PayPal wrote about its existing rolling reserve policy on its blog on Monday because, it said, it has been receiving a lot of questions from sellers about the policy. Risk analyst Bill Clark explained:

Rolling reserves are very common in the payments industry, so some of you may have already experienced them with your merchant accounts. For those of you who are unfamiliar with rolling reserves, here's how it works. PayPal may require that a small percentage of some of our sellers' payment volume be held in their account for a period of time, sort of like a security deposit to cover future chargebacks and reversals.

Clark told AuctionBytes that the reserves apply to a very small number of sellers both on and off eBay. When asked what percentage of funds are held, Clark said, "The funds held are competitive with other leading financial services companies and are necessary to continue providing a low cost service to other sellers in our system."

You can read more about PayPal rolling reserves and make a comment on the AuctionBytes Blog.