How a rolling reserve works
The merchant agreement sets a percentage and a holding period. Each settlement is paid out less that percentage, and each withheld slice is released when its own period ends.
After the first period the merchant receives old slices while new ones are withheld, so the balance levels out. As an illustration, 10% held for 180 days on steady sales of EUR 100,000 a month builds up to about EUR 60,000 and stays there. Both figures are negotiated case by case and reviewed as the merchant's record grows.
Why acquirers ask for a rolling reserve
A chargeback can arrive months after the sale, and the acquirer answers to the card scheme for it if the merchant has closed or run out of money. The reserve is decided at underwriting and reflects:
- The merchant's history of chargebacks and refunds
- The gap between payment and delivery: travel, tickets, pre-orders
- The age and finances of the business
- The sector, and whether the schemes treat it as high risk
What a rolling reserve means for a payment provider
The reserve is a separate balance per merchant, built and released day by day. The ledger has to post each hold and release, show them on the merchant's statement, and keep the money apart from what is due for payout. A payment facilitator often holds reserves on its sub-merchants while its own acquirer holds one on the facilitator.
Rolling, upfront or capped reserve?
- Upfront reserve
- A lump sum deposited, or withheld from the first settlements, before processing starts.
- Capped reserve
- A percentage is withheld until a fixed total is reached, then withholding stops and the total is kept.
- Settlement delay
- Every payout arrives later, but nothing is held back once the delay has passed.
Where a rolling reserve shows up in a platform
Modules that do the work
- Merchant onboardingBusiness sign-up, verification and underwriting, from application to first payment.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- PayoutsMoney out to bank accounts, cards and wallets, on the rail that fits each payment.
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.