Small BusinessOperationsFraud and Risk Management

How to resolve payment on hold or unavailable funds

PayPal Editorial Staff

PayPal Editorial Staff

10 October 2023

10 October 2023

4 mins read

Most businesses will experience a time when their funds become unavailable, also known as a payment hold. It can be frustrating and confusing, especially if you need that money to pay for something urgently.

Understanding why your funds are inaccessible or on hold is an essential part of managing your business effectively. So, let's explore what a payment hold is and why it happens, plus how to resolve it to prevent further delays in accessing your money.

Why are my funds inaccessible or on hold?

PayPal may place a hold or restrict your account activity if we need a little more information from you about a transaction, your business, or your account activity. Some of the reasons why we may need this information include:

  • You’re a first-time seller: When you’re a new seller, it takes time to build up enough history to demonstrate a pattern of positive buyer-seller transactions. The good news is you can usually move out of this status by confirming your identity and building up a history of positive selling activity.
  • You haven’t sold in a while: When your selling activity has been dormant for a long time, it’ll also take time to rebuild a history of positive buyer-seller transactions.
  • To help solve customer disputes: If multiple customers file for a refund, dispute, or chargeback, it can delay the availability of your funds. The best way to resolve this is to work directly with your customers to prevent, or solve, disputes and chargebacks. Sometimes it’s possible your customer filed for a refund, dispute, or chargeback because someone illegally used their account to buy something.
  • Your selling pattern appears unusual or changed: Unusual account activity includes a recent spike in sales or a change in your average selling price, business platform, or type of item being sold.
  • You’re selling higher-risk items: Higher-risk items can include tickets, gift cards, consumer electronics, computers, and travel packages.

Learn more about what account limitations are and why they may be placed on your account.

How long will PayPal hold your funds for?

How long we hold your funds can vary depending on the individual circumstances. However, after you have completed all required steps and submitted any requested documentation to us, we aim to review your account within 3 days. (You can read our User Agreement for more information on the different types of holds and reserves we may place on your account.)

What are account holds, limitations, and reserves

Account holds and reserves are measures that financial institutions may use to manage risk. They’re often put in place to protect against fraud, chargebacks, and other potential financial losses.

Common types of PayPal account reserves include the following:

  • Rolling reserve: This is when a percentage of every transaction you receive is held and then released later, on a scheduled basis. For example, your reserve could be set at 5% and held for a 60-day rolling period. It means 5% of the money you receive on day 1 is held and then released on day 61, 5% of the money you receive on day 2 is held until day 62, etc.
  • Minimum reserve: This is a specific minimum amount of money you’re required to keep available in your business account. We either take the minimum reserve as a percentage of money held until it reaches a certain amount, or a one-time amount. For instance, 10% of your daily transaction volume is held until a balance of £10,000 is reached, or a one-time amount of £10,000 is taken from the available balance and deposited in the reserve balance.

It’s not always possible to prevent reserves — and depending on your industry and credit history, you may never be able to fully remove a reserve from your account. The good news is you can reduce the chance of having a reserve put on your account by following these best practices:

  • Ship promptly and give customers valid tracking information
  • Communicate clearly and alert customers about any changes, delays, or other important information
  • Monitor and try to keep complaint rates below 1% of your sales
  • Avoid long refund times

Get more information on PayPal account limitations.

How can you help prevent the delay of available funds?

There are four steps you can take to help prevent a delay of available funds in the future:

  1. Review the email we send and the alert in your account overview:

    If a buyer pays you and the payment isn’t immediately available, we’ll notify you via an email titled “An important message about your PayPal balance” or via an alert in your Account Overview page. This email or alert will be the best source of information about why your payment isn’t available and what you may be able to do to prevent the delay of available funds in the future.

  2. Prevent refunds, disputes, and chargebacks by:

    • Setting yourself up for success by posting actual photos and detailed, accurate descriptions of items so buyers know exactly what they’re getting.
    • Being clear about shipping and handling time, costs, and methods, and process orders promptly to avoid delays.
    • Packing items carefully with appropriate, quality packing material, so customers receive the items in good condition.
    • Uploading tracking information of your chosen carrier.
    • Clearly defining your return policy upfront to avoid problems later.

    Learn more about how to prevent disputes.

  3. Communicate and work with your customers:

    When customers contact you, do your best to be responsive and helpful. Working with customers early on can prevent a minor issue from ballooning into a much larger problem, and following the guidelines listed previously will help to reduce the number of buyer disputes, claims, and chargebacks. If you are involved in a buyer dispute, start working to resolve it right away. Frequent, honest, and open communication with the buyer via the Resolution Centre can help clear up any misunderstanding.

  4. Set up a customer service message:

    Setting up a customer service message in the Resolution Centre may help to prevent disputes. For example, if shipments will be delayed because of extreme weather in your region, letting the buyer know may answer their question and make a dispute unnecessary.

For more helpful information on running your business, check out our Operations articles, tools and tips.

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