An account maintained by the acquiring bank to hold funds as security against potential future liabilities, chargebacks, or disputes.
In the payments ecosystem, risks loom around every swipe and tap. Reserve accounts provide merchants with a fund buffer to cover problems when transactions go awry. Understanding why reserves are required and how they work enables businesses to navigate the complexities of commerce confidently.
Reserve accounts are contingency funds merchants must keep on deposit with their payment processor. A percentage of sales proceeds are held in these accounts to cover potential issues like:
Reserves provide a financial safety net when disruptions strike.
With vigilance, reserves allow commerce to thrive safely.
Reserve accounts inject transactions with fail-safes that minimize exposure for merchants and processors. Though requiring upfront collateral, they enable businesses to absorb problems that will inevitably arise with customers.