What is a loss account?
When merchants are onboarded via PayPal for Marketplaces to a Managed path marketplace solution, the onboarding process creates an individual loss account for each merchant. This account is used to facilitate reverse movement of funds. For example, if a customer disputes a charge due to fraud or non-delivery of goods, PayPal reverses the transaction and refunds the customer from the merchant's loss account. Loss accounts are required because Managed path partners assume full financial liability for their merchants.
Note: When initiating a refund, PayPal also reverses the variable portion of the PayPal processing fee. Any fixed fees or other overages are charged to the loss account.
PayPal For Marketplaces - Managed path