James Wilding's Weblog

When you add a new credit or debit card to a PayPal account, you need to confirm that the card belongs to you. PayPal do this by charging a small amount to your card, and asking you to confirm from your bank statement a reference number which comes with that small charge. Once confirmed, PayPal refund 100% of the small charge.

For a Visa, the small charge is £1. Let’s be charitable: I imagine PayPal refunds that money after one or two days, once a user has had time to check their bank statements (online or by phone). For those one or two days, PayPal can collect interest on your £1. Multiply this situation by a few million.

My question to PayPal: why, given that you are making money from my money while I check my bank statements, do you take £1 instead of 1p?