The Fixed Reserve is a risk-management strategy we employ to help protect our merchants from potential losses that can occur when chargebacks or refunds are processed against their accounts. Without a Fixed Reserve, a high rate of chargebacks could cause your account's running balance to run into the negative. To set up a Fixed Reserve, you will be requested to transfer a lump sum during onboarding to act as a buffer, with these reserved funds acting as the primary source to fulfil chargebacks or refunds processed. These reserved funds can be topped up when needed - you can also optionally agree for the Fixed Reserve to be partially funded from the revenue derived from settlement.
How the size of the Fixed Reserve is calculated
Every business is different and there is no one-size-fits-all approach to calculating the size of the Fixed Reserve needed. Many factors are taken into consideration when establishing the Fixed Reserve (e.g. the sector in which your business operates, how products are delivered, your agreement with us, etc.) but broadly speaking the percentage of funds reserved is determined by the perceived level of risk associated with the transactions you process. Or put another way, if chargebacks and refunds are deemed more likely, a larger Fixed Reserve will be needed to ensure you are adequately protected.
Do I need the Fixed Reserve?
During the onboarding process, all merchants undergo due diligence and security screening, and as part of this, we will determine whether a Fixed Reserve would be appropriate to help protect your account. However, not every business will need a Fixed Reserve. You might instead be asked to agree to a Rolling Reserve, which functionally serves the same purpose, but instead of being funded by a lump sum paid upfront during onboarding, this is funded by temporarily setting aside a portion of your revenue in a rolling manner.
Releasing funds from Fixed Reserve
Funds held in your Fixed Reserve are released once the chargeback liability period determined by the card schemes expires (minimum of 120 days from when the funds were added, but this can be longer depending on your agreement with us).
