Your account reserves questions answered

Oct 02 2019 | PayPal editorial staff | 5 min read

Account reserves help protect you and PayPal against potential financial risk. Money held in reserve still belongs to you, but it can impact your cashflow.
To help you understand what’s happening, we’ve pulled together answers to the most common questions about PayPal’s account reserves. 
 

Q. I’ve had an account for years. Why is it being reviewed now?

It could just be a routine account review. Or changes in your account may have prompted the review. If we’ve seen a sudden increase in your sales volume, selling price or the number of buyer disputes, claims, chargebacks or refunds you’re making, we’re likely to look into what’s going on.
 

Q. Why do I need to give PayPal more information about my business or my financials?

We ask for more information to make sure your business can deliver what your customers order. Here’s a rundown of the kind of information we may ask for and how we use it.

My business or my financials  

Q. How long does it take to find out what kind of reserve will be placed on my account?

Once we’ve received all the requested information, we’ll typically contact you with an update within 3 business days. Keep an eye on your inbox.
 

Q. When will I get access to money in reserve?

When your money is released depends on the type of reserve you have.

Rolling reserves hold a percentage of each transaction you receive and release it a scheduled basis. For example, if your reserve is set at 10% and held for a 90-day rolling period, 10% of the money you receive on day 1 will be held and then released on day 91, 10% of the money you receive on day 2 will be held until day 92, etc.

Minimum reserves and jumpstart reserves are amounts held in your account and typically only released after you cease trading with us. We review them every 180 days to make sure the type of reserve and amount is still appropriate for your business.

Once we’ve placed a reserve on your account, we’ll email you the terms of your reserve. You’ll also find these terms in your account so you can check it at any time.
 

Q. When is my account reserve reviewed?

We review your account every 180 days. If there’s a change in your business performance, we may adjust or remove an existing reserve, or add a new one. We actively work to release reserves where possible as we know how important a reliable cashflow is to your business.
 

Q. If I close my account, when will I receive the money held in reserve?

We can hold your money in reserve for up to 180 days after you close your PayPal account. In some cases, it can take more than 180 days and, if that’s the case, we’ll keep you informed.
 

Q. Will PayPal use the money held in reserve if I receive a chargeback?

No, we’ll only use money from your available balance to cover any chargebacks you receive. We hold funds in a reserve when we’re unable to collect on your past due balances from chargebacks, claims, debit transactions with insufficient funds in the account and fees.

Don’t forget, there are some things you can do to protect your business against losses from chargebacks with Seller Protection.
 

Q. Why are my sales considered high risk?

If the goods or services you’re selling are considered high risk, that means they tend, across the industry, to have higher rates of refunds, fluctuating values and/or long delivery lead times. These include sales for things like tickets, furniture, gift cards, consumer electronics, computers, commodities, travel, jewellery, presale items and other more expensive products.
 

Q. I’ve never had a problem with claims or chargebacks so why do I have a reserve?

Claims and chargebacks are just one of the factors we consider when reviewing an account for a reserve. We also look into things like:
  • Your processing history with PayPal and other providers
  • Whether your industry has a higher likelihood of chargebacks or refunds
  • Whether your account has an elevated number of customer claims and disputes
  • Your business and/or personal credit history
  • Whether you’re selling products or services in advance (presales)
  • Your delivery timeframes
 

Q. What appeared on my credit report that caused you to place a reserve?

Your credit information is just one of many factors we consider when deciding if your account requires a reserve. If you’d like to know more about your credit reports, please contact a credit reporting agency to review your history.
 
To learn more about PayPal’s account reserves and why you might have one, check out our article Get to know PayPal account reserves.

 
The contents of this site are provided for informational purposes only. The information in this article does not constitute legal, financial, IT, business or investment advice of any kind and is not a substitute for any professional advice. You should always obtain independent, professional accounting, financial, IT and legal advice before making any business decision.
The contents of this site are provided for informational purposes only. The information in this article does not constitute legal, financial, IT, business or investment advice of any kind and is not a substitute for any professional advice. You should always obtain independent, professional accounting, financial, IT and legal advice before making any business decision.