How it works
Rolling reserves, explained
What a reserve is
A reserve is a percentage of your card volume that the acquirer withholds from settlement and holds for an agreed period before releasing it to you.
It is your money. It is not a fee, not a deposit you forfeit, and not revenue for anyone. It sits in an account you cannot draw on until it ages past the reserve term, at which point it is released on the same rolling schedule it was withheld on.
What makes it feel like a fee is the first few months, when money goes in and nothing comes back out. That period ends. Section 05 shows exactly when.
Why acquirers hold one
When a cardholder disputes a transaction, the money comes back out of the merchant account. If the account cannot cover it, the acquirer pays — the liability sits with the bank, not with you and not with the ISO that boarded you.
That exposure is larger in restricted verticals for reasons that have nothing to do with whether a business is run well. Longer delivery timelines mean more time between payment and fulfilment. Subscription and continuity billing produce disputes months after the first charge. Regulatory shifts can make a legal product unsellable in a quarter.
The reserve is the collateral against that. A merchant with a clean ratio and short delivery times will be asked for less than one selling twelve-month programs — and the same business will be asked for less after a year of clean processing than it was at boarding.
The three structures
Rolling reserve
Held per batch · released on age
A percentage of each batch is held and released on a rolling schedule once it has aged past the reserve term. The most common structure in restricted verticals.
Capped reserve
Withholding stops at a ceiling
The same rolling withholding, but it stops once the balance reaches an agreed ceiling. After that, funding runs at full value while the ceiling stays held.
Upfront reserve
Held at boarding
A fixed amount held at boarding, usually funded from the first batches. Used where processing history is thin or the delivery timeline is long.
What it looks like on a statement
The reserve appears twice on a settlement statement once you are past the reserve term: once as a deduction for the current period, and once as a credit for the period being released.
Most processors show you the first line and not the second, which is why merchants believe reserve money disappears. Both lines belong on the statement.
Our own rates are not shown here. They are set at underwriting against your vertical, history, and ratio, and we would rather render them blank than anchor you on a number nobody has agreed to.
What it does to funding, month by month
This is the part worth understanding before you sign anything. A rolling reserve reduces your funding for the length of the reserve term and then stops reducing it — the balance stays held, but your monthly funding returns to full value.
| Month | Gross volume | Reserve withheld | Reserve released | Net funding | Reserve balance |
|---|---|---|---|---|---|
| 1 | $840,000 | −$84,000 | — | $756,000 | $84,000 |
| 2 | $840,000 | −$84,000 | — | $756,000 | $168,000 |
| 3 | $840,000 | −$84,000 | — | $756,000 | $252,000 |
| 4 | $840,000 | −$84,000 | — | $756,000 | $336,000 |
| 5 | $840,000 | −$84,000 | — | $756,000 | $420,000 |
| 6 | $840,000 | −$84,000 | — | $756,000 | $504,000 |
| 7 | $840,000 | −$84,000 | +$84,000 | $840,000 | $504,000 |
| 8 | $840,000 | −$84,000 | +$84,000 | $840,000 | $504,000 |
| 9 | $840,000 | −$84,000 | +$84,000 | $840,000 | $504,000 |
Two things happen at month 7. Net funding returns to full gross volume, because the amount being released equals the amount being withheld. And the reserve balance stops growing — it plateaus at $504,000 and stays there for as long as your volume holds steady.
The cost of a reserve is therefore not the percentage. It is the working capital tied up during the first 6 months, plus a held balance that scales with your volume. Plan for the first 6 months.
Getting it back
While processing
Released on the rolling schedule, without you asking. Each period’s reserve is released once it ages past the term, and it shows on the statement as a credit line.
After you stop
Held until the dispute window on your final transactions closes, then released less any losses. This is the answer merchants are most often not given: the balance is not forfeited, and it is not released the day you stop either.
If losses exceed it
A reserve caps nothing. If chargebacks and refunds exceed the held balance, the shortfall is still owed. Anyone implying otherwise is describing a product that does not exist.
Our terms
We are not publishing a reserve rate. Reserve terms are set per merchant against vertical, processing history, chargeback ratio, delivery timeline, and the sponsor bank carrying the account, and a single advertised number would be wrong for almost everyone who read it.
What we will commit to in writing before you sign: the rate, the term, the release schedule, and the conditions under which either can change. If a processor will not put those four things in front of you before signature, that is the answer to your question about them.
Questions merchants ask
- Is a reserve a fee?
- No. A fee is money you do not get back. A reserve is your money, held on a schedule and returned, less anything charged against it for chargebacks or refunds you did not cover.
- Can a reserve be reduced or removed?
- Reduced, sometimes. Removed, rarely. The lever is processing history and chargeback ratio, not negotiation — a clean twelve months is worth more in that conversation than anything you can say at boarding.
- Can the rate change after I am approved?
- Yes, in both directions. Reserve terms are normally reviewed against chargeback performance. Sustained improvement can lower the rate or shorten the term; a deteriorating ratio can raise it.
- What happens to the balance if I stop processing?
- It is held until the dispute window on your last transactions has closed, then released less any losses. Card-brand dispute windows run for months after a transaction, and for some dispute reasons considerably longer — which is why the hold does not end the day you stop.
- Who actually holds the money?
- The sponsor bank or acquirer carrying the liability, not the ISO that boarded you. Our specific arrangement is confirmed at underwriting.
Ask what your reserve would look like.
Tell us your vertical, monthly volume and current processing status. We will tell you what structure is realistic before you fill in anything sensitive.