A rolling reserve is a chargeback risk prevention tool, and is used with any business model that is deemed high risk of getting them. For the most part bank will set a firm percentage based on the risk involved with the business. Can be 5%-20% of transaction value per month. (10% of 100.000 processed would mean 10.000 in rolling reserve per month). The rolling reserve will be held for x amount of months mostly 4-6 months.
The RR covers in the case you are getting terminated so that the bank, and it’s partners have a buffer between loss and chargebacks disputed by customers. A rolling reserve is possible to get reviewed after months of processing. When a merchant shows to be less high risk than deemed by bank.
It will be applied to any merchant account based on the business model and the average delivery time of the goods and/or services. After applying for a merchant account additional information is required in order to draw conclusions. So always have your KYC close to you, in case they need more documents.
Usually it is paid out to a merchant after a certain amount of time which can vary on business model, risk factors and bank. In the high risk space it is usually six months we are talking about, and 10% set from the start. As mentioned earlier in this post, it can be negotiated after proven processing history, to which you didn’t get above 1% in chargeback ratio nor hitting the count. It will be paid out to the merchant in their settlement accounts, after due period.
PurePay is available to help you getting started. So get in touch with an agent today by calling, or writing.