When a merchant contacts a bank to obtain a merchant account, they go through the underwriting procedure. During the procedure the bank estimates the possible business risks.
If your business falls into a high risk category, the bank may ask you to open a reserve account. It will be charged a percentage from each sale.
This process is called rolling reserve.
Rolling reserve is a term that refers to funds that the acquiring bank uses as insurance against possible risks.
These funds are held for up to 6 months, after which they are returned to the merchant. Thus, funds in the rolling reserve are constantly “circulating”.
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