When entrepreneurs start a new business, there are tons of issues to tackle, paperwork to sign, and plans to execute. Some of the most critical of these tasks is deciding where your financial support is coming from. Most business owners seek the support of a bank or merchant account provider to infuse them with the necessary funds to get started. However, most acquiring banks and merchant account providers have a non-interest-bearing reserve fund that requires business owners to either put a reserve deposit down before funds are released or take a portion of their profits annually.
What is a Merchant Account Reserve?
Finding a merchant account with no reserve is more of a challenge than most business owners want to face, so most elect to agree to merchant account reserve requirements. The reserve serves as a financial insurance policy for a merchant account provider or acquiring bank, that protects them from any and all financial challenges or collapse suffered by merchants. Similar to a security deposit on a rental property, the reserve is in place to protect the acquiring bank from financial responsibility in case of any unforeseen circumstances like lost or missing deliveries, too many chargebacks, loss of sales orders, “acts of God” and disasters, bank errors, fiscal mismanagement, and other incidents.
How is Payment Collected?
Generally, merchant account reserves are funded from the very beginning once the final contracts are signed. However, some account providers offer a “rolling reserve.” This type of reserve takes a percentage off of the account holder’s profits until the reserve fund reaches the amount specified in the contract.
The size of the reserve fund will vary from business to business and account holder to account holder. The merchant account provider will consider a variety of factors to determine the appropriate amount for the reserve like how well your particular industry has performed in the past or the financial behavior and exposure of the business owner. Based on their findings, the Bank reserves the right to raise the amount of the merchant account reserve at any time.
A Reliable Merchant Account with No Reserve
eMerchantBroker.com values the entrepreneurial spirit, which is why we offer deserving business owners merchant accounts with no reserve. We respect your profits and will maintain your business’ integrity from the beginning to the end.
For more information, contact us today at 818-621-4893