Merchant Account Reserve

A Merchant Account Reserve is a certain amount of money held by the payment processor as a form of insurance against potential risks such as chargebacks, fraud, or merchant bankruptcy.

The reserve can be a fixed amount or a percentage of sales. Funds can be held for a specific period or indefinitely depending on the agreement between the merchant and the payment processor.

The need for a merchant account reserve often depends on the perceived risk associated with the merchant’s business. High-risk businesses, such as those in the travel or online gaming industries, are often required to maintain larger reserves.

This helps the payment processor manage their risk, as they may be held liable for any chargebacks or fraud that the merchant is unable to cover. Merchants should carefully review and understand the terms of their account reserve before agreeing to them.