PayPal ticket reserves & refunds - account reserves.

Apr 10 2018 | PayPal editorial staff

A PayPal ticket reserve is a preventive measure ensuring the ticket buyer receives a refund in the case of cancelation. Learn more about account reserves.
Why does PayPal hold reserves for businesses that host conferences/events?
Sometimes events and conferences have to be canceled. It happens more than you'd expect, and it’s often outside of the organizer’s control. Some reasons for cancelation include: insufficient demand, sickness of the performers, and bad weather. In these instances, we need to ensure that the ticket buyer is protected and receives a refund. Maintaining a reserve balance in your PayPal account is a preventive measure that helps safeguard all parties and enables a smoother refund process, if required. I’m selling tickets to an event or conference.

Why do I need to send you this information?
We would like to understand more about the scale and size of your event.
Information requestedWhy is this required?
The event date and reason for the event.Knowing the event date helps us understand the period where an increase in account activity can be expected. Gaining visibility into the details of the event lets us get a deeper understanding of it.
How many tickets you're expecting to sell, and the average ticket price.This gives us a sense of the transaction number and volume we can expect to see in your PayPal account for the specific event.
The dates the tickets will be available for sale.This gives us a sense of the specific time frame in which you'll be processing transactions and allows us to manage the transaction volume increase.
The merchant services you're using to process ticket transactions (PayPal and/or others). If you have another processor, do you have a sense of how much will be processed through them?Knowing the merchant services you're using to process ticket transactions helps us gauge the total volume of sales for the event and then understand the dependency on PayPal to accept payments.
Your previous experience in hosting an event/conference, including details of prior ones.This helps us understand your track record at event-hosting - in particular, if you host recurring events.
Whether you've previously used PayPal to collect money for an event or conference.This helps us to understand whether this is a new activity for you.
Details on the insurance for the event. For example, are you insured against event cancelation?Insurance coverage in the instances where the event is canceled may help to protect your buyers and yourself. Details of this will be important. We’ll need to know the terms around any insurance policies you may have in advance, especially terms around cancellation.
Details of the venue agreement.A venue agreement helps to confirm that the event is planned and helps us determine that tickets will be issued in accordance with the rules and regulations of the venue.
Details on the expenses that need to be made in advance of the event/conference.Our default position, like many payment processors, is to hold money until the event date. We need details of the type of expenses, the date they're due for payment, as well as supplier details and invoices, so that we can determine the amount of  money we can release to you in advance of the event.

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.

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Frequently asked questions.

PayPal Seller Protection covers you in the event of claims, chargebacks, or reversals that are a result of unauthorized purchases or items your buyer didn’t receive. For all transactions made on or after April 13th, 2020, Seller Protection will be extended to intangible items such as travel, ticketing, services and digital goods. With PayPal Seller Protection, you may be covered for the full amount of all eligible transactions.
This page applies for accounts based in the United States

Below are some of the main requirements you need to meet to benefit from Seller Protection:

The transaction must be marked as eligible or partially eligible for Seller Protection on your Account Transaction Details page.
  • Your account must be in good standing.
  • You must respond to our requests for documentation and other information within the required timeframe.
For physical goods:
  • You must ship the item to the address on the Transaction Details page.
  • You must provide proof of shipment, proof of delivery, or signed delivery confirmation where applicable.
For intangible or digital goods:
  • You must provide compelling evidence that the intangible item or digital good was delivered or provided as described, or that the service was completed as described. Compelling evidence can include any evidence available to prove that your buyer received the goods or services or benefited from the transaction.
  • You must comply with any terms and conditions that apply to the purchase
  • You must comply with all technical integration requirements that were specifically notified to you by PayPal.
  • You must have paid standard transaction fees on the transaction. 
Seller Protection will not apply to:
  • Claims or Chargebacks for reason of ‘Significantly Not as Described’
  • Items that you deliver in person, including at a retail point of sale
  • Items equivalent to cash, including but not limited to gift cards
  • Donations
  • Financial products or investments of any kind
  • A payment sent using PayPal’s friends and family functionality
  • A payment made using PayPal Payouts, Mass Pay, PayPal Direct Payments, Virtual Terminal Payments, PayPal Business Payments or PayPal Here
  • For shipped items, any item that is not shipped to the recipient's shipping address on the Transaction Details Page. We recommend that you do not use a shipping service arranged by the buyer, so that you will be able to provide valid proof of shipping and delivery.

There are no limits or caps associated with Seller Protection. However, PayPal reserves the right to withdraw or to suspend your eligibility for Seller Protection when abusing the privileges offered. In the event of withdrawing Seller Protection, PayPal will communicate the same before taking any action.
For full eligibility requirements, see the full Seller Protection Policy terms in the PayPal User Agreement
Depending on when you view the User Agreement it may still indicate that intangible items, services and digital goods are ineligible, which will no longer be correct. All other exclusions remain in effect.

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.

From time to time, we may need to adjust your reserve amount. If that happens, we’ll email you about the changes.

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.

Key-in and swipe transactions over certain monetary thresholds may be subject to an automatic reserve. Funds in reserve will be temporarily held in your PayPal account and unavailable to you, to cover the high risk of fraud associated with these transactions. For increased protection from fraud and to reduce the likelihood of funds being held, we recommend using a chip or contactless card reader. All PayPal accounts are subject to policies that can lead to account holds, limitations, or reserves. See the PayPal Here™ Agreement.

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.

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.