What are reserves?

An account reserve is an amount of money set aside in your PayPal account to help make sure that you're able to meet any liabilities you may incur from a chargeback, claim or bank reversal, where no other money is available. The reserved amount still belongs to you but is unavailable for use (including withdrawal).

Usually, if you have a reserve on your account and receive a chargeback or dispute, we’ll deduct that amount from your available balance. However, if you go out of business or stop processing PayPal payments, we’ll use any reserve to cover future payment reversals.

There are 2 types of reserves we may place on your business PayPal account: rolling reserves and minimum reserves (one or combination of both at the same time).

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. For example, your reserve could be set at 10% and held for a 90-day rolling period. It means 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. Rolling reserves are the most common type of reserve.

A minimum reserve is a specific minimum amount of money that you’re required to keep available in the balance of your business PayPal account. We either take the minimum reserve as a percentage of money held until it reaches a certain amount, or a one-time amount (this is known as an upfront reserve).

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.

If your payment or part of your payment is held due to a reserve and you issue a refund, the funds will come from your available PayPal balance. If there’s no funds in the balance, the refund will be funded with your bank account.