From the post...

What are reserves?
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.

We’re requiring reserves for a very small percentage of our sellers – currently less than 1%. To determine when to place a reserve, we look at a number of factors that may increase the risk of chargebacks or reversals – things like industry categories that have higher-than-average chargebacks, or sellers who are new to PayPal (where we’ve historically seen a higher instance of chargebacks or reversals). We reassess risk factors periodically, and if we determine that the risk has gone down in certain seller segments, we will release the reserve.

Given what I’ve seen written online already, I have a feeling these reserves will be met with mixed responses. Even though I do understand the reasoning behind them, one could ask the question why hold funds when sellers need access to them more than ever? The counter point I guess is that in the current economic environment, at a time when other financial companies are turning some merchants away, PayPal is still providing a cost-effective payment service, and making it very easy to get set up.

That said, what do you think?

Cheers,
RBH