When a payment is marked as “pending” it means that the payment process still needs to be completed. In most cases, this simply means that you need to wait for this to happen. In some cases, however, you may need to take action.
The basics of payment processing
Most payments go through some kind of authorisation process before they are presented for payment. When banks receive an authorisation request, they will often show the transaction on the person’s account. Typically, they will mark it as pending payment (or payment pending). This means that they are ringfencing the account holder’s funds on the expectation that they will need to make payment later.
Once the payment request is presented, the bank will release the funds. This is, however, not always the end of the story. Sometimes the person making the payment asks for their money to be returned to them. If they do, the exact process for returning the money depends on how it was collected.
The role of payment processors
Large companies often have their own payment-processing facilities. They simply need to connect to banks for the actual transfer of funds. Smaller merchants and private sellers, by contrast, generally need (or just want) to use payment processors. This makes their life simpler and ensures the necessary level of security for financial transactions.
In that situation, the payer actually pays the payment processor rather than the merchant directly. Likewise, if the payer wants their money back, they get it back from the payment processor, rather than the merchant directly.
To reduce their exposure to risk, payment processors sometimes wait a short time before passing funds on to merchants. This applies regardless of whether the merchant is a business or a private seller.
Generally, therefore, if you have an eBay payment pending or a PayPal payment, it simply means that eBay or Paypal is waiting to make sure that everything is fine with the transaction before releasing the funds.
The importance of security
There is another reason why you might see a PayPal pending payment (or a pending payment from another source). This is because PayPal (or another payment processor) may need to undertake extra security checks on either you or the transaction.
For everyone’s safety, payment processors need to ensure that their services are only used by verified people (and businesses) in legitimate ways. Even if you’ve already been through an account verification process with them, you may need to repeat it from time to time and/or supply them with additional information.
Managing pending payments
Realistically, both merchants and customers can expect to see “pending payment” on their accounts from time to time. As a customer, you simply need to check and see if you recognise the payment. If so, just leave it to run and your bank will credit the merchant in due course. If you don’t, contact the merchant and/or your bank to resolve the matter.
As a merchant, for the most part, you will also just leave pending payments to run their course naturally. For cash flow purposes, you may find it helpful to familiarise yourself with your payment processor’s guidelines on how long it takes to process transactions. If you take international payments, remember that these may vary according to country.
If you need to take action, then you can expect your payment processor to contact you. Usually, this will be by email. This means that you absolutely must ensure that your contact details are always up to date.
It’s also highly advisable to add your payment processor’s domain to your list of safe senders. This will minimise the risk of an important email being sent to spam.
We Can Help
If you’d like to learn more about what it means when a payment is pending, then get in touch with our financial experts. Find out how GoCardless can help you with ad hoc payments or recurring payments.