PayPal Payment Fund Authorization & Capture Options

Not everyone knows there are multiple options for authorizing and capturing funds via PayPal. Often, a company sets up their merchant profile with PayPal and leaves the settings as they were upon setup. However, depending on the order & fulfillment processes the company has set up in NetSuite, the initial settings may not work best for them.

Below are some details about PayPal’s fund authorization & capture options that you may want to consider, especially if you are integrating PayPal with your NetSuite account.

Want to learn more about NetSuite Integration? Check out this article on NetSuite Integration Options!

Automatic: One-step PayPal Payment Authorize and Capture

Automatic (one-step payment) is usually the default setup for PayPal merchant accounts. This functions by authorizing AND capturing the funds when the customer clicks the button to confirm payment.

Pros:

• Funds are available immediately.
• There is no risk of the customer’s account not having the funds to cover the purchase.
• You do not need to go back and manually capture the funds.

Cons:

• Business processes that only charge for fulfilled items in NetSuite will need to handle refunds more often.
• Funds hit the business account the day of order, which may not align with accounting in NetSuite.

Authorize & Capture: Two-step PayPal Payment Fund Approach

PayPal offers an option to authorize and capture funds later. This usually needs to be chosen in the merchant account settings. Authorize & capture functions by immediately authorizing the funds in the bank account. This also places a hold on the funds for 29 days. Once the business has determined they want to capture the funds, they go back to their merchant profile and capture the funds.

Pros:

• Order fulfillment, inventory verification, and other business processes can occur before funds are captured.
• There is less risk of handling refunds as you would only capture the funds needed for the fulfillable items.
• The timing of funds going into an account is easier to control.
• Risk of forgetting to capture funds for an order.

Cons:

• Higher risk of customer’s not having actual funds for the order balance.
• Need to go back and capture the funds manually.

Finding the Right Approach to Your PayPal Funds

The above methods for PayPal fund authorization and capture may not be the only methods. If looking through PayPal’s help section & account settings does not provide a clear solution for how a business would like to handle payment processing with PayPal, it is recommended to reach out to their merchant support team to understand all the options available.

If you have specific questions about integrating PayPal with your NetSuite ERP system, or want to know what funds authorization & capture options might be right for you based on your accounting processes in NetSuite, contact us!

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