Rolling Reserve

A contract might, for example, hold 10% of daily card volume for 180 days: money held from sales on 1 January is released around the end of June, and so on for each day, so the reserve rolls forward. Other forms include a fixed or upfront reserve, which is a lump sum held for the life of the contract, and delayed settlement. The terms are set in the merchant agreement and can often be reviewed after a period of clean processing.

Reserves protect the acquirer, which is liable to the card schemes if a merchant cannot cover its disputes. They are most common where there is a gap between payment and delivery, such as travel, event ticketing, annual memberships and pre-orders, for new businesses without processing history, and in high-risk sectors. Visa's risk guide for payment facilitators names delayed-delivery merchants as typical cases and says reserve funds belong to the merchant and must be held and controlled by the acquirer, not the facilitator.

For a merchant, a reserve is a real cash-flow cost. When comparing providers, ask whether a reserve applies, its percentage and duration, whether it is capped, what would trigger an increase, and how and when funds are released if you leave. Low chargeback rates and a record of reliable fulfilment are the usual routes to reducing or removing it.