What Is a Rolling Reserve?

A rolling reserve is a fund in which a set percentage of each of the merchant’s debit and credit card transactions is held by the acquiring bank for a pre-specified period to cover potential chargebacks and refunds. This is a type of non-interest-bearing cash reserve in which funds are held for a short period of time as a protective measure for both the merchant and the merchant services provider.

The reserve funds are used to settle liabilities and serve as protection for the merchant account provider in the event that the merchant becomes insolvent or refuses to cover these costs.

How Does a Rolling Reserve Work?

If you establish a new merchant account, you may be asked to set aside part of your gross sales in a rolling reserve.

Rolling Reserve Timeline

In a typical scenario, a percentage of credit card revenue is stored in the reserve upon the completion of each sale. At the end of the waiting period, the funds are released into the merchant’s business bank account.

Because this happens progressively, it is called a “rolling” reserve.

For example, a merchant has a 30-day waiting period at a 10 per cent reserve rate:

• Day 1: The merchant processes €500. €50 is withheld by the processor.
• Day 2: The merchant processes €600. €60 is withheld by the processor.
• Day 31: The €50 withheld on Day 1 is released to the merchant’s bank account.
• Day 32: The €60 withheld on Day 2 is released, and so on.

For How Long Are Funds Kept in a Rolling Reserve?

The applicable percentage of the merchant’s gross revenue is stored in the rolling reserve for a predetermined period, usually one to two weeks. Some rolling reserves last much longer. For example, sometimes 90 or 180 days.

The payout schedule may be daily or monthly.

• With a daily payout schedule, the withheld amounts are released from the rolling reserve account after exactly the pre-specified number of days.
• With a monthly payout schedule, all of the funds withheld during a certain month are released after the number of months specified in the contract, at the end of the month.

What Percentage Is Held in a Rolling Reserve?

Merchant account providers set their own percentages for each rolling reserve merchant account. The percentage may also vary depending on your processing volume. Typically, traditional merchant account providers withhold around 5-10 per cent of each transaction. However, merchants who have been placed on the MATCH list may be subjected to percentages up to 100 per cent.

If your merchant provider requires a rolling reserve, you will be notified of the exact terms when you apply for an account. You will then have the chance to negotiate the terms or have the terms reviewed by your lawyer (if you have legal representation) before signing on the dotted line.

Who Needs a Rolling Reserve?

Some merchant service providers require a rolling reserve for all merchants. Other providers weigh the need on a case-by-case basis. Your account may be selected for a rolling reserve if:

• Your business credit history is less than perfect (see our article on how to get a merchant account with bad credit).
• Your industry has a higher-than-average likelihood of fraud and/or credit card chargebacks.
• Your merchant account has been subject to an above-average number of customer complaints or disputes.
• Your business processes a large number of pre-orders for products that are not yet available.
• Your business is new, and you don’t yet have any credit card processing history upon which to assess your risk level.

Make sure to speak with your merchant services provider if you are unsure of the requirements for your business.

Pros and Cons of a Rolling Reserve for Merchants

A rolling reserve might seem like a pure inconvenience. After all, you would prefer to receive all of your revenue straight away. However, rolling reserve accounts offer several potential benefits as well as the obvious drawbacks.

Pros

• For some merchants, accepting a rolling reserve requirement might be the only way to qualify for payment processing services, especially if they have been placed on the MATCH list. Merchant acquirers can search the MATCH™ database when doing due diligence on a potential merchant. Most are unlikely to grant listed merchants an account without the security of a significant rolling reserve.
• A rolling reserve provides a safety net for both you and the merchant services provider. It gives you the assurance that the funds are there in case you need to provide a refund or reverse a disputed charge.
• A rolling reserve may contribute to lower rates for you, the merchant. It may also give you access to a greater selection of merchant service providers.
• There is no loss to you as a merchant. While your funds will be subject to a slight delay, you will receive them eventually (minus any refunds and chargebacks).

Cons

• Rolling reserves make a portion of your revenue inaccessible. This may create cash flow challenges, especially for new businesses. The upside is that the rolling reserve acts as a kind of forced savings account, helping you get into good habits early on.
• Long waiting periods are very frustrating for merchants.

Remember: A payment provider’s main goal is to mitigate risk. Some do this by being extremely choosy about the merchants they accept or by subjecting certain merchants to higher rates. Other merchant providers use rolling reserves as a way to offer service and premium rates to all merchants while still protecting their investment.

How to Reduce or Remove a Rolling Reserve

A rolling reserve is not necessarily a permanent situation. As the risk profile of the merchant decreases, providers may be ready to reevaluate the requirement for a rolling reserve. For this, the following milestones should be met:

1. Processing history must be consistent during a set time (generally 6-12 months at least).
2. Chargeback ratios must remain consistently low (usually below 1 per cent).
3. Sales should be steady and reflect financial health and stability.

If all these criteria are met, you can request a renegotiation to either remove your rolling reserve entirely or reduce it by lowering the percentage withheld or shortening the holding period.

Other Types of Merchant Account Reserves

There are other kinds of reserves (besides rolling reserves) that payment processors might use:

Capped Reserves

With a capped reserve, a percentage of the funds is withheld from each transaction until a predetermined “cap” is reached. No further funds are withheld after this. However, the reserved amount remains inaccessible until the merchant account is closed.

Up-Front Reserves

Merchant account providers can ask for a lump sum payment at the beginning of the merchant’s contract to be held in reserve. This gives the payment processor security at the outset. The funds in the up-front reserve can then be released gradually over time as the merchant proves his or her trustworthiness.

Rolling Reserve FAQ

1. Is a rolling reserve refundable?Yes. The funds kept in a rolling reserve belong to the merchant. They are withheld for a predetermined period and then released back to the merchant’s business account.
2. Can a rolling reserve be negotiated?Yes. Merchants can negotiate the terms of a rolling reserve either to lower the percentage withheld or shorten the holding period. This usually requires having 6-12 months of consistent processing history and a low chargeback rate.
3. Does a rolling reserve affect settlement time?Partially. The percentage withheld by the processor is moved to a separate account and only becomes available after the determined waiting period. Standard settlements for the remaining balance remain as usual.
4. How long after account closure is it released?This varies. Most processors withhold the final reserve balance for six months to ensure that the standard chargeback window expires before the funds are released.

Make Rolling Reserves Work in Your Favour

Rolling reserves might seem annoying or frustrating at the outset. However, they do come with several potential benefits. These benefits include access to a wider range of merchant accounts, potentially lower fees, protection in the case of unexpected chargeback costs, and (for some merchants) the ability to accept card payments at all.

When shopping around for a merchant services provider, read the fine print and ask questions. You don’t want to be blindsided by a rolling reserve, but you also don’t want to disqualify a merchant provider simply because they impose one. As long as you run a reputable business, the rolling reserve can work in your favour.

Published: December 5, 2023
Last updated: February 2, 2026