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What are reserves?

An account reserve is a percentage of money that is held in your PayPal account to cover any payment reversals you may receive. Reserves are used to prevent transaction losses that may occur from payment reversals like chargebacks and disputes filed by your buyers. PayPal uses 2 types of reserves: rolling reserves and minimum reserves.
  • A Rolling reserve is a reserve where a percentage of each transaction you receive 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.
  • 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 established 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.

Reasons for placing reserves
PayPal may place a reserve on your account if we believe there is a high level of risk associated with your account. In determining that a high level of risk is present, PayPal considers a list of factors and how they change over time, including, but not limited to:
  • How long you’ve been in business.
  • Whether your industry, or the transaction, has a higher likelihood of chargebacks.
  • Your payment processing history with PayPal and other providers, and the volume you are processing.
  • Your business and/or personal credit history.
  • Your delivery time frames.
  • Whether you have higher-than-average numbers of returns, chargebacks, claims, and disputes.
  • Manually-keyed transactions from PayPal Here.
How to prevent reserves from being placed on an account
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 lessen your risk factors and improve your customer service in the process by following Seller Best Practices – and that’s a win-win for everyone.

Seller Best Practices
  • 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.
  • Avoid long refund times, which can lead to complaints from unsatisfied customers.
  • For PayPal Here, swipe credit and debit cards when the card is physically available.  Only manually key the card number when necessary and appropriate.

 

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