Rolling Reserve
A rolling reserve is a percentage of each settlement an acquirer withholds for a set period, typically 90-180 days, to cover potential future chargebacks or refunds before releasing it back to the merchant. It is standard on high-risk MCCs, not a penalty for a specific business.
A 10% reserve on 200,000 EUR of monthly volume holds 20,000 EUR of your own cash at any given time, compounding to roughly 60,000-120,000 EUR sitting with the acquirer once the 90-180 day hold period fills. Reserve percentage and hold length are both negotiable at placement, not fixed by default.
Chargeback ratio is the share of transactions disputed by cardholders against total transaction count in a given month.
An acquirer is the bank or financial institution that processes card payments on a merchant’s behalf, settling funds from the card networks into the merchant’s account.
Settlement is the transfer of cleared transaction funds from the card network or payment rail into the merchant’s bank account, net of fees, chargebacks, and any reserve withheld.
A Merchant Category Code is a four-digit number card networks assign to classify what a merchant sells, used by acquirers and issuers to price risk and route transactions.