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