Is PayPal Holding A Reserve For You?

[Scot Standke]

I just logged into my PayPal account and saw the following text at the top of the page in a pink box:

"We have applied a reserve to your account. A certain percentage of each day's transactions or a minimum dollar amount will need to remain in your account. Why?"

The "Why" is a hyperlink that leads to another page that says:

"Rolling reserve: 0% will be held in your account for 180 days. My reserves balance

Why was a reserve placed on my account?
Sometimes we need to temporarily set aside some money in your account to make sure that you can cover any potential reversals or chargebacks.
What are the different types of reserves?

• Rolling reserve: A certain percentage of the money you receive each day is set aside and then released after a certain number of days.
• Minimum reserve: The minimum that you need to keep in your account at all times. We'll hold a percentage of each day's payments until you reach your minimum reserve.

Will a reserve ever change?
We may adjust your reserve from time to time. You'll always find your reserve listed on your Account Overview. We'll notify you if your reserve changes.
For more information, please visit our Help Center."


I've had a PayPal account since their inception, no clue why they are doing this now. For the moment there is nothing being withheld, just thought it was odd.


Has anyone else seen this?


I have moved tons and tons of money through this account over the years and my refund rate generally is around 2% or less.


Scot

[AverageGuy]

no, not in my account.

david

[Troy_Phillips]

I always keep 25% in my account anyway . This might be why I have never seen this in my case . I have had list members tell me they have a forced reserve

[Scot Standke]

Well, at least I get to kick back and rake in the generous 0.07% interest rates

So far there is nothing being held back though.

Scot

[iplusgold]

A friend of mine had the exact same thing and rang the dreaded paypal to enquire as to why it was required. He was told that they cant give him the exact reason that it was enacted but it was due to a security concern etc. And that the normal reasons are thatyou areeither trading in a high risk industry or that your dispute & chargeback percentage had crossed a certain threshold.

Not sure if it applies in your case...have you had may disputes or chargebacks lately?

Anyway, hope that helps

[Scot Standke]

Nope, like I said, my returns on any given month are around 2% or lower usually. I like to think that that is quite a bit below the norm in the IM industry.

I do normally empty my account a few times a week because of all the horror stories I've heard about PayPal over the years

Scot

[Troy_Phillips]

Originally Posted by Scot Standke

Nope, like I said, my returns on any given month are around 2% or lower usually. I like to think that that is quite a bit below the norm in the IM industry.

I do normally empty my account a few times a week because of all the horror stories I've heard about PayPal over the years

Scot

If you are verified it makes no difference if you empty out or not ... they will go to your optional funding methods if you lose a dispute and the funds are not there

[Scot Standke]

Yeah, that's totally fine but has never happened to me either. I normally always have a decent amount in there that will more than cover any refund request.

What I meant was the folks that have reported having their accounts frozen with hundreds or thousands of dollars in the accounts for weeks or months.

Scot

[Troy_Phillips]

Originally Posted by Scot Standke

Yeah, that's totally fine but has never happened to me either. I normally always have a decent amount in there that will more than cover any refund request.

What I meant was the folks that have reported having their accounts frozen with hundreds or thousands of dollars in the accounts for weeks or months.

Scot

Yeah ... that would kind of suck.

I normally leave 25% in.... invest 25% and put the other 50% in my bank.


I will not do that anymore . I would not be happy if I woke up to $25,000 froze due to a freakin $47 dispute :-)

[Dennis Becker]

I just found the same thing in my account, 0% rolling reserve for 180 days. That's like nothing, right? It just sort of freaks me out, a lot of cash goes through my account, and to hold any percentage of daily income for 180 days is not something pleasant to think about.

High risk? I've been with PayPal since they opened the doors when they were competing with x.com (remember them?), I had an x.com account also.

No disputes to speak of, I can't remember the last chargeback if I even had one. eBay 100% positive feedback of over 33,000. If I'm a risk to PayPal, that's a surprise to me.

On the other hand, their problem with the IPN handling today cost me 4 hours of trying to figure out what was wrong with my script or database, turns out it was their scheduled maintenance last night.

[Scot Standke]

Here's an article I just found on this.

Sounds like PayPal can hold up to 20% of your incoming payments for up to 2 months!

PayPal's Reserve Policy Can Disrupt Cash-Flow - BusinessWeek

Scot

[Scot Standke]

Man are there some horror stories in the comments below the article:

"I successfully have had a paypal account for nine years and use their Website Payments Pro for my 3 websites' shopping carts. I run more than $200,000 per year in sales through the account.

I received a phone call today from a paypal rep telling me they are going to take 15% of every sale I make from now on until a reserve of $30,000 is built up, which they will keep as long as I have my account!

The thing is, 15% represents more than my net profit (actually, that's about twice my net profit).

In comparison, the mafia is a nice organization."

Man, this does NOT look good!


Scot

[seasoned]

Scot,

They aren't doing this with me.


BUT, this is a STANDARD way of doing things! You said you get a LOW discount rate, and may have up to 2% returns. They may, after a certain floor, hold a certain percentage of the amount above that(and currently they say it is 0 anyway), or of the whole. That is OBVIOUSLY just to protect them in case you skip! BE HAPPY! They KNOW they aren't making that much on you, and this just helps to protect them.

CLICKBANK DOES THE SAME THING!!!!!

Imagine if they didn't do that! Many people advocate removing every PENNY! What if THEY get a chargeback? PAYPAL COULD GO BROKE!

Steve

[Jeremy Kelsall]

We have a reserve with paypal...

They initiated the reserve when we had a big influx of sales.

About a year ago, we were going around 10K a month through paypal - Then the number increased by a lot and then initiated a 10% reserve. After 90 days then reduced it to 5%.

I think there are a ton of reasons why they initiate the reserves - In the end, I think it is just to hold onto your money though because our refund rate was and has remained under 2% overall.

It's really not a big deal though.

[Scot Standke]

That's the thing Steve, I almost always have enough in the account in case of the possible refund, I offer 100% money back guarantee on virtually everything I sell.

I'm just curious as to why now, after all these years doing business with them, had something changed.

Has anyone seen this happen to them and the amount withheld stayed at 0? Or do they eventually just hit you with an arbitrary amount and time frame?

One guy in another forum was reporting that $30,000 was built up as a buffer and the amount stays in there forever. That's just simply insane if you ask me. How many businesses could afford to have 30k sitting in limbo?

Well, there is the more than generous 0.07% interest rate at least

Scot

[seasoned]

Originally Posted by Scot Standke

That's the thing Steve, I almost always have enough in the account in case of the possible refund, I offer 100% money back guarantee on virtually everything I sell.

I'm just curious as to why now, after all these years doing business with them, had something changed.

Has anyone seen this happen to them and the amount withheld stayed at 0? Or do they eventually just hit you with an arbitrary amount and time frame?

One guy in another forum was reporting that $30,000 was built up as a buffer and the amount stays in there forever. That's just simply insane if you ask me. How many businesses could afford to have 30k sitting in limbo?

Well, there is the more than generous 0.07% interest rate at least

Scot

Well, a LOT of people here seem to think that if you "successfully" charge someone, it means you make money! They treat it like it is THEIRS! They figure if they type ANYTHING, it is magically VALUABLE! You sound like you aren't that type of person, but let me state the truth....


1. It means you take out a LOAN! USUALLY, the customer pays it back, but they MAY default! If they do a chargeback, saying YOU did something wrong, YOU have to pay them, or pay a service fee if you can't put the ball in their court.

2. It isn't FULLY yours until a certain amount of time has passed. I USED to think that was 90 days, but SOME claim it is longer. Until then, they COULD do a chargeback!

3. Just because you write something, it doesn't make it worth what you say. It is like the old example of a person saying "Send me $5 to find out how to get RICH, only to find that he is selling a sheet of paper that says 'do what I just did with you!'".

The guy with the $30K "buffer" may have been basically a conman! Because so many figure they can sell ANYTHING at ANY PRICE, and keep the money NO MATTER WHAT, many DO, and companies start doing things to protect themselves. So YOU may be seeing this ONLY because they are starting to get burned by OTHERS!

BTW if you always have enough to cover, you may never have to worry. This is probably JUST IN CASE you decide to withdraw everything after some BIG sales.

Steve