Understanding Rolling Reserves

A rolling reserve is a percentage of your sales that the payment processor holds to cover potential chargebacks. This security balance varies based on your transaction volume. For example, if your monthly sales total $10,000 and the rolling reserve is 10%, the processor retains $1,000 until they release it based on their schedule.

Reserve Percentages

Reserve percentages typically range from 5% to 15% and depend on the risk assessment from the payment processor.

• Low Risk: 5% (e.g., $10,000 in sales = $500 reserve)
• Medium Risk: 7% – 10% (e.g., $10,000 in sales = $700 – $1,000 reserve)
• High Risk: 10% – 15% (e.g., $10,000 in sales = $1,000 – $1,500 reserve)

Release Schedules

Payment processors offer various timelines for releasing withheld funds:

• 30 Days: Funds held for 30 days
• 60 Days: A common release period for many processors
• 90 Days: Frequently applies to high-risk merchants

Cash Flow Considerations

A rolling reserve affects liquidity as it temporarily locks up a portion of cash that could otherwise finance operations or investments.

Factors Affecting Underwriting

Common underwriting factors include:

• Business credit history
• Chargeback history
• Industry-specific risk levels

Questions to Ask Processors

Before signing, ensure to inquire about:

• Reserve percentages and their rationale
• Release schedules and their conditions
• Fees associated with chargebacks and reserves

Conclusion

Understanding rolling reserves is crucial for kratom merchants to navigate the complexities of payment processing. Consider working with knowledgeable providers like High Wire Payments for tailored solutions that align with your needs.