Glossary
Rolling reserve
A share of each day's card sales that the processor holds back and releases after a fixed period, often 5-10% for 90-180 days. It covers chargebacks that arrive after the sale.
Also called: reserve, merchant reserve, holdback.
With a 10% rolling reserve over 90 days, 10% of day 1 sales is released on day 91, day 2 on day 92 and so on. PayPal also uses minimum reserves, a fixed amount held, and jumpstart reserves, taken from the available balance at once.
The cost is cash flow. At $50,000 a month in card sales, a 10% reserve held 90 days keeps about $15,000 locked at any time, and about $30,000 if held 180 days. For an advertiser that buys traffic daily and pays affiliates weekly, that's ad budget sitting at the processor.
Reserves can grow after a dispute spike or a volume jump. If you're scaling a card offer, price the reserve into your margin before you raise the budget.
Related terms: Merchant account, Payment facilitator, Chargeback, Hold, Payout.