What is Rolling Reserve

When you apply for an acquiring agreement, occasionally you will be meet with a requiring of a ‘Rolling Reserve.’ In this blog, we will explain the phenomena.

Rolling Reserve is established by the acquiring companies (the agreement to receive payments from credit cards) to secure their money in the matter of bankruptcy, fraud, or other cases where the company of the acquiring can lose money. To ensure their revenue, they make a special agreement called Rolling Reserve. By a Rolling Reserve, the amount of income is split in two, some of the income is paid directly to the store owner, the rest is held back for a period.

“My experience is, that the acquiring companies rejected some clients and offered an agreement with a Rolling Reserve instead” Mikeal, Reepay.

An acquiring agreement with a Rolling Reserve is set up with a split in percent and period. An example is a split of 40% revenue reserved in 60 days. The agreement is to secure the acquiring company and minimize the risk of handling payments.

“I have only experienced the Rolling Reserve on the acquiring for credit cards, VISA, and MasterCard, but I think, that’s only a matter of time before others require it too.”

When an acquiring agreement is required with a Rolling Reserve, it is often in the case of high risk of bankruptcy. Cases like ticket sales, extremely considerable revenue or a weak market where products easily can be purchased and sold, is often the market for a required Rolling Reserve. Also holds the risk of your own economic a specific role. If your business has a weak economy and you own cash holding is low, the requirement for a Rolling Reserve is established.

“I haven’t tried a case, where the requirements of hold back were 100%, but I have heard of examples. But whether it’s a tall story or true, I don’t know.”

To receive payments through credit cards, it’s necessary with an acquiring agreement. To handle the acquiring, it’s required to accept a risk to secure the business. Our recommendations are, that if the Rolling Reserve agreement is offering 30 % with a revenue back hold in 30 days, you will need good arguments to avoid the Rolling Reserve, even if your business has a low risk. Another way of handling the 30 % and 30 days, is to view the days as a trial, as you will receive the payments within the 30 days along with the invoice for the acquiring agreement.

To find another acquiring provider will be difficult, as they all run on the same conditions.

“As you well know, the payment industry is very complex. Please reach out, if you need more information.” Mikael, Reepay