Reserve
Also called rolling reserve
A reserve is a portion of a merchant’s takings held back by their payment provider to cover potential future refunds or chargebacks. It is most commonly applied to new businesses, or to those selling goods and services delivered a long time after payment.
A rolling reserve holds a percentage of each day’s takings for a set period, then releases it. A fixed reserve holds a set amount until the account has a track record.
It exists because the provider, not the customer’s bank, is liable if a merchant takes deposits and then fails to deliver.
Travel, events, furniture and anything with a long gap between payment and delivery attract reserves most often.
Why it matters to you
If you take deposits months in advance, ask about reserves before you switch. Discovering one after you’ve moved is a genuine cash flow shock.
Work out what you’re actually paying.
Whatever your statement calls it, the only figure that matters is total cost divided by total takings. Our calculator works that out from your own numbers.
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