Rolling reserves

Rolling reserves are a risk management mechanism in which hold a percentage of a merchant's daily transaction volume for a specified period before releasing the funds. This provides ongoing protection against and while allowing businesses to maintain operational cash flow. Rolling reserves adjust dynamically to changes in transaction volume, making them suitable for businesses with variable or seasonal sales.  

Daily reserve amounts are calculated based on a predetermined percentage of transaction volume, typically 5–20%, depending on risk assessment. Funds are held for a set period, usually 90–180 days, and released on a first-in, first-out basis. This creates a continuous cycle where new reserves are established daily while older reserves are released, keeping the reserve pool stable and adaptable to business growth or decline.

Factors influencing reserve percentage and holding period are:

Rolling reserves automatically scale with business growth without contract changes, provide proportional risk coverage, and release aged funds to help maintain cash flow. Merchants must manage cash flow carefully, as rapid growth or seasonal spikes can increase the funds held. Effective management requires accurate cash flow forecasting, maintaining sufficient working capital, and ongoing communication with processors.