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.

Frequently asked questions.

An account reserve is an amount of money that is on hold 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.
  • A Rolling reserve is a reserve where a percentage of each transaction you receive each day is held and then released later on a scheduled basis. This is the most common type of reserve.
    • 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.
  • A minimum reserve is a specific minimum amount of money that’s held in your reserve balance. The minimum reserve is either taken as a percentage of money held until a certain amount has been reached, or a one-time amount.
    • For example, 5% of your daily transaction volume is held until a balance of $5,000 is reached.
  • A Jumpstart reserve is when funds are held from your available balance immediately.
    • For example, if we make the determination to keep a $10K jumpstart reserve and there is $20K in the PayPal account balance, $10K is moved to reserves straight away.
We may also use a combination of a reserve types on your account.

Why does PayPal use reserves?

Reserves are used to prevent transaction losses that may occur from payment reversals like chargebacks and claims filed by your buyers. 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 any reserve balance. However, if a seller goes out of business or stops processing payments through PayPal, we will use any reserve to satisfy future payment reversals.

Reasons for placing reserves

Reserves are a common industry practice. They are used to minimize losses and to create a safer shopping experience. If you would go out of business or would be otherwise incapable of covering your financial obligations, we would still need to pay back the buyer. If a buyer contacts PayPal or their financial institution because they didn’t receive what they ordered, we’re responsible for making things right. A reserve can be placed on your account for a number of reasons and is set on a case-by-case basis. PayPal considers a list of factors to determine this 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 are selling products or services in advance (preselling orders).
  • Your delivery time frames - whether there are extended delivery timeframes
PayPal will periodically review the account to determine whether the reserve placement and amount needs to be adjusted. Reserves may be eligible for the reduction or removal with positive changes to key areas such as performance, industry, claims reduction, etc.

When will I get my money?

Once a reserve is placed, you will receive communications outlining the terms of your reserve. Your terms are also outlined in your account. When your money will be released depends on what 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.

For minimum reserve, reserves are reviewed every 90 days. PayPal proactively reviews reserves and based on improvements to your business performance it is possible that your reserves could be adjusted or removed.


How to prevent reserves from being placed on an account

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
A customer who receives prompt service, accurate order fulfillment, and speedy billing is a customer who will be less likely to file complaints or make returns in the future – and more likely to buy from you again.

You can also access additional information on account reserves by reviewing our Business Resource Center.
 
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.

 
Using Cortana on your windows device, you can order movie tickets from Movietickets.com and pay with PayPal.

Just ask Cortana what’s playing at your local cinema. For example, “Ask MovieTickets.com what movies are playing at Oakview AMC.” If it’s the first time you’re doing this, you’ll be asked to connect Cortana to MovieTickets.com.

​You’ll see a list of movies at the theater you mentioned. You can then tell Cortana which movie you want to see. When you’re selecting the number of tickets to get, you can tell Cortana how many adult and child tickets you need. If you need to choose where to sit you can do that as well.

When you’re ready to pay tap or say, “Proceed to checkout with PayPal.”  You’ll be taken to the PayPal website. From there you can choose your payment method and complete your transaction to buy your movie tickets.