What are reserves in payment processing?

A reserve on a merchant account in credit card processing is a temporary hold on a portion before they are deposited in your bank account. For example, if you had a 2 week reserve of $2000, there would be a hold of a rolling total amount of $2000.

The funds in the reserve are in place to protect both the merchant and credit card processor in the event of unplanned risk events such as chargebacks.

Reserves are put in place for merchants that are higher risk for some reason. Higher risk merchants might be new businesses, riskier industries (i.e. custom made furniture), or businesses with a history of chargebacks. You can read more about risk.