Account Reserves FAQs.

Aug 21 2018 | PayPal editorial staff

Get answers to commonly asked questions on account reserves.
Q: I've had an account for years, why is my account being reviewed now?
A: It could just be time for a routine account review. Or, changes in your account may have prompted the review. For example, we may see a sudden increase in your sales volumes, selling price, or the number of buyer disputes, claims, chargebacks, or refund rates you’re receiving on your account.
 
Q: Why do I need to send you more information about my business or my financials?
A: The information helps us verify your business will be able to deliver what the customer ordered. Here’s a summary of the information we may be requesting, and how we use it.
 
 Requested informationHow we use it
Business information
  • Time in business
  • Industry
  • Number of employees
  • Website
Time in business:
This helps us know if you’re a new business starting out, or have been in business for a while.
 
Industry:
This helps us evaluate if you’re operating in a high or low risk industry. Presale items such as events, travel, tickets, and furniture are considered high risk.
 
Number of employees:
We use this information to assess your company’s ability to deliver products or services.
 
Website:
We use this information to review your policies and checkout pages to determine what information your buyers receive. We’re interested in your return policy, customer service information, shipping time, presale listing, product, and service descriptions.
Processing historyWe use your processing history to determine what products you have been selling, how long you’ve been processing these types of transactions, and what types of customer problems you’ve experienced.
Supplier informationWe use your supplier information to verify your supplier is legitimate.
Financial statementsWe use your financial statements to assess the strength of your business, your ability to pay your suppliers, and deliver the product or service.
Business creditWe use your business credit information to assess your current and past ability to pay creditors.
Personal creditWe use your credit information to assess your current and past ability to pay creditors. Consumer credit may be used if your business has minimal or no historical business credit.
Business model:
  • Product
  • Price
  • Delivery
  • Promotion
Product/Service Offering:
We review the types of products you’re selling, how the products are manufactured, and who your suppliers are. Certain products, services, and suppliers carry a higher risk. We also need to validate you’re able to deliver the product or service to the customer’s satisfaction (product quality and on time delivery).
 
Price:
This helps us evaluate if your volume significantly increased because of a change in price or new product offering.
 
Delivery/Shipping:
We review your shipping processes and delivery timelines.
 
Promotion:
We may ask you if you’ve had any recent sales which might have caused a large increase in your volume.
Fraud prevention/detection processes or toolsWe want to make sure you have adequate controls in place to help detect fraud.
 
Q: I sent in the information you requested. How long do I have to wait to see what type of reserves will be on my account?
A: Once we receive all the requested information, we’ll typically contact you within 3 business days. Be sure to check your email within these 3 days.
 
Q: When will I receive my money?
A: Once we place a reserve on your account, you’ll receive a communication outlining the terms of your reserve. Your terms are also outlined in your account. When your money is released depends on the type of reserve you have.

If you have a rolling reserve, the funds will be released after a certain period of time. For example, if you have a 90 day rolling reserve, funds from Day 1 sales will be available on Day 91. The funds will be released at the time of the original payment. So, if a payment was received, and held, at 9am on Day 1, it will be released at 9am on Day 91. Even though you will receive Day 1 sales on Day 91, we will continue to capture new reserves on an ongoing basis. You’ll always have the last 90 days of payments in reserve at any given time.

For a minimum reserve, reserves are reviewed within every 180 days. PayPal proactively reviews reserves and based on improvements to your business performance it is possible that your reserves could be adjusted or removed.
 
Q: When will my account be reviewed?
A: We review your account within every 180 days. If there’s a change in your business performance, we may adjust or remove your reserves. We actively work to release reserves where possible.

Q: What's the maximum amount of time you can hold my money in a reserve?
A: We can hold your money in a reserve for up to 180 days. This may change depending on business performance. 
 
Q: If I close my account, how long will it take for me to get the money that was held in a reserve back?
A: You’ll typically receive your money 180 days after your account is closed. In some cases, it can take more than 180 days.
 
Q: Will PayPal use the money being held if I receive a chargeback?
A: 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.
 
Q: Am I selling a product that’s considered high risk?
A: Certain goods are associated with a high level of risk such as tickets, furniture, gift cards, consumer electronics, computers, commodities, and travel packages. These items tend to have high refund rates, fluctuating values, or long delivery lead times. Presale items are also considered as high risk.
 
Q: I’ve never had a problem with claims or chargebacks, why are you holding my money in case these things happen?
A: Claims and chargebacks are one factor we consider when reviewing an account for a reserve. We may also review other factors, including:
  • 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 (preselling orders).
  • Your delivery time frames - whether there are extended delivery timeframes
 
Q: What appeared on my credit report that caused you to place a reserve?
A: We make reserve decisions based on multiple factors (see above), your credit information being one. If you’d like to know more about your credit reports, please contact the respective credit bureaus below to review your history.
 
Credit Bureau NamePhone
Equifax1-800-727-8495
Dun and Bradstreet1-800-234-3867
Experian1- 888-808-8242
 

 

The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision.

Frequently asked questions.

An account reserve is an amount of money that is held in your PayPal account to cover potential risk of payment reversals you may receive, like chargebacks and claims.
Certain types of PayPal Here™ transactions have additional risk and are subject to reserves where funds are on hold in your PayPal account for a period of time. Specifically, if you have a reserve limit of $500, key-in or swipe magnetic stripe cards for sales in excess of $500 over a 7-day period, are subject to a 30-day reserve.

For example, if you process a total of $600 in keyed-in or magnetic stripe transactions over a rolling 7-day period, $100 will be held for 30-days. If funds are held in reserve, you will be notified by email and provided details on when funds will be released. The reserve limit is subject to change.

Why do you place some PayPal Here funds received via key-in & magnetic stripe in reserve?

Keyed-in and magnetic stripe transactions are associated with higher incidents of fraud compared to chip and contactless transactions. Account reserves allow for a portion of money to be temporarily set aside to cover any payment reversals associated with fraudulent activity you may receive like chargebacks, claims, and disputes.


Will using a chip card reader prevent funds from being placed in reserve?

Processing chip or contactless transactions with the PayPal Chip Card Reader can minimize the likelihood of funds being placed in reserve. There are other factors that determine when funds are held in reserve. Accounts are evaluated on a case-by-case basis and a reserve may be placed on your account if there is a high level of risk associated with your account. For more information on account reserves please visit the PayPal Help Center.

How do I know if my funds are being held in reserve?

You will be notified by email if any funds are held in reserve. Additionally, the amount being held in reserve can be found under ‘on hold’ in the money tab. From time to time, we may need to adjust your reserve amount. If that happens, we’ll email you about the changes.

How can I reduce my reserves?

If you have a PayPal Mobile Card Reader, to reduce the reserve on your account, you may consider upgrading to a more secure device. With an upgraded device, you can accept other transaction types, which are more secure, such as chip card. Alternative devices are available.

   
An account reserve is an amount of money that is held in your PayPal account to cover potential financial risk such as payment reversals you may receive like chargebacks and claims. PayPal uses three types of reserves: rolling reserves, minimum reserves and jumpstart reserves.

Reserves may be a necessity throughout your relationship with PayPal. Preventing reserves isn’t always possible, and depending on your industry and your credit history, you might never be able to fully remove a reserve from your account.

However, you can reduce the likelihood of having a reserve and improve your customer service in the process by following Seller Best Practices – and that’s a win-win for everyone.

Seller Best Practices
Some best practices to follow are:
  • Ship promptly and give your customers valid tracking information through PayPal, so they can keep tabs on their purchases and know when to expect delivery
  • Communicate early and often with your buyers and let them know about any changes, delays, or other important information
  • Monitor your buyer complaint rates regularly and try to keep complaint rates below 1% of your sales.
  • Avoid long refund times, which can lead to complaints from unsatisfied customers

PayPal proactively reviews reserves and based on improvements to your business performance it is possible that your reserves could be adjusted or removed. So, if you’ve made improvements in key areas, for example performance, industry, and claim reductions, it’s possible that your reserve will be lifted or reduced.

To find out how much money is being held or in reserve, simply click Money under the "PayPal balance" section. From time to time, we may need to adjust your reserve amount. If that happens, we’ll email you about the changes.

 
The collateral summary section represents the rolling reserves of a PayPal balance, held in reserve to cover possible disputed charges, chargeback fees, and other expenses.
 
PayPal Credit may not be offered as a funding source for every purchase. Some PayPal merchants don't accept PayPal Credit. In addition, please note that even if a merchant offers PayPal Credit as a way to pay, PayPal reserves the right to restrict your ability to use your credit line depending on the circumstances of each purchase. If PayPal Credit doesn’t appear as a payment option at checkout, you won’t be able to use your PayPal Credit account for that particular transaction.

If the merchant accepts PayPal Credit, and there are no restrictions on your transaction, we recommend that you choose from your available PayPal funding sources to complete your purchase.