Payout hold and reserve cost.

What holds and reserves are

PayPal's user agreement describes three tools. A hold keeps a payment unavailable to sender and recipient while it is reviewed. A rolling reserve holds a percentage of each transaction you receive each day and releases it later on a schedule; PayPal's own example is 10% held for a 90-day rolling period, so 10% of day 1's receipts is released on day 91, day 2's on day 92, and so on. A minimum reserve is a fixed amount you must keep in your balance. Other processors use similar mechanisms, and the arithmetic below applies to any of them.

The arithmetic

Once a rolling reserve has run for the full hold period it reaches a steady state in which the locked balance equals daily sales x reserve percentage x days held. A 10% / 90-day reserve therefore locks up nine days of sales. A payout delay of N days on all funds locks up N days of sales. A minimum reserve is simply added. The yearly cost is the total locked cash times what replacing that cash costs you, whether that is interest on a credit line, a merchant cash advance factor or the return you would have earned.

Worked example

Sales of $30,000 a month are $986.30 a day. A 10% reserve held 90 days locks $8,876.71, which is nine days of sales. At 8% a year that costs $710.14 a year ($59.18 a month), or 0.197% of sales, which eats about 2% of a 10% profit margin. Add a 2-day payout delay and another $1,972.60 is in transit.

• The balance builds up over the hold period, so the first months are less costly than steady state, and a released reserve is not lost, only late.
• Processors set reserves at their discretion; the percentages here are yours to enter from your notice.
• Seasonal sales change the locked balance. Run the tool for your peak month as well.

Last checked against the sources 2026-10-19. Sources: PayPal User Agreement (US), Holds, Limitations, and Reserves (rolling reserve and minimum reserve definitions, 10% / 90-day example).

FAQ

How much cash does a rolling reserve lock up?

In steady state: daily sales x reserve percentage x days held. A 10% reserve held 90 days locks up nine days of sales.

What is PayPal's rolling reserve example?

PayPal's user agreement gives 10% held for a 90-day rolling period, with day 1's held money released on day 91 and so on.

What is the difference between a hold and a reserve?

A hold temporarily blocks a specific payment or account. A reserve takes a percentage of receipts, or a fixed minimum balance, over a longer period.

How do I price the cost of a reserve?

Multiply the locked cash by what it would cost to replace it for a year, for example your credit line rate. The tool shows that per year, per month and as a share of sales.

How long until a new reserve reaches its full size?

About as long as the hold period: with a 90-day reserve the balance grows for roughly 90 days before releases begin to offset new holds.

Can I get a reserve removed or reduced?

Processors decide at their discretion. PayPal's agreement points sellers to the Resolution Center or the notice they received to ask about a reserve.