>It's worth noting that our chargeback rate is well under 0.1%

Thanks for highlighting. This does seem pretty aggressive.

This does stink, but they have options. If their revenue is as large as they state, they can likely go to a bank and get a line of credit with their receivables as collateral. If they were in a B2B business, they would likely be facing Net 45 terms from their customers anyway. http://www.comcapfactoring.com/blog/line-of-credit-secured-b...

I'm curious if they need Paypal due to customer preference, or if they could simply accept credit cards directly. At that volume, implementing your own merchant account sounds like a much better idea than paying the absurd rates Paypal charges.

However, I'm fairly certain that they would have thought of this :) I'm assuming they need to accept Paypal due to customer demand.

Chargeback rate is low, but:

1) NZ company operating out of Australia- complicated international ownership structure.

2) Industry is software. Software is a high risk product category.

3) Very quick unexpected growth in transaction volume. Another big fraud red flag.

This isn't an aggressive reserve, it's a defensive one.

Industry standard holdback rate is 10% for six months. I've been in the payments industry 15+ years and never heard of anyone holding more than 10% except for PayPal. Not giving a timeline on when the holdback is returned is also unique to PayPal. There's no defense here. What they are doing should be against the law.