Advice on best practices for sellers

Account Reserves


What are reserves?

An account reserve is a pool of money set aside in your PayPal account to help ensure that you are able to meet the liabilities you may incur from a chargeback, claim or bank reversal when no other funds are available.

PayPal uses two types of reserves:

  1. A rolling reserve is a reserve where a percentage of each transaction received each day is held and then released later on a scheduled basis.  For example, your reserve could be set at 10% and held for a 90-day rolling period – meaning 10% of the money you receive on day 1 is held and then released on day 91, 10% of the money you receive on day 2 is held until day 92, etc.  Rolling reserves are the most common type of reserve.
  2. A minimum reserve is a specific minimum amount of money that you’re required to keep available in your PayPal account balance at all times.  The minimum reserve is either taken as an upfront amount deposited all at once or is built up and maintained on a rolling basis from percentages of sales, much like a rolling reserve.  An account can have both a minimum and a rolling reserve at the same time. 

I’m a PayPal Heretm merchant. Am I subject to reserves?

You may be subject to reserves, depending on the characteristics of your business or your account, as noted below. What is unique to PayPal Heretm merchants is that you may have a reserve placed on your account that impacts only specific transaction types, and that it is possible for a rolling reserve to have an initial threshold below which funds are not placed in your pending balance. Here are some examples of a reserve that may be placed on a PayPal Heretm merchant:

  • You may have an account-level rolling reserve that places all incoming funds in your pending balance for a specified period of time.
  • You may have a rolling reserve that affects only payments that you process via PayPal Heretm, but does not affect online payments.
  • You may have a rolling reserve that affects only keyed-in transactions. This places only the funds received via keyed-in transactions (payments you accepted by typing the customer’s credit card number into the PayPal Heretm app) in your pending balance for a specified period of time.
  • You may have a transaction-level reserve with a threshold. Let’s use the last example, where the reserve affects keyed-in transactions only. The threshold amount refers to the cumulative sum of funds received via that transaction type during a period of time. If your threshold is £500 and your period is seven days, then the first £500 accepted via keyed-in payments in any seven-day period are immediately available for withdrawal. Any keyed-in payments in those seven days that bring your total above £500 will be placed in your pending balance.

The exact details of your funds availability will be communicated to you in an email from PayPal, and you can see these details in your account at any time.

As with all reserves, we regularly review the reserve settings on all affected PayPal Heretm accounts. When the reserve is no longer necessary, it will be removed.

I’m a PayPal Heretm merchant, and my account has a reserve. What can I do to remove it?

All PayPal Here merchants will have their reserve settings reviewed every ninety days. With good account performance, your reserve will be lessened so that more of your funds are available for withdrawal immediately. Follow our Seller Best Practices below to avoid buyer disputes, claims and chargebacks.
Whenever we make a change to your reserve settings, we will notify you via email.

PayPal Heretm Seller Best Practices

  • Ensure that your return policy is clearly defined.
  • If you are involved in a buyer dispute, start working to resolve it right away. Frequent, honest and open communication with the buyer via the Resolution Centre will help clear up any misunderstanding.
  • It’s important to make your Card Statement Name as clear as possible so that customers will recognize your charge on their card statement. If a customer doesn’t recognise a charge, they could open a complaint that they did not recognize or did not authorise the charge. The Card Statement Name is the name that will appear on your customer’s credit or debit card statements. To help your customers remember where they shopped, make sure your Credit Card Statement Name is correct by following the instructions below.

    Update your Card Statement Name
    1. Log in to your PayPal account.
    2. Click Profile at the top of the page.
    3. Click My Selling Preferences.
    4. Click update next to “Card statement name” in the “Selling online” section.
    5. Enter your business name, then click Save.

    Don’t enter special characters such as &, #, ().

    Your business name could be displayed on your customers’ card statement after the word PayPal *. For example (PayPal *SELLER NAME).

Why does PayPal use reserves?

Reserves are common industry practice used to help ensure that you are able to meet the liabilities you may incur from a chargeback, claim or bank reversal, when no other funds are available.

Ordinarily, if you have a reserve on your account and receive a chargeback or dispute, we will deduct that amount from your available balance and not from your reserve balance. However, if a seller goes out of business or stops processing payments through PayPal, we will deduct any payment reversals that subsequently come in from the reserve.

Why was a reserve placed on my account, and how can I remove it?

Account reserves are placed and evaluated on a case-by-case basis. A reserve may be placed on your account if there is a higher than average risk bankruptcy or other payment issues associated with your account. In determining this, PayPal considers a variety of factors, including:

  • How long you’ve been in business
  • Whether your industry has a higher than average likelihood of bankruptcy or payment issues
  • Your processing history with PayPal and/or other providers
  • Your account’s performance with respect to customer claims and disputes
  • Your business and/or personal credit history
  • Your delivery time frames
  • Your account’s performance with respect to returns and chargebacks
  • Your unique business model

Once your account has a reserve, PayPal re-evaluates your processing attributes from time to time to determine whether the reserve can be removed or whether the amount of money kept in the reserve can be decreased. So, with adjustments in some key areas, it’s possible that your reserve may be lifted or reduced.

There are things you can do to lessen the likelihood of a reserve being placed on your account, however removal of the reserve altogether is dependent on a number of factors and isn’t always possible for every account.

How do I prevent reserves from being placed on my account?

Preventing reserves isn’t always possible, however you can lessen your risk factors and improve your customer service in the process by following Seller Best Practices below.

Seller Best Practices

  • Use clear photos of the product  and detailed, accurate descriptions of items, so buyers know exactly what they’re getting. This will help cut down on buyer disappointments and disputes.
  • Be clear about shipping and handling times, costs, and methods; process orders promptly to avoid delays.
  • Be sure to pack items carefully with appropriate, quality packing material, so customers receive the items in good condition.
  • Track packages you’ve shipped to cut down on the amount of time money is temporarily unavailable. Use a shipping method that provides tracking information, such as RoyalMail, Parcel Force or FedEx.
  • Clearly define your return policy up front to avoid problems later.
  • If you are involved in a buyer dispute, start working to resolve it right away. Frequent, honest, and open communication with the buyer via the Resolution Center will help clear up any misunderstanding.

Providing customers with prompt service and accurate order fulfillment may lessen the likelihood of complaints or returns in the future.