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.