PayPal Check Depositing App Efficiently Turns Checks Into Thin Air

Instead of schlepping small checks she receives all the way to a local bank branch, Robin likes to use PayPal’s smartphone check-capturing service and deposit the funds in her PayPal account. That’s a pretty neat trick…at least until two checks went missing entirely in PayPal’s system, and no one can tell Robin where they went because the check-cashing services are handled by a third-party vendor, not PayPal itself.

I don’t like going to the bank.

I do like using check capture services on my phone to take pictures of checks and having them magically (though slowly, usually 7-10 days) appear in my account.

I don’t like that my bank, ING, has been slow to integrate check capture. “Coming soon” for a couple of years now, or at least it seems like it.

I do like that paypal has check capture. I often use it to deposit my random checks.

I don’t like that they’ve recently overhauled their mobile app. In their previous mobile app, you could see that you had uploaded a check, and that it was pending. Now, you upload a check, and you get no indication of whether you should be expecting money to magically appear in your account at some time in the future.

On March 21, I deposited two checks from the same payor. On March 22 or 23, I deposited an additional check, from a different payor.

One of the two March 21 checks showed up on March 27. Sweet! I figure that the other two checks will show up soon. But as the days tick by, no sign of the funds.

On April 9, I send paypal an email inquiry, asking them if they can tell me whether the checks are still pending. Within an hour or two, I get an email back in which they say this:

“Thanks for your email. We’ll do our best to get back to you within 24 hours. It might take a bit longer (depending on the question), but we try hard not to keep you waiting longer than 72 hours.”

Fair enough. I wait 72 hours, no response.

I call the line noted in their app for customer support, and waited about 10 minutes or so to talk to a live person.

I repeat my questions to the CSR, who’s plenty nice and courteous. I receive the following answers:

1. He can’t tell me whether the missing check info is still pending. Their checks are cashed by a third party vendor, and only show up in their system after they’ve been credited to my account.

2. He can search the third party’s system if I can give him a five digit transaction ID. He can’t tell me where the transaction ID appears in the app.

3. He can’t tell me if anyone is currently working on my previous inquiry.

4. He can’t tell me why I haven’t heard from anyone in the time frame specified by the email I received.

Like I said, he was plenty courteous. I told him (calmly and politely) that I don’t blame him personally for what his company hasn’t done, but I’m a pretty dissatisfied customer at this point.

I’ll deposit the checks at my local bank, I guess, and hope that Paypal doesn’t try to negotiate the checks at a later date. Don’t know what the consequences would be if Paypal does try to negotiate them.

That’s annoying. But at least Robin still has the paper checks after the originals were converted into ones and zeros and then sent into the ether.


Edit Your Comment

  1. pgr says:

    I have to say “You must be nuts to use PayPal as a ban!

    Anyone who deals with PayPal for any reason has to expect to be screwed ultimately.

    THEY ARE NOT A BANK and they are NOT regulated by banking laws. You use them at your own risk (and, it’s a major risk as people find out when they screw up) and good luck in resolving anything in your favor.

    • lemortede says:

      THIS. I dont understand why any one would use them as a bank.

    • kimmie says:

      I use them solely for micropayment and whim type things. $10 crap on Etsy or eBay. I don’t think I’d trust them with more than $20 or so, to be honest. They only exist because us lazy folks keep giving them business and sellers keep using them.

  2. TB says:

    I have an ING Electric Orange account too and I’ve been harassing their customer service for the last 18 months about the “Coming Soon” thing for online deposits. I eventually gave up on them and switched to State Farm Bank for my checking.

    • georgi55 says:

      OH MY GOD. Go login to ING if you still have it, the feature is live!!

      I hit the reply button to make fun that they’ve been dotting the i’s and crossing the t’s for over a year now and logged in to see the actual image. To my super duper surprise, the feature actually went live! I thought it would never see the day.

  3. scoosdad says:

    With these image capture check deposit apps becoming more popular, what’s to stop someone from depositing the same check into multiple banks? They’ll get caught eventually, but I would think a bank not taking physical possession of a check could create huge problems within the banking system.

    (I figured I’d bring that up because everyone else will be busy blaming the OP for thinking PayPal is a bank.)

    • bhr says:

      I would assume that is why there is a significant delay built in to the system. Check capture creates a lot of additional opportunity for fraud (my opinion) and will result in either stricter recover laws, stricter penalties, or a longer overall delay for all deposits (even live ones as someone could capture and then deposit).

      • Ogroat says:

        To use the USAA check cashing app, you must have a credit card with the company (or br eligible for credit if I remember correctly.) I assume this is to put it on your credit if the check bounces and you’ve spent the money already. You have a limit of $500 on your daily online deposits. Finally, you must write “for deposit only to USAA bank account number xxxxxx.” under your signature on the back.

        • AustinTXProgrammer says:

          The chase check deposit app doesn’t seem so strict… But it is iPhone only (can’t use a computer) so they might be able to pin it to a specific device.

        • SpiffWilkie says:

          I’ve never used the mobile app to deposit at USAA, but I do use the deposit@home feature where I scan the check to deposit. There is a $10,000/day limit for that. I don’t have a credit card with them, but I suppose they might take into account credit worthiness before allowing someone to use the feature.

          • sponica says:

            they definitely do take credit worthiness into account…my sister wasn’t able to use it because her credit was definitely in the basement

        • sponica says:

          yeah I’ve never written the “for deposit only to USAA bank” part. i just endorse it like I would any other check…my name and acct number

          i’m leery of using a smartphone for deposits though…call me a luddite

          • SpiffWilkie says:

            I’ve never written that, either. I never even noticed that they ask you to write that on the back until a couple of nights ago when my wife pointed it out (she’s a stickler for the rules).

          • CubeRat says:

            Sweetie, your more advanced than I. I refuse to use a smartphone for any banking, even just alerts or checking my balance – although I admit I think the alerts are fine. And I’m usually a first adopter of new bank tech.

            My big advantage is that I work in an office with excellent computer security, so I check my accounts daily from there. On my days off, I use my home computer.

            I have no intention of ever using my smartphone for payment, deposits, or banking of any type.

            • sponica says:

              I don’t even have a smartphone…if I did, I doubt I’d access the bank site on it. It’s just as easy to call the bank to get balance info, if I really truly needed it…

        • Willow16 says:

          I thought you had to have an insurance product with USAA to use deposit at home. Maybe now it’s a credit card. Also, if your daily limit is $500, then it must vary by customer because my daily deposit limit is $10,000. I assume it corresponds with how much you have in your bank accounts.

          • mobiuschic42 says:

            Ditto – my limit is $10000 – I wonder if it’s from being an actual USAA member (not just someone who uses their banking products)? Thanks, mom and dad! Your military service got me this sweet bank account…

    • chiieddy says:

      Short answer is the eCheck system the banks have set up which make this possible. A scan of a check is as good as presenting the check. The bank puts a hold on the funds, just like a regular check until it clears through the original bank the draft is drawn on. Sometimes they’ll (as a courtesy) release the funds, but if the check fails to cash for any reason (be in lack of funds or it is invalid) you can bet your sweet baby cheeks that the bank will yank the funds from your account and charge you a fee on top of that.

  4. I wumbo. You wumbo. He- she- me... wumbo. Wumbo; Wumboing; We'll have thee wumbo; Wumborama; Wumbology; the study of Wumbo. says:

    Nearly a week? Goodness. I love advances in technology; I promise. I like all the ways technology makes it so I never have to leave my home. However, I draw the line when it takes a week to deposit a check. I live the fact that I can deposit it at the ATM with no fuss and the money is usually there within the next 2 business days.

    Remember filling out deposit forms? Remember when you needed an envelope to make your ATM check deposit? Good times, good times…

    • georgi55 says:

      They may make the balance available to you in 2 days out of faith, but if it’s a fake check even if it cleared in 2 dyas, chances are 5~10 days later they will come looking for the money.

  5. Blueskylaw says:

    PayPal+Smartphone Service=Oxymoron

  6. SavijMuhdrox says:

    I thought being able to walk up to an ATM and deposit my check there was a breakthrough technological innovation that made my life easier..

    turns out i wasn’t aiming the lazy bar low enough.. (prolly shoulda just kicked it instead of “aiming” it for the ultimate lazy in the first place)

    it’s money, it’s (probably) your livelihood.. is going to the bank to securely deposit it that much of a drain on everything else in your life? (i.e. spending that money?)

  7. blinky says:

    Perhaps there is a reason ING is slow to integrate check capture?

  8. Ed says:

    FWIW, I just got a notice on my iPad that the ING App now supports check deposit this morning.

  9. kranky says:

    Here’s what I would expect.

    Paypal does not credit the OP with the funds, so OP physically deposits the same checks at the bank. Some time later, Paypal decides to credit the OP. Paypal then finds out the OP already processed the checks through her bank, when the checkwriter complains about being debited twice for the same check.

    Paypal freezes the OP’s account for 6 months and refuses to return any funds, claiming fraud. OP will have no success getting a rational person to take action at Paypal. OP will swear off Paypal forever.

  10. chiieddy says:

    I don’t have an answer for the OP since she’s using Paypal and they’re not regulated under the same laws as a bank. Her money is stuck. I do recommend she open a small checking account with Schwab and download their app, then set it to transfer to ING.

  11. Nanopy says:

    USAA’s mobile application check deposits are generally available same-day (I think they guarantee them against your USAA credit card). I haven’t had a lot of luck with ING bank’s online tools and gave up on them awhile ago.

    As everyone else says, don’t trust PayPal with your money. They’re dishonest as a bank without the same regulations.

  12. Audiyoda28 says:

    So I’m confused.

    It’s well established here (and elsewhere) that Paypal is patently useless. If the OP is even a casual reader of this site that fact is plainly evident.

    Why would the OP: (1) use Paypal. –and– (2) complain to Consumerist knowing full well the the comments will include responses like Paypal is not a bank and Paypal is not regulated.

  13. ecuador says:

    Wow, you use Paypal for CONVENIENCE? What next, perhaps play some Russian roulette for fun?
    Whoever uses Paypal in cases where they are not forced to (e.g. ebay) deserves what he/she gets.
    Until ING gets their acts straight there are many National banks (some less evil than others, all* less evil than Paypal) that have check cashing support in their apps (IIRC Citi, Chase among others).

    *Bank of America need not be mentioned as an exception, since while they are around as evil as Paypal nobody sane should consider them when choosing a bank.

  14. skapig says:

    Go with a real bank that offers this feature with greater accountability.

    That being said, you might want to give the CFPB a whirl. They might give you some leverage against Paypal.

  15. ovalseven says:

    Think of Paypal as a dimly-lit basement full of bald, fat guys in dirty white t-shirts and visors smoking cigars and counting large stacks of cash.

    They’re not a bank. Their job is just to move money for people while keeping a nice chunk for themselves. Don’t trust them.

  16. Starrion says:

    This isn’t directed specifically at the OP but in general:

    What does a company (like Paypal) have to do to a consumer or a number of consumers before ALL the other customers realize that the company is an accident waiting to happen?

    Paypal specifically has
    Taken and held (many)consumer’s money for up to six months for issues that the consumer was not responsible for.
    Shown a chronic widespread disregard for providing customer service when a complaint occurs
    Run consumers through numerous hoops to regain access to their own money
    This skips all the one-off insanities like destroying a ‘conterfeit’ antique violin, ect.

    All of these issues are well documented. Paypal routinely screws consumers in the worst manner imaginable, and yet there are countless people like the OP who are playing with fire because they personally have not been burned.

    A Zebra herd will usually not stick around when one of them get pulled down and eaten by a Lion. You don’t see the Zebra standing there saying to each other “Well, I have never had a problem with lions, so I don’t see what the issue is.”

    • ovalseven says:

      “You don’t see the Zebra standing there saying to each other ‘Well, I have never had a problem with lions, so I don’t see what the issue is.'”

      A funny and very accurate analogy.

      Thanks for the laugh.

  17. sjb says:

    not a bank

    “This means that PayPal offers none of the protection that real banks offer, and it isn’t required to maintain any of the security, customer service or dispute resolution services that banks provide.”

  18. Thumprr says:

    OP here. I don’t think of Paypal as a bank. However, for random smaller checks (not my paychecks, which are direct deposited to ING), it was less of a hassle to wait the week than to make a special trip to deposit the check to my brick and mortar bank.

    My envy of USAA and other banks for implementing check capture, and my frustration with my main bank (ING) for delaying the implementation of check capture, led me to ignore other folks’ difficulties with Paypal. For those blaming me for trusting paypal at all, I totally get it.

    Today, as many have noted, ING has implemented check capture. Problem solved, and now deleting the paypal app from my phone. . .

  19. brandymb says:

    Paypal is NOT the worlds most loved way to pay or get paid. They love to hold your money and maybe let you have it after 21 days.. if the moon is blue..

  20. HogwartsProfessor says:

    “I don’t like going to the bank.”

    So she uses PayPal as a bank instead?

    Sorry, but that was pretty funny.

  21. Doctor_X says:

    I’m happy to report that ING Bank’s online check depositing service went live today.

  22. PhilipCohen says:

    My God, are people in the US still using paper checks? Has the US dropped back to being a third-world country? And, PayPal. Don’t get me started …

    “The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the United States government that protects you against the loss of your deposits if an FDIC-insured bank or savings association fails.”

    PayPal is licensed in some places only as a “money transmitter”, like Western Union. The FDIC guarantees the safety of deposits only when a FDIC-insured bank fails. That I am aware, the FDIC does not insure non-prudentially regulated “non-bank” entities such as PayPal. Certainly, I have never seen any notice of such insurance applying to PayPal.

    PayPal will hand out unverified user accounts, both “buying” (transferor) and “merchant” (transferee), to literally anyone and their dog. PayPal is not licensed as a “bank” nor to provide credit, and I don’t doubt that if you leave your funds “on deposit” with PreyPal then you have no protection for those funds at all other than as an unsecured creditor.

    Regrettably, eBay’s desperate, pro-buyer, anti small seller, policies have, in recent years, encouraged every petty fraudster to crawl out of the woodwork and onto the eBay marketplace. That is not to say that eBay does not have its share of unscrupulous shill-bidding merchant fraudsters, they too are rampant, and welcome, on eBay. However, the resulting increase in transactional disputes by buyers, fraudulent or otherwise, is apparently causing problems for the eBafia and PreyPal at the big end of town …

    There is a rumour afoot that the reason PayPal is now so aggressively applying lengthy holds on seller-users’ funds is because PayPal’s clunky, stand-alone payment system is causing too much trouble for the real banks with charge-backs and other transactional disputes and PreyPal has apparently been told to shape up or ship out, and if they don’t shape up, then they risk having their “merchant account” with the infamous Wells Fargo Bank declared “persona non grata”. (Funny too how the unscrupulous tend to congregate.) This, of course, is the same risk that any unscrupulous merchant account holder faces with any real bank. And what would such action against PreyPal mean? It could effectively mean the end of the clunky PreyPal.

    Therefore, there is little chance that PreyPal will, of its own volition, cease applying these funds holds—which are a clear breach of the conditions applying to its money transmitter licences. (Still, it would be nice to think that the situation was causing the “eBafia Don” some loss of sleep.)

    Having said that, notwithstanding that users have supposedly “agreed” to these funds holds, the details of which are buried somewhere deep in the bowels of the PreyPal user agreement, the fact is, such conditions, that fly in the face of statute law, are not enforceable, and the local Money Transmitter Regulator will usually require that PreyPal desist if users complain about such funds holds.

    If users are not happy about PreyPal holding their funds without valid reason, they should do something about it. It appears that in the US relief can be obtained from this arbitrary, nominally unlawful activity by lodging a complaint with your state’s “Money Transmitter Regulator” at

    Other US state related sites …

    And, just for a laugh then, some comment on PayPal’s off-eBay products: “The New Way To Pay In-Store” (at Home Depot), PayPal Here, SmartPay, PayPal Digital Wallet, PayPal Debit MasterCard, PayPal Local and Watch With eBay …

    And, when do we start calling eBay a payments company …

    The simple fact is, once Visa’s is up and running, the clunky PreyPal has little long-term future, certainly very little future outside of the eBay marketplace …

    And, as for PreyPal’s venture into physical POS (at Home Depot for instance), in competition with the traditional payment cards, well, I just can‚Äôt stop laughing …

    Undoubtedly, Scotty Thompson saw the icebergs ahead, and decided to swim over to Yahoo! before the rusting old scow, “eBafia”, finally struck and went submarine.

    eBay / PayPal / Donahoe: Dead Men Walking