PayPal money on hold: why it happens and how to get it released

Why is PayPal holding my money?

PayPal money on hold is a payment that has reached your account but that you cannot withdraw or spend yet. The PayPal User Agreement says PayPal may hold a payment when it believes there may be a high level of risk associated with you, your PayPal account, or your transactions. Funds are usually held for up to 21 days, and PayPal tells you through your PayPal account or directly by phone or email whenever it places a hold.

PayPal's help center lists these reasons a payment can be on hold:

• You are a new seller with PayPal or an established seller who has opened a new account. A new account has no selling history yet.
• your selling activity has been dormant for a long time.
• multiple customers reported problems or requested refunds.
• Your selling pattern changed: an unexpected surge in sales, a change in business type, a change in average selling price, or the type of item being sold.
• You sell higher-risk items, such as event tickets, consumer electronics, travel packages, and gift cards.
• Your identity verification is not complete, or your video KYC call is still pending.

To see which reason applies to your payment, log in and open Know your options under your PayPal balance. When a payment is not available, PayPal also sends an email titled “An important message about your PayPal balance” or shows an alert in your account overview.

How to release a PayPal payment on hold

The hold on one payment ends sooner when PayPal can see that the buyer got what they paid for. Start from the payment in your Activity list.

1. Open the held payment

   Go to Activity, find the payment and choose the option to get your money. Pick product for a shipped item, or service or virtual product for anything else.

2. Ship with tracking

   Add tracking from one of PayPal's approved carriers, or print the shipping label through PayPal. PayPal releases the hold approximately 24 hours after the courier confirms delivery to the buyer’s address.

3. Mark services as completed

   For a service or an intangible item such as an e-book or a lesson, set the order status to Completed. PayPal releases the hold 7 days after you confirm the order status as Completed.

4. Answer the buyer quickly

   PayPal recommends working with customers to solve problems. A payment that a buyer challenges can stay held may last longer than 21 days if the payment is challenged.

The 21-day hold: how long does PayPal hold funds?

The PayPal User Agreement says risk-based holds generally stay in place up to 21 days from the date the payment was received into your account. This is the hold sellers call the 21-day hold. PayPal can release it earlier, for example after you upload tracking, but the agreement leaves early release to PayPal's discretion.

Delivery confirmation does not always end a hold. PayPal's help center says that in rare cases, after tracking or a completed order status, it may still hold the payment for up to 21 days, for example after an unusual change in your selling pattern.

A disputed payment is held longer. The User Agreement says the hold may last longer than 21 days if the payment is challenged by the buyer. If PayPal decides the payment should not be reversed, it lifts the hold. How PayPal decides a case is covered in the guide to PayPal Seller Protection.

PayPal holds, reserves and account limitations

PayPal uses three different measures, and each one needs a different response. A hold applies to single payments. A reserve keeps some or all of a business account's balance unavailable. A limitation restricts what the account itself can do.

A reserve on a business account means all or some portion of the money in your business account is reserved as unavailable for withdrawal. PayPal's User Agreement lists the factors it weighs, including how long you have been in business, your industry, your processing and credit history, your delivery time frames, and whether you have a higher than average number of returns, chargebacks, claims or disputes.

• Rolling reserve: a percentage of every transaction you receive is held and then released later, on a scheduled basis. PayPal's own example is a reserve set at 5% and held for a 60-day rolling period.
• Minimum reserve: a specific minimum amount of money you’re required to keep available in your business account.
• Jumpstart reserve: we hold funds from your available balance immediately.
• Account limitation: PayPal can limit an account for seller performance, such as an unusually high number of claims and chargebacks, selling an entirely new or high-cost product type, or if your typical sales volume increases rapidly. If PayPal believes you engaged in a restricted activity, one of the actions it can take is holding your balance for up to 180 days if it needs to protect against liability.

A reserve can stay for a long time: PayPal says depending on your industry and credit history, you may never be able to fully remove a reserve. You also cannot close an account while it is subject to a hold, limitation or reserve, so closing the account is not a way to get the money out.

PayPal suggests you can lower the chance of a reserve by shipping promptly with valid tracking, telling buyers about delays, avoiding long refund times and keeping complaint rates below 1% of your sales.

PayPal account limited: what to send to lift a limitation

PayPal says that to respond to a limitation, hold or reserve, you should visit the Resolution Center or follow the instructions in our email notice. A limitation that is not permanent is normally removed after you provide us with the information we request.

1. Read the notice

   Open the email and the alert in your account overview. They say what PayPal needs from you. Send what is asked for, so the review does not stall on a missing item.

2. Prove who you are

   If the notice asks you to confirm your identity, complete every step it lists. If it mentions a video identity check, book it, since PayPal also holds payments while your identity verification is not complete, or your video KYC call is still pending.

3. Answer questions about your sales

   PayPal names a rapid rise in sales volume and a new or high-cost product type as reasons for a limitation. If the notice asks about either, answer the questions it lists and attach the records it requests.

4. Clear open disputes

   PayPal names an unusually high number of claims and chargebacks as a reason for a limitation. Work with buyers to resolve open complaints in the Resolution Center.

5. Wait for the review

   The User Agreement says a limitation that is not permanent is normally removed after you provide us with the information we request. If PayPal still sees risk after reviewing the information, it can keep acting to protect against reversals.

Square account deactivated or holding funds

Square's Payment Terms say that if some aspect of your business is especially risky, Square may withhold funds or require that you set aside funds in a reserve. It does this by temporarily suspending or delaying payouts of Proceeds, and the reserve can be raised, reduced or removed at any time by Square.

The Payment Terms describe three situations that can end an account. The first is a business type Square does not support. The list includes firearms, firearm parts or hardware, and ammunition, internet/mail order/telephone order of age restricted products (e.g., tobacco) and direct marketing or subscription offers or services. You also cannot use Square if you are connected in any way to any other business that conducts illegal activities. The second is an information request: Square may ask for invoices from your suppliers, a government issued identification such as a passport or driver’s license, a business license, or other information, and if you refuse, your Square Account may be suspended or terminated. The third is that Square can end payment services at any time for any reason.

If Square deactivated your account, read the deactivation email first. You can appeal only if you received a deactivation notice from Square indicating eligibility to appeal. Eligible sellers appeal through your Square Dashboard, the Square POS app, or from a link in your deactivation email.

1. Open the link in the deactivation email, the Dashboard banner or the in-app notice.
2. Fill in the appeal form. It asks for a description of your products or services and any relevant documentation that supports your appeal, and how you fixed the concern named in the notice.
3. Submit and wait for the decision. Appeals are typically reviewed within 48 hours.
4. If the appeal is approved, the account is reactivated and any held funds will be released. If it is denied, you get an email explaining the decision and impact to any held funds, and the deactivation remains in effect.

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Questions about PayPal money on hold