A portion of the merchant's revenue retained by the acquirer as a security against potential future chargebacks or disputes.
In business, risks lurk around every transaction. How can companies cover themselves when working with uncertain partners? One approach is implementing holdbacks in payments. Understanding this tactic provides insight into managing merchant-supplier relationships.
Holdbacks involve a buyer withholding a portion of payment due to a seller until contract conditions are satisfied. Common scenarios include:
Holdbacks enable businesses to gain financial protection during vulnerable periods of uncertainty.
For buyers, key advantages of holdbacks include:
Holdbacks bring accountability and security to transactions.
To effectively use holdbacks:
With the right approach, holdbacks provide financial flexibility without undermining relationships.
Payment holdbacks inject transactions with contingency plans that minimize exposure. While sparking mixed feelings from sellers, they enable buyers to operate with greater confidence.