Merchant Account Cash Reserve Explained:
What is a Cash Reserve? Sometimes also called a “rolling reserve,” “daily discount,” “or personal guaranty,” a cash reserve is a pool of money held by the merchant account provider to protect against losses caused by a merchant. A cash reserve can be established during the opening of the merchant account by the business providing the funds upfront, or by the merchant account provider holding back a percentage of the merchant’s daily sales until the reserve amount is met.
Cash reserves are usually only imposed on business types that are deemed as “high risk” when the account is established; however, any business that suffers from a rash of chargebacks or fraudulent transactions may have a cash reserve imposed upon them, often with little or no warning. Cash reserve funds are usually released within 60-90 days from the day that they were first withheld. With a “rolling reserve,” the individual transactions that make up the reserve are held and then released at a predetermined interval. Cash reserve policies vary by merchant account provider.
