What is the difference between a rolling reserve and a static reserve?
A rolling reserve is a percentage of each payout, held for a fixed period and released tranche by tranche, so it follows sales volume. A static reserve, also called a fixed or minimum reserve, is a set amount the merchant must keep with the provider at all times. It does not release on a schedule and is reviewed case by case.
In detail
The two differ on how the amount is set and whether it moves.
Rolling reserve
- Basis: a percentage of each day’s sales.
- Movement: a tranche is withheld and another is released every day.
- Effect: the reserve grows and shrinks with volume, and a merchant that stops selling gets everything back once hold periods end.
Static reserve
- Basis: a fixed amount, for example a sum equal to one month of expected refunds and disputes.
- Movement: none. The balance stays until the provider reviews it.
- Funding: paid up front by transfer, or built by withholding the first payouts.
Other forms exist. A capped reserve is a rolling reserve that stops growing at an agreed ceiling. Deferred settlement delays all payouts by extra days. A bank guarantee can replace cash.
Providers often combine them: a small static reserve at the start, plus a rolling percentage. The choice depends on the exposure profile. Seasonal businesses suit a rolling reserve, while a merchant with large prepaid orders may need a fixed amount.
See What is a rolling reserve? for the full comparison. Reserve terms are usually set during underwriting, inside the onboarding workflow, and then tracked in settlement reports.