In some cases, accounts are approved with a rolling reserve. This article explains what a rolling reserve is, why it may be required, how it works, and what to expect over time.
What Is a Rolling Reserve?
A rolling reserve is a portion of your processing volume that is temporarily withheld and held for a defined period before being released back to you.
Unlike a one-time or fixed reserve, a rolling reserve updates continuously as new transactions are processed and older reserve amounts are released.
Rolling reserves are a standard risk-management tool used by payment processors and sponsoring banks.
Why Rolling Reserves Are Used
Rolling reserves help manage potential financial exposure related to payment processing, including:
Chargebacks and disputes
Refunds and customer claims
Delayed fulfillment of goods or services
Subscription or recurring billing models
Rapid growth or volume fluctuations
Industry or regulatory risk
A reserve is not a penalty and does not imply wrongdoing. It is applied to support account stability and uninterrupted processing.
How a Rolling Reserve Works
A rolling reserve is defined by two terms:
Reserve percentage (for example, 10%)
Holding period (commonly 180 days)
Example:
If your account has a 10% rolling reserve with a 180-day holding period:
10% of each processing period’s volume is withheld
That amount is held for 180 days
After 180 days, the funds from that earlier period are released
Visual Timeline: How a Rolling Reserve Cycles
Below is a simplified timeline showing how a rolling reserve functions over time.
What this means:
The first six months build the reserve
Beginning in month seven, earlier reserves are released as new reserves are collected
Over time, withholding and releasing typically balance out
What Happens After the Holding Period?
After the initial holding period:
The reserve continues to apply to new volume
Funds from prior periods are released on a rolling basis
The reserve becomes rotational rather than cumulative
The reserve does not automatically end unless it is reviewed and adjusted.
Can a Rolling Reserve Be Changed?
Yes. Rolling reserves are reviewed periodically and may be adjusted based on account performance.
A reserve may be:
Reduced
Shortened
Converted to a capped reserve
Removed entirely
Review considerations typically include:
Chargeback and dispute ratios
Refund practices
Volume consistency
Account history and operational changes
Compliance with applicable rules and regulations
Changes are not automatic and require sustained positive performance.
Can a Reserve Increase?
If account risk increases — such as a spike in disputes, significant volume changes, or business model changes — reserve terms may be adjusted accordingly.
Is Reserve Money Lost?
No. Reserve funds are not fees and are not forfeited as long as account obligations are met. Funds are released once the applicable holding period has passed, subject to account health and outstanding liabilities.
Why Rolling Reserves Help Maintain Account Stability
Rolling reserves help:
Absorb unexpected dispute or refund activity
Reduce the likelihood of sudden account interruptions
Support long-term processing relationships
Provide stability during periods of growth or change
They are designed to protect both merchants and payment partners.
If you have any additional questions, please contact our Support Team by clicking the support widget in the bottom right corner of this page or email us at support@payments.ai.
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