Respond to a Chargeback

Don’t be alarmed if you have received a chargeback notice.

A chargeback is when a buyer asks their credit card issuer to reverse a transaction after it has been completed.

Chargebacks are available only to users who made a payment funded by their credit card. They are initiated and handled by the buyer’s credit card issuer – not by PayPal - and therefore will follow that companies rules and timeframes.

Buyers generally request chargebacks for the following reasons:

Every now and then a payment is sent but fails to arrive in the seller’s account. This is an easy fix, and usually happens for the following reasons:

  • The item did not arrive.

  • The item was significantly different than advertised.

  • Their credit card was used without their permission to purchase the item fraudulently.

Resolving Disputes with Buyers

Know how to respond if someone disputes a transaction. There are many reasons for disputes, from shipping delays to damaged items to unauthorized transactions. That is why PayPal keeps the lines of communication open between sellers and buyers, making it easier for you to resolve things quickly and successfully.

To respond to a dispute, go to the Resolution Centre and post a message explaining your understanding of the situation. Sometimes this is all you need to do to resolve the situation.

If not, the buyer may escalate the dispute to ‘claim’ status, which means PayPal will review the case and provide a final decision, within 20 business days.

Appealing a Claim

When a claim is found in favour of the buyer, you may be able to appeal the decision. The decision could be reversed in the event of one of the following:

  • The item is returned to you, but not in the same condition as when the buyer first received it.

  • No item was returned at all – just an empty box.

  • The wrong item was returned to you.

You can file an appeal in a few steps:

  • Log in to your PayPal account

  • Go to the Resolution Centre

  • Select “Closed Cases” from the drop-down menu

  • Click the Appeal button

  • Once the appeal has been filed, you may be asked to provide documentation supporting your case, file a complaint, or file a police report, depending on the circumstances. A PayPal representative will then review your case, and if an appeal is granted and you win, you will be reimbursed for the transaction.

My Funds are on Temporary Hold

In certain situations, PayPal may place payments on temporary hold. For example, whenever a claim, dispute, or chargeback is opened, PayPal will generally place the payment in question on hold. The funds will remain in your account, but cannot be withdrawn until the issue has been resolved.

Once a decision has been made, your funds will either be released to you or refunded to the buyer.

To check the status of an open dispute, or to offer a refund to the buyer at any time, simply log in to your account, and click on your open case.

Funds Availability Delay

Generally, we will make funds that you receive available to you immediately. However, in order to minimize the costs you and we may incur due to disputes and chargebacks, we may sometimes delay the availability of certain funds. You will not be able to spend or withdraw the unavailable funds for a given amount of time. This policy may be applied to particular transactions or to a portion of all transactions.


When we delay the availability of all or some portion of all transactions received by a specific amount, it’s called a “reserve”. In other words, we may set aside an amount of your money as pending for a given period of time. We will notify you if a reserve will be applied to your account, along with the type, the amount and duration. The information will also be provided on your Account Overview page.

Reserve types include:

A rolling reserve

We will hold a certain percentage of your funds on a rolling basis and release them at the end of a given timeframe. For example, if we set your reserve at 10% for a 90-day rolling period, we’ll hold 10% of the payments you receive on the first day until day 91, 10% of your second day’s payments until day 92, and so on. You can use the remaining funds immediately.

A minimum reserve

We may require you maintain a pre-determined amount of money in your account with us. For example, if we set your reserve at $5,000.00, we’ll hold a percentage of each day’s received payments until this pending balance reached your minimum balance level. Once that level is reached, that amount will be held as pending in your account.

Payment holds

We may temporarily hold 100% of the funds you receive as a pending balance in your account, and release the funds associated with each transaction after a given timeframe. For each transaction, we may release the funds sooner if we determine that the transaction has been fulfilled and your customers are satisfied.