PayPal closed my account: what to do (UK)
If PayPal closed your account with money on hold, its User Agreement lets it hold the balance for up to 180 days to cover potential chargebacks and claims, then release the remainder. You can ask PayPal in writing for the closure reason and the release date, and escalate an unresolved case to the Financial Ombudsman Service. The 180-day hold is the longest of the mainstream processors, which is why merchants with category or dispute exposure move to a properly underwritten high-risk account rather than relying on PayPal.
Your money: where it is and when it is released
PayPal states in its User Agreement that when it closes an account it may hold the balance for up to 180 days to cover chargebacks, reversals and claims, releasing the remainder afterwards.
PayPal (Europe) provides UK services under FCA rules; an unresolved complaint can be escalated to the Financial Ombudsman Service.
Source: PayPal User Agreement (holds and account closure). Reserve and hold terms change, so confirm the current position against your own agreement and the notice on your account.
Why PayPal closes accounts
- A PayPal account-level risk flag, sometimes unrelated to a single transaction.
- A buyer-complaint or dispute pattern.
- A business category PayPal restricts, or a policy breach in its Acceptable Use Policy.
- A sudden change in volume or trading behaviour.
What to do, in order
- Get the reason and release date in writing. Use the Resolution Centre and email to request the closure reason, the held amount and the 180-day release date; keep copies of everything.
- Do not open another PayPal account. A second account linked to the same business is usually detected and limited too. Fix the underlying routing.
- Keep trading on a merchant account. Bring a card-present or online merchant account live so revenue continues through the hold.
- Escalate to the FOS. After a formal complaint and 8 weeks or a deadlock letter, refer the case to the Financial Ombudsman Service.
- Place a high-risk account if category-driven. A specialist acquirer underwrites the category upfront, with the risk classification disclosed from the start.
Escalating to the Financial Ombudsman
PayPal falls under UK financial rules, so an unresolved 180-day hold or closure can be referred to the Financial Ombudsman Service after 8 weeks or a deadlock letter, free of charge.
Keep a paper trail: the closure notice, your written request for the reason and release date, and your formal complaint. The Financial Ombudsman Service can direct a firm to release funds or pay redress, and it costs you nothing to use.
The durable fix: a properly placed account
If the closure was driven by your trade category rather than a one-off flag, opening another mainstream account just repeats the cycle. A specialist high-risk acquirer underwrites the category from the start, with the reserve and risk classification disclosed upfront. As a broker we match you to the acquirer most likely to take your specific profile and then stay on as your named UK account team, so if a reserve or dispute question comes up later you have someone who already knows the account.
PayPal closed my account with money in it, will I get it back?
If PayPal closed your account with money on hold, its User Agreement lets it hold the balance for up to 180 days to cover potential chargebacks and claims, then release the remainder. You can ask PayPal in writing for the closure reason and the release date, and escalate an unresolved case to the Financial Ombudsman Service. The 180-day hold is the longest of the mainstream processors, which is why merchants with category or dispute exposure move to a properly underwritten high-risk account rather than relying on PayPal.
How long does PayPal hold funds after closing an account?
PayPal states in its User Agreement that when it closes an account it may hold the balance for up to 180 days to cover chargebacks, reversals and claims, releasing the remainder afterwards. Ask for the exact release date in writing.
Why did PayPal close my account?
Common triggers are: A PayPal account-level risk flag, sometimes unrelated to a single transaction. A buyer-complaint or dispute pattern. A business category PayPal restricts, or a policy breach in its Acceptable Use Policy. A sudden change in volume or trading behaviour. You are entitled to ask for the specific reason in writing.
Can I complain to the Financial Ombudsman about PayPal?
PayPal falls under UK financial rules, so an unresolved 180-day hold or closure can be referred to the Financial Ombudsman Service after 8 weeks or a deadlock letter, free of charge.
Should I open another PayPal account?
Usually not. A near-identical new account is often detected and closed too, and a pattern of closures makes the next underwriter more cautious. If the closure was driven by your trade category, mainstream processors will keep declining; the durable fix is a high-risk merchant account placed with a specialist acquirer that underwrites the category from the start.
How do I keep taking card payments right now?
A dedicated merchant account plus a card reader keeps you trading without relying on a single wallet provider. Running a second processor in parallel is now standard practice so a single closure never stops your revenue.
Related help
If funds are only temporarily held, see my acquirer froze my funds. For a permanent termination, see account terminated by acquirer and the MATCH/TMF list explained. Or read the full high-risk merchant guide.
Founder & Managing Director, Muswell Rose, MerchantHQ
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind MerchantHQ. His career runs through insurance, mortgages, commercial finance and fintech lending, including payments and merchant services. He writes the MerchantHQ library.
Last reviewed: 15 July 2026