A rolling reserve is a type of cash reserve that withholds a small percentage of all gross sales of a merchant for a predetermined amount of time in a non-interest-bearing account before releasing the funds to the merchant. For high risk merchant accounts, rolling reserves are typically used by credit card processors as a risk management tactic.

In contrast to reserve accounts, which are usually created and funded in response to a merchant ‘s anticipated risk, rolling reserves are taken up front from all the sales of a merchant as a pre-emptive way for a processor to protect itself from potential loss. Most rolling reserves take 5-10 percent of the credit card sales of a merchant and hold them before releasing them to a merchant for a certain period of time, usually a week or two. Business owners who cannot afford to wait for 10% of their revenue stream to be accessed should be sure to avoid merchant accounts with attached rolling reserves.

There are some common misconceptions that merchants need to be made aware of when it comes to payment processing with a rolling reserve.

First and most importantly, a rolling reserve is seen by many companies as a negative element that is taken into account when choosing certain account providers. For you, the merchant, the tool should be seen as a safety net instead of a loss in turnover in the early months of opening your account. The rolling reserve itself is not a fee, but a delay in payment, so after a delayed period, you will receive transaction payments.

We are often asked for ways to have a rolling reserve, it is important to consider why for your business you don’t want the protection in place. If you work with large chargebacks in a high-risk industry and have no rolling reserve in place, you could receive funds that need to be repaid (or deducted from your next settlement) after saying that if you use an account such as PayPal or Stripe and want to find alternatives with lower amounts of rolling reserve, it might be worth shopping around. New companies often use the above companies and stick with them as their businesses grow, but by switching account providers, it may be possible to reduce your rolling reserve with well-run accounts.

Remember, the rolling reserve account won’t earn any interest from the provider, and is there to protect them as much as you do. It should not be seen as a fee that you can not afford, more like protection and pay-out on goods or services that have been formally completed without any problems along the way.