cash, but no activity.
- That's £9.6M a year starting in December.
Well done, PayPal.
If you're looking for alternative to PayPal for collecting invoice payments, subscriptions or recurring payments, try out TillyPay.
Under the PRO tier, our rate is 1.4% for the whole of Europe (vs Paypal's 3.4%)