Reserves explained.

Anyone can sell with PayPal, regardless of how they do business. To manage the risk that arises from such openness, we follow a common industry practice by placing reserves on a small proportion of high-risk businesses. This also helps to ensure businesses are able to meet any liabilities incurred from a chargeback, claim or bank reversal, when something goes wrong.

1

We’ll initiate the underwriting process via email or phone.

2

Submit required documents on Resolution Centre for review.

3

Once a decision is made, we’ll contact you with our recommendations.

How are reserves determined?

Reserves are determined through the process of underwriting. We’ll evaluate your account periodically to determine whether the reserve should be changed or removed. Conversely, this seldom happens, but a handful of merchants currently not on reserves may be required to set aside reserves when certain risk criteria are met. In making a decision on the type and amount of reserves, we may consider influencing factors such as the risk of business disruption and chargebacks and reversals. Other considerations include:

  • your business health and/or personal credit history
  • your operational business model, including details such as purchase delivery timeframes
  • whether your industry category has higher than average likelihood of bankruptcy or payment issues historically
  • your processing history with PayPal and/or other providers
  • your selling performance with respect to customer claims, disputes, reversals and chargebacks

Types of reserves.

Reserve placement is typically maintaining a proportion of funds, usually as pending balance for a pre-determined period of time. This is to help ensure fulfillment of unresolved past due balances. Alternatively, you can provide a bank or parent guarantee in place of reserves, facilitating improved cash flow for merchants.

Fixed reserves Rolling reserves
The amount will be calculated and maintained in your account during your stay with us. For example, set aside a one-time reserve balance of US$5,000 or you also have the option of building the required amount over time: 5% of daily transactions are held till a reserve balance of US$5,000 is reached. Provides more flexibility by enabling you to set aside a fixed percentage of your daily sales for a period of time and have it freed up once the duration is met. For example, if you have a 90-day rolling reserve, funds from Day 1 sales will be available on Day 91 and Day 2 on Day 92.

Seller best practices.

Consult our risk analysts to better understand the key concerns and how to address them.

  • reduce the overall risk levels of your business
  • refine your operations model to reduce the likelihood of customer issues

Questions and answers

I've had an account for years, why is my account being reviewed now?

Your recent business changes may prompt us to initiate a review of your account. This could be due to several reasons: a significant increase in processed sales volumes, an increase in your selling price, an increase in buyer dispute, claim, chargeback, or refund rates. These are possible fraud indicators or declining seller performances and that’s why we may intervene to help maintain a positive experience for buyers.

I’ve sent in the information you requested. How long do I have to wait to see what type of reserves will be on my account?

Once we’ve received all the information, we’ll typically contact you in around 3 working days.

When will I receive my money?

Refer to the terms of your reserve outlined by our underwriting team. If you have a rolling reserve, the money will be maintained as pending balance in your account until the pre-determined number of days are met. For example, if you have a 90-day rolling reserve, funds from Day 1 sales will be available on Day 91 and Day 2 on day 92nd. Meanwhile, we will continue to capture new reserves on an ongoing basis, to replace that released.

Which industries are considered high-risk?

Some industry profiles present more risk than others. For example, membership or subscription services, travel packages, events ticketing and gift cards are considered more risky than restaurants and retailers. Due to the nature, operating rhythm, including delivery lead times, these industries have been found to have a higher tendency for payment reversals, fraud or risk of fulfillment issues.