Banking
Our merchant account is approved, and our cash is still disappearing.
A rolling reserve is a percentage of gross processed volume withheld by the acquirer and released after a fixed period, commonly 5 to 10 per cent held for 180 days in high-risk acquiring. Its purpose is to cover chargebacks and refunds arising after settlement, which in a subscription or gaming business can surface months later. Approval on those terms is not a concession; for many acquirers it is the condition of taking the account at all.
The cash-flow effect is arithmetic and counter-intuitive. During the hold period the reserve builds every month before anything is released, so a growing merchant is always funding a larger reserve than it is recovering. Growth consumes cash rather than producing it. On roughly a 6 per cent hold at 180 days, a business processing a million a month steadily has around 360,000 permanently withheld once the reserve matures, and considerably more while volume is rising.
Two variants make it worse. A capped reserve stops accruing at an agreed ceiling; an uncapped one does not. And a reserve on gross rather than net volume is charged on refunded transactions as well as settled ones. Where the agreement also permits termination for convenience, the reserve can be held for the full release period after processing has already stopped.
How LTB Resolves It
LTB models the reserve against actual settlement data so the real cost is visible, then negotiates the terms that matter: a cap, a shorter hold, a defined stepped-release schedule tied to chargeback performance, calculation on net rather than gross volume, and release mechanics that survive termination. Contract review and negotiation are conducted by LTB directly across the EU and through local counsel elsewhere.
Where an acquirer will not move, the practice places a parallel or replacement relationship with an institution in its network on terms agreed in advance, and splits volume so no single acquirer holds all of the reserve. Reserve terms are set and released by the acquirer (LTB is not a payment institution and holds no funds), and the practice negotiates, documents, and monitors the position on the client's behalf.
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