Why are my funds being held in reserve?
We may place a reserve on your business PayPal account to cover potential financial losses that may occur from chargebacks and disputes. This practice helps us to create a safer shopping experience.
When we place or review a reserve on an account, we consider several factors, such as:
- How long you’ve had your PayPal account
- How long you’ve been in business
- 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
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.
Some best practices to follow to reduce the likelihood of having a reserve are:
- Ship promptly and give your customers valid tracking information through PayPal, so they 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.
We review reserves within 180 days of placement. Based on the improvements to your business performance, we can remove the reserve from your account or adjust the reserve amount.