Rolling reserve

How it works

Hold 10% for 180 days and roughly six months of 10% of revenue sits permanently out of reach, earning you nothing. That balance, not the headline percentage, is the number to price: your reserve rate multiplied by sales across the whole hold period. Count it as working capital when you compare quotes, because a lower rate with a reserve attached is often the more expensive deal. Ask whether the reserve is rolling or capped. A capped one stops growing once it hits an agreed target.

The mechanics are simple enough. The processor takes its percentage out of each day's settlement before paying you and parks it in an account it controls. Each held amount runs its own clock, commonly 90 or 180 days from the day it was withheld, so once the first period ends releases start arriving daily. That pot is also the processor's first source of funds for your chargebacks, refunds and fees, and if it runs short it debits your bank account directly.

The rate and the period are set at underwriting and written into your merchant agreement, and most agreements let the processor raise them on notice. The reserve also outlives the account: on termination, processors typically hold what is left for the full chargeback window, often 180 days past your last transaction. Six clean months gives you something to bargain with, so ask in writing for a review and get the review date into the agreement. Check your statement for the separate reserve and reserve release lines.

Worked example

Take $200,000 a month at a 10% reserve held for 180 days. $20,000 goes in every month, and nothing comes back until month seven, when the first $20,000 is released. From then on the balance settles at around $120,000. That is your own money and you cannot spend it, and if you leave the processor it is typically held for a further six months.

Frequently asked questions

How long does a rolling reserve last?

90 to 180 days for each individual amount withheld. The reserve itself lasts as long as the processor thinks it needs one, releasing and refilling every day, so there is no end date to point at. Close the account and expect the remaining balance to be held for the full chargeback window, commonly 180 days after your last transaction.

Can you get a rolling reserve removed or reduced?

Not on request alone, but six to twelve months of clean processing usually makes the case for you. Ask in writing, quote your chargeback ratio and refund rate, and push for a scheduled review date written into the agreement rather than a vague promise. If the processor will not move, a competing quote without a reserve is fair grounds to switch once your history supports it.

Do you earn interest on money held in a rolling reserve?

Usually not. The funds sit in an account the processor controls, and most merchant agreements state plainly that no interest is payable to the merchant. Treat the balance as an interest-free loan you are making to your processor, and add that cost of capital to the effective rate you compare against other providers.