What’s a Merchant Account Reserve, and Why Is it Taking my Money?

Aug 12, 2014
fotolia_2832717_XSWhen 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 providers 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 require business owners to ether put a reserve deposit down before funds are released or takes a portion of your 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 take 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 as 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 or click on the button below to start the free application

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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