Rolling Reserve Merchant Account: When it comes to new merchants and high-risk businesses, the bank takes all the possible caution to avoid any loss in their business. Due to which they have created a robust network of rules that need to be followed at all times so that economic and financial aspect of the business never sees any downfall.
This is the reason that bank introduced the concept of Rolling Reserve Merchant Account.
WHAT IS ROLLING RESERVE MERCHANT ACCOUNT?
Rolling Reserve is a fixed percentage (generally 5-10%) of a merchant’s transacted amount reserved by the bank which can be used in case of an excessive chargeback. This happens for only a short time interval (6-12 months) until the business gets some stability.
Upon completion of this time interval, the bank releases the amount to the merchant on the scheduled dates.
WHAT IS THE PURPOSE OF ROLLING RESERVE?
As we discussed, rolling reserves are applied for the merchants having a high-risk business. The idea of introducing the rolling reserve is to avoid any loss of revenue in case of excessive chargeback in the business. What are the traits that result in high-risk business?
Excessive Number of Chargebacks – Most of the credit card networks have established 1% criteria where chargeback ratio of more than 1% will state as an excessive chargeback. Upon exceeding this limit, again and again, can make the business as a high-risk business. Merchant With Poor Personal Credit– If you are a merchant with a history of bad credits in previous terms then you can face consequences while getting the merchant account. This means might be denied from a merchant account or get the Rolling Reserve Merchant Account for your business.
There are some businesses that are considered as the high-risk businesses, for example:
Online Gambling Or Casinos Computer Software And Hardware Business Bitcoins Or Forex Trading Dating Services VoIP Or Telemarketing Pharmaceuticals Or Drug Stores E-Commerce Adult Materials, Products Or Services Airline Tickets Magazine Subscriptions
If you are a merchant of those businesses or similar businesses then you will be provided with Rolling Reserve Merchant Account.
Merchant Stronghold offers account services for the merchants with high-risk businesses. You can contact our experts by placing a call at the toll-free number.
If you have a high-risk business then rolling reserve is inevitable. However, you can work on other strategies to maximize the profit so that it won’t affect as bad as it may seem. Furthermore, you can work on strategies to minimize the chargeback in the business. And finally, use the best business practice to eliminate any situation that can harm the reputation of business in any way.
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