What is a fixed reserve and situations when you need it

Posted on 24.4.2016
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Written by Eva Ciga

A reserve is an amount of cash retained by the payment provider or acquiring bank. This is due to the risk associated with a merchant account. Therefore a fixed monetary amount retains indefinitely and we call it a fixed version of reserve. As opposed to a rolling reserve, funds in a fixed reserve are never released, thus it brings further disadvantages to a merchant.

Why a merchant needs to keep fixed reserve?

In conclusion, the usual reasons why online merchant must have it :

  1. if we talk about high-risk business
  2. a business with a large average ticket size
  3. a merchant having poor credit history or no processing history
  4. a merchant with a high-processing volume
  5. unregulated industries.

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