What a hold is
A hold is a temporary delay or withholding of settlement funding. It may apply to a single transaction, a batch, or an account, and is governed by the merchant agreement and network rules.
What a reserve is
A reserve is an amount a processor may withhold from settlement as a safeguard against chargebacks, risk, or contractual exposure. Reserve terms are set in the merchant agreement.
Types of reserves
- Rolling reserve — a percentage held for a set period then released.
- Fixed or capped reserve — a set amount held until a threshold is met.
- Reserve build-up — incremental withholding until a target is reached.
Why they happen
Holds and reserves may arise from unusual transaction activity, a spike in chargebacks, a change in business behavior, underwriting review, suspected fraud, or contractual risk provisions. They are risk-management tools, not penalties by default.
How long they last
Duration depends on the agreement, the reason, and the processor's review. Some release on a schedule; others remain until conditions are met. Understanding your agreement's terms is essential.
What to review
Review the merchant agreement's reserve and hold provisions, your processing statements for reserve activity, and the reason given. Where a reserve or hold is unexpected or disputed, understanding your rights under the agreement is the first step.