Barclays Bank PLC & Paypal Collaborate In Direct Debit Subscription Snafu

How do you handle the merging of bank accounts within one of the World’s largest banking corporations (Barclays Bank PLC)?
Well if you are Paypal, you cancel all subscription payments on the accounts linked to Barclays in a major banking snafu.

This won’t interest many of my US readers unless I happen to be one of your customers, though something similar could happen to your Paypal subscriptions wherever you are located.

Here is a timeline…

Barclays Bank (UK) Buy Woolwich Building Society

This actually happened I believe over a year ago. They were both being run as separate entities thus nothing drastic to worry about.

May 2007 High Street Consolidation & Bank Account Notice

I am not sure how much of this has happened, I haven’t actually been back in the UK for almost a year but I assume that there is some consolidation of the retail outlets.

There was a notification of bank accounts being transferred over sometime towards the end of July, but no specific details regarding direct debits that I am aware of.

July 10th Through July 21st Bank Account Merger

Letters start being sent regarding the merger of bank accounts.

I get all business correspondence scanned and sent through to me near enough the day it arrives in the post box. The first letter, dated 10th July arrives in my email 21st July

This allows me to set up my internet banking on the new account

July 31st 2007 All Paypal Subscriptions Cancelled

Paypal Subscription Cancellations

I had multiple bank accounts and credit cards attached to my Paypal account, but because the bank account that was still listed as being the primary account was closed, Paypal decided to cancel all my subscriptions.

I also received the following email from Paypal

The mandate from your bank account, ending in 6313, was returned by your bank on 31 Jul. 2007 for the reason below:

The bank account is closed.

Sincerely,
PayPal

Please do not reply to this email. This mailbox is not monitored and you will not receive a response. For assistance, log in to your PayPal account and click the Help link located in the top right corner of any PayPal page.

Hellish Procedures

Am I to blame? I am not sure, but from the evidence I have collected, the blame squarely rests on Woolwich / Barclays or Paypal.

It seems logical to me that the ideal way for this situation to be handled would be an authorization request of some kind to transfer bank mandates to the new account by Barclays or they should do it without any needed authorization.

Alternatively Paypal could have notified me that they were changing my primary account over to a different account, because they had received notification on my primary account being cancelled.

I am not sure even if I had thought of changing over my primary bank account in Paypal, whether the secondary funding source for each subscription would have been transferred over as well.

Bank Mandates Were Meant To Be Transferred

Referring to the changes documents

To save time we’ve transferred over all your current bill payment mandates.

Further down the page it states…

We have moved all of your Direct Debits across to your new account and notified the companies concerned but because these are new Direct Debits they will not have any of the additional information, such as the last payment amount and last payment date. Once the Direct Debit has been claimed from your new account the details can be viewed in ‘Change Payments’ – accessed from the ‘All Payment Options’ link in the left-hand menu of your homepage.

As far as I am concerned, Barclays and Paypal are to blame for this mistake, but it is certainly going to cost me a great deal of time, and potentially cost businesses a lot of lost subscriptions.

Going Forward

I will most likely spend the remainder of today on the telephone trying to get through to Paypal, and contacting each of the sites I had subscriptions with explaining that I didn’t request a cancellation.
Fortunately I have a lot less subscriptions currently than I had in the past, but this situation is still going to take time to clear up.

How Much Can This Cost Your Business In Both $$$ and Time?

Major bank mergers don’t happen every day, but how many of your subscribers are paying using Paypal, and how many of them would go to the trouble of renewing subscriptions that are cancelled en mass.

Paypal Disaster

Judging by the difficulty I am having reaching Paypal on the phone, this might be a major snafu. Woolwich / Barclays have millions of customers, and they have all just had their Paypal subscriptions cancelled.

Membership Sites on Autopilot?

There is lots of talk about the profitability of membership sites running on autopilot. How would your membership site business handle 20% of your subscribers with subscription cancellations overnight?

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Comments

    • says

      Kelvin I have lived as an expat for 14 years, and when I left the UK at the age of 23 I wasn’t too concerned about my ability to open a new bank account – in those days before 9/11 it was easy.

      When I started my online busines, I was able to register a Paypal account with an old savings account, but accessing the money was a problem, as the account didn’t a visa card, just a cash card.

      The obvious route was to open a current account with the same building society, The Woolwich.

      It turned out even though they had an 18 year history with them, though intermittent, and still having maintained the same address all that time in the UK, I still had to jump through a lot of hoops to open the account, maybe as many as if I was starting afresh.

  1. says

    I think I will cry for the matter if this happens to me.. I am also in the process of creating a membership site..

    But I guess the only way to back customers if you give a benefit to renew it again.. =)

  2. says

    This sounds like a major snafu. More often than not, online entrepreneurs are usually at the mercy of online financial institutions. They call the shots. There are enough stories about PayPal cutting off accounts without even blinking! Well, I may exaggerate a bit, but bloggers outside the US are at a disadvantage in most situations.

  3. says

    Opening a bank account in the UK as a foreigner is a real task. Doesn’t surprise me that this cock up is the result of a merger. The investment bankers just set up the merger and run.

  4. John says

    This is Paypal's issue. It's a known issue that all online merchants deal with in Paypal on an everyday basis. The only ones not aware of this issue is Paypal support.

    They tie subscriptions in their system to individual funding sources instead of the Paypal account itself. So even though you mayt have 3 funding sources, that old credit card that just expired from 4 years back will probably kill your subscription as well if you made your subscription back then.

    This, of course, is complete idiotic and akin to a bank not paying a check even when you have plenty of money in your checking account. This issue causes Paypal merchants that use subscription services thousands of dollars a year – and it probably costs Paypal iteself millions of dollars a year in lost or delayed fees.

    …will they fix it? God knows. The whole Paypal company seems to be outsourced to a 'certain' land filled with people that have a high opinion of their own skills, but that's the extent of their skill.

  5. fbeats says

    i am forget all info about bank cause not connected my accounts their accounts but i will try to make my account
    this is very nice articles thank for sharing