PayPal Virtual Terminal applications put 50% reserve on whole account

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If you’re thinking of applying for a PayPal Virtual Terminal account, think again: several sellers are reporting that VT applications are resulting in rolling reserves of 50% for 60 days being put on their entire PayPal account. has been told by PayPal that this is now standard practice for all new VT applications. Cancelling the VT application does, at least theoretically, seem to result in the . (NB: both those threads are on the UK PowerSeller board so you’ll need a PS signin to be able to view them.)

A rolling reserve means that PayPal hold a proportion of your payments for a set amount of time after the transaction, ostensibly to ensure that there is no chargeback later. A 60 day hold of 50% of your turnover means that a month’s worth of your payments will always be being held by PayPal.

For the last year or so, we’ve heard of merchants having 10-20% of their turnover held, often when there is a change in their pattern of payments or they’re selling in a “risky” category. However, this new policy is astonishing, both in the amount being held, and its being applied to the entire account, not just VT payments.

Virtual Terminal allows merchants to input credit cards numbers directly via their computer. If you take orders over the phone, in person or by snail mail, it can be a useful way to process credit card payments. Given this new policy, if a virtual terminal is what your business needs, you’re probably better off looking at one of PayPal’s competitors: Sage Pay Go, RBS WorldPay Virtual Terminal or Payment Sense Virtual Terminal.

Edited to add: It gets worse. Another eBay seller on is reporting that they cancelled their VT application but were told that the reserve would still apply to their normal PayPal account.

17 Responses

  1. I’ve also got to add: this policy will kill this product very very quickly for PayPal, and I don’t understand why they would do that. If they don’t want to sell it, they should just withdraw it!

  2. So what you’re saying is if I turn over say £10k/mth on eBay and think I might be able to add £2k with VT that by the end of 60 days PayPal will be holding £12k of my money?

    No reserve and £10k a month sounds a much better cashflow to me than £12k/mth and kissing goodbye to £12k forever (or at least until 60 days after I stop using PayPal)

  3. It appears fine if you know the score and are opening a PayPal account JUST for VT, but you’re only allowed one account and to have it applied to an existing eBay business is a sure way to go bankrupt in a short space of time unless you’ve got deep pockets.

  4. This is very worrying news – I was thinking about opening one of these VT accounts as I am in the process of starting up a second business. But as a brand new business it could not survive with having that much of its cash flow tied up for so long. It would also inmpact – although admittedly not as strongly – on my ebay sales. Surely there must be more to it than this?

  5. It makes no sense from a risk management point of view, which is presumably the justification Paypal would use.

    Holding a part of the VT receipts might be justifiable, at least until trading history is built up, but holding any of the balance of a hitherto satisfactory account cannot be right.

  6. we applied for a VT a few months back and were told Paypal would take 10% of everything that went through the account.

    when we stopped laughing, we politely declined.

    PS did you know Paypal has also stopped taking applications for their top up card? Even more strange they are not going to replace any lost cards either.

  7. We’ve got a VT account and haven’t heard anything about money being held, I quess it’s just for new accounts, if true.

    We also use Sagepay direct, which gives us the option of taking phone and mail orders, so if Paypal do start holding funds we’ll pull out.

  8. Happened to us last year. A five year old account with a 100% 150,000 feedback rating with virtully no chargebacks etc. selling in a low risk area. Made no sense to us at all so we cancelled the facility. Not before PayPal had built up a £15k reserve.

  9. We had this happen to us. Applied for VT. [email protected] got involved and we had 25% reserve for 90 days. Told them ‘no thanks’ but the reserve was and is still there. Presume they don’t want the business?

  10. Hi guys, I’m one of the unfortunate posters from the PS forums on eBay. I can update with some more info, the rolling reserve has been cancelled but they are hanging onto the money that they ‘reserved’ whilst this farce was going on, and they are saying they will not release it under any circumstances.
    I’ve applied, and been accepted for SagePay without any of this hassle, Virtual Terminal with Paypal – don’t bother.



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