Problems › Rolling reserve
Your PSP wants a 10% rolling reserve. What it costs, and what to negotiate.
TL;DR. A rolling reserve is collateral: a percentage of your processed volume (TPV, before fees) held back from each settlement for a period and then released. Three numbers decide what it costs you: the percentage, the holding period, and whether there is a cap. A provider that quotes the percentage and is vague on the other two is pricing your category with a template. A provider that actually underwrites your vertical prices your history. The difference, on $1M a month, is the working capital below.
Who this is for. Merchants processing $100K+ a month who have been quoted a reserve, had one increased, or want to know what a reasonable one looks like before signing.
How much cash the reserve locks.
Rolling reserve: a percentage of processed volume (TPV, before fees) is withheld from each settlement and released after the holding period, so at steady state roughly (holding period ÷ 30) months of withholding is locked at any time. A cap stops the pile growing past a fixed amount.
- The reserve is collateral, not a fee: it comes back. The cost is the working capital you cannot use while it is held, and what happens to it if the account is terminated (held for the full period, disputes deducted).
- With the cap, the reserve stops growing at $250,000 on day 75; from then on nothing further is withheld until a release falls due. Without the cap, the same terms would lock $600,000.
- Three numbers decide everything: percentage, holding period, cap. A provider that quotes the first and is vague on the other two is pricing the category, not you.
Simplified: assumes steady volume and release exactly at the holding period; ignores disputes deducted from the reserve.
Percentage, holding period, cap. Read all three before you argue about one.
Percentage
The number everyone negotiates and the one that matters least on its own. 10% is a common opening in higher-scrutiny categories; low single digits on clean history. Ask what brings it down and on what timeline.
Holding period
90 to 180 days where a reserve applies (higher-scrutiny categories, new merchants); many mainstream accounts carry none. This multiplies the percentage: 10% for 180 days locks twice the cash of 10% for 90. On termination, it is also how long the money is held after the end date.
Cap
Whether the pile stops growing. A reserve capped at one month of volume is a different instrument from one with no cap, especially if you are growing. Negotiate the cap first.
Four patterns we see repeatedly.
01
The template reserve.
10%, 180 days, no cap, no release schedule, because that is the provider's default for “gaming” or “crypto”. Nobody looked at your ratios. A provider that underwrites the vertical knowingly prices your six months of history, not the label.
02
Negotiating the percentage, signing the rest.
The reserve comes down from 10% to 7% and everyone is pleased. The holding period is still 180 days with no cap and the provider keeps the right to change it. The cash locked barely moved.
03
The reserve that doubles after a spike.
A good month, a dispute uptick, and the provider exercises its change right: 10% becomes 20% with no notice. Read the change-rights clause before you sign; ask for notice and a review mechanism.
04
One acquirer, so no leverage.
Reserves come down fastest when the provider knows you have an alternative already carrying live volume. With one acquirer, every negotiation is a request. With two, it is a decision.
Price your history, not your category.
We review the agreement (percentage, period, cap, change rights, release on termination), pull six months of dispute and refund data, and take both to providers that underwrite your vertical knowingly. Where the incumbent's terms are a template, a second offer with real terms is usually enough to move them; where it is not, the second offer becomes the second acquirer.
In 97% of ~200 pricing reviews the offer we brought was cheaper than the incumbent. Reserve terms are part of that review, not an afterthought.
What is a rolling reserve?
A percentage of your processed volume (TPV, before fees) that the acquirer withholds from each settlement and releases after a fixed holding period, continuously. With 10% and 180 days, 10% of every day's processed volume is held back and comes back six months later, so at steady state about six months of withholding is locked at any time. It is collateral against future chargebacks and refunds, not a fee: it comes back, unless disputes are deducted from it or the account is terminated.
Rolling reserve vs capped reserve vs upfront reserve?
Rolling: a percentage withheld continuously, released on a rolling basis after the holding period. Capped (or static): the withholding stops once the reserve reaches a fixed amount, which is what you want if you are growing. Upfront: a lump sum deposited before processing starts, usually for new or thin-history merchants. Many agreements combine a rolling reserve with a cap; the cap and the release schedule matter as much as the percentage.
Is 10% a normal rolling reserve?
It is a common opening number for higher-scrutiny categories, and it is usually the provider's default for the category rather than a judgement of your business. An established operator with clean chargeback history can see low single digits; a new relationship in iGaming or sweepstakes often starts at 10% and negotiates down on performance. If 10% is quoted with no cap and no release schedule, that is a template, and templates are negotiable.
How long does the holding period usually run?
90 to 180 days is typical in higher-scrutiny categories and for new merchants, because that is roughly the window in which chargebacks can still arrive. It is not a given on every account: established merchants in mainstream categories often have no rolling reserve at all, and clean history shortens the period. On termination, the reserve is typically held for 30 to 180 days after the end date, in most cases the full 180, so the holding period you sign is also the period your cash is held if the relationship ends.
Can we negotiate the reserve down?
Yes, and the lever is data: six months of chargeback and refund ratios by month, dispute reasons, and an explanation of your controls. Negotiate the cap and the release schedule before the percentage; a 10% reserve capped at one month of volume is a very different instrument from 10% with no cap. The strongest position is a second acquirer offering better terms: reserves come down fastest when the provider knows you have an alternative that already carries live volume.
Do Stripe, PayPal and Shopify Payments hold reserves?
Yes, and they can impose or increase one unilaterally for aggregator accounts in categories they consider higher risk, usually with no negotiation. If a reserve has just appeared on an aggregator account, treat it as the early warning that it is: the same model that imposed it can close the account. A dedicated merchant account with a reserve you negotiated is the durable alternative.
What happens to the reserve if the account is terminated?
It is held for the period in the termination clause, usually 30 to 180 days after the end date, and disputes that arrive in that window are deducted from it. The balance is then released. Get the release schedule in writing on day one. If you are reading this because a termination letter arrived, start at the termination guide.
How is Milestone paid for this?
By the acquirer or PSP you end up using, as a commission on volume. No fee to you for a review of your reserve terms. We place with whichever of ~30 providers prices your history rather than your category, so we have no reason to push one.
Account terminated
What happens to the reserve, and the first 72 hours.
iGaming by license
Reserve norms by license, from MGA to Curaçao.
True-cost calculator
Fee rate vs approval rate: what the cheaper offer costs.
Send us the reserve clause.
Percentage, period, cap, change rights, plus your vertical and monthly volume. We tell you within one business day whether it is a template or a price. No fee for the review.