High Risk Merchant Account Reserves

Existing high risk merchants are all too familiar with the merchant processor’s practice of holding cleared transaction funds known as merchant cash reserves. Typically they ask us to find a merchant processor who requires no high risk merchant reserve or one who requires a reduced reserve percentage or balance. Many times we are able to negotiate the merchant reserve with the acquiring bank and reduce the amount required under the rolling reserve agreement. It is difficult to eliminate the requirement for a high risk merchant reserve.

For those who are new to the high risk merchant category, the merchant reserve is a cash amount held back from your available post-clearing funds. The high risk merchant reserve generally ranges between 5% and 10% of each merchant’s approved volume or monthly sales volume. Reserve amounts are held by the merchant processor to ensure against losses due to uncollected fees, merchant fines, high chargebacks, etc.

Merchant reserves can be held for a minimum of 180 days under a rolling reserve feature of the high risk merchant account. If you were to change your merchant processing account to another processor, the reserve held by your former processor will be transmitted to you – or to the new processor, if a reserve agreement is in place. Remember that the merchant reserve, net of any charges, belongs to you.

High Risk Merchant Processing Rates

In general it is safe to say that high risk merchants are charged higher processing rates than non-risk merchants. Unlike non-risk merchants where rates are more commoditized, high risk merchant processing rates are more individualized. Each merchant account application is underwritten based on the risks involved and we try to find the best high risk processing options available to you.

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