12-19-2016: Josef Průša described a scandal with PayPal, which froze over $1 million in his account
The reason was because the company was "growing too fast" and had suspiciously high sales
On December 19, 2016, Josef Průša – the founder of Prusa Research, the manufacturer of the popular DIY 3D printers – published a blog post about a conflict with PayPal, which had frozen over $1 million of the company’s funds. PayPal justified the freeze by claiming the company’s rapid sales growth appeared suspicious.
The event was symbolic in the history of Prusa Research, as it documented a period of significant growth that pushed the company into the ranks of leading European 3D printer manufacturers. At the same time, it helped increase the company’s recognition outside the niche of hobbyist 3D printer users.
The main cause of the issue was the exceptionally well-received Prusa i3 MK2 printer, launched by the Czech manufacturer in May 2016. For six consecutive months, sales grew dynamically, peaking in the last two months of the year when many customers sought to purchase the 3D printer as a holiday gift.
PayPal became concerned about the rapid revenue increase and suspected that Prusa Research might be engaging in fraudulent activities. As a result, the payment provider froze the company’s funds, preventing it from processing payments, making bank transfers, or issuing customer refunds. The decision was made without prior notice, taking effect overnight. Additionally, Průša emphasized that during two years of operation, the company had only experienced three chargebacks.
Průša further criticized PayPal’s treatment of Czech businesses. He pointed out that Czech companies could only withdraw funds in the local currency at an unfavorable exchange rate, losing approximately 2% on each transaction. Furthermore, sales exceeding $100,000 per month triggered a 21-day freeze on the excess funds, and the process of raising account limits took months. Communication with PayPal was also problematic, with responses delayed for weeks.
Following the publication of articles about the situation on industry news portals, PayPal took action. A new account manager unfroze one-third of the funds linked to already fulfilled orders, while the remaining funds were to be released as additional products were shipped. Prusa Research also implemented a new payment processor, Adyen, offering more favorable terms and greater flexibility, thereby reducing the company’s reliance on PayPal in the future.
This event was a pivotal moment for Prusa Research, as it elevated the company’s image from a “garage-based” manufacturer serving a small group of DIY enthusiasts to a serious player on the European and global stage. Selling a significant number of 3D printers and generating substantial revenue demonstrated the company’s credibility and growth potential.
Source: www.prusa3d.com