Reduce stock only for specific order statuses and payment method in Woocommerce

Using a custom function hooked in woocommerce_order_status_changed you will be able to target 'processing' and 'completed' order statuses change reducing order items stock.

I have added in your function a condition to target only "BACS" payment gateway on orders.

add_filter( 'woocommerce_can_reduce_order_stock', 'wcs_do_not_reduce_onhold_stock', 10, 2 );function wcs_do_not_reduce_onhold_stock( $reduce_stock, $order ) {    if ( $order->has_status( 'on-hold' ) && $order->get_payment_method() == 'bacs' ) {        $reduce_stock = false;    }    return $reduce_stock;}add_action( 'woocommerce_order_status_changed', 'order_stock_reduction_based_on_status', 20, 4 );function order_stock_reduction_based_on_status( $order_id, $old_status, $new_status, $order ){    // Only for 'processing' and 'completed' order statuses change    if ( $new_status == 'processing' || $new_status == 'completed' ){    $stock_reduced = get_post_meta( $order_id, '_order_stock_reduced', true );        if( empty($stock_reduced) && $order->get_payment_method() == 'bacs' ){            wc_reduce_stock_levels($order_id);        }    }}

Code goes in function.php file of the active child theme (or active theme).

Tested and works