Posted By:
Andrew S.Although PayPal is not insured by the FDIC because it is considered to be a deposit broker, PayPal itself has thousands of accounts in one FDIC bank. Even most of the employees at PayPal don't know the name of the FDIC bank the money is deposited in....probably only the finance director and a few other select individuals (CEO, etc.) Due to the extremely large amount of money PayPal deals with, the bank in question cuts them a special deal and pays 5% quarterly interest on the balance in said accounts. This is what I was told by a friend who used to work for PayPal up until 2007. So it is in their financial interest (greed) to hold seller funds as long as possible in order to reap the high interest returns.