We recently launched 2 SaaS platforms and have put around $250k USD through our paypal account in 3 months (the account is business registered and verified for around 1 year now).
First month we generated 60k revenue and were slapped with a $5000 minimum reserve + 12% rolling reserve over 30 days. Contacted the team at PayPal and negotiated removing the minimum reserve but increased the 12% rolling to 45 days. This make sense it mitigates their risk.
We reinvested a lot of that capital and expanded marketing on our second SaaS which launched at the beginning of may. We generated an additional $180k during the 10 day launch period (lifetime account - now changed into a monthly model).
PayPal slapped us with a $15k minimum reserve and 12% rolling for 45 days. They took $15k from the rolling reserve and moved it into the minimum. They refused to budge on the minimum this time.
Fast forward to last week. They decided our processing volume is increasing too fast and again raised our minimum reserve to $22,830.64 (I'm not joking, its that exact amount).
They also raised the rolling reserve to 35% for 45 days. The worst thing is they took $4k from our available balance which we kept in there in case of disputes/refunds plus to pay bills like server costs. They moved that $4k into the minimum reserve as well.
We have had zero chargebacks and a dispute rate of around 1.5% - Typically the disputes are people not receiving login details etc. We show our support helpdesk url on both the receipt and on the warning screen before they open the dispute. I'm not sure why customers still open disputes when their issue can be resolved in 15 minutes using our helpdesk.
I have tried working with PayPal to lower the minimum and come to an agreement on the rolling. I doubt many businesses can afford 35% rolling reserves. 12% made sense in terms of mitigating PayPal's risk.
PayPal completely ignores my calls and emails responding with preset macro responses so I've been left with no choice but to lodge a formal complaint with the financial ombudsman.
If you're a new startup and need cash flow to expand - think twice about using PayPal.
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