Understanding Rolling Reserves & Associated Requirements

If you’re a new online business owner looking for UK merchant services you may have heard about a certain requirement called a rolling reserve. Companies who establish a new merchant account may be asked to set aside part of your gross sales into one. So what is it and how does it work?

What is a Rolling Reserve?

A rolling reserve 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 merchant services provider.

Why Do Providers Require a Reserve?

The reserve works as a type of insurance policy for the merchant services provider. If the merchant jumps ship with an outstanding balance or is suddenly unable to make a payment, the rolling reserve is used to satisfy all or a portion of the debt. As long as the merchant remains in good standing with the provider, they won’t lose any of the money accumulated in it.

Some merchant services 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 one if:

  • Your business credit history is less than perfect
  • Your industry has a higher-than-average likelihood of fraud and/or 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 not yet available

How Long Do Merchant Providers Hold Funds?

The merchant’s gross sales are stored in the rolling reserve for a pre-determined period of time, usually one to two weeks. Some reserves can last much longer. For example, the waiting period is up to 90 days for a PayPal rolling reserve. At the end of the waiting period, the funds are released.

In a typical scenario, a percentage of credit card revenue is stored in the reserve upon the completion of each sale. If your merchant provider requires a rolling reserve, you will be notified of the exact terms when you establish your account.

Rolling Reserves Can Be a Good Thing for Merchants

A rolling reserve can contribute to lower rates for you, the merchant, and it can also give you access to a greater selection of merchant services providers.

A 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. But other merchant providers are using rolling reserves as a way to offer service and premium rates to all merchants while still protecting their investment.

Remember, there’s no loss to you as a merchant. Your funds will be subject to a slight delay, but the trade-off is that you’re able to enjoy features and rates that might otherwise be inaccessible.

Does QPay Europe Require a Rolling Reserve?

For some merchants, QPay Europe may require a rolling reserve. The total percentage and withholding time are assessed individually for each merchant and defined in the processing agreement.

Our reserves enable us to offer some of the most competitive rates in the industry (often as low as 1%) for the greatest number of merchants, even those who have been turned away elsewhere. It also allows us to equip every merchant with our industry-leading tools and security features.

When shopping around for a merchant services provider, the key is to always 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, a reserve can work in your favour.

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