Rolling, fixed and minimum reserves explained, with the cash-flow math

A reserve is money you've earned that your processor won't pay out yet. PayPal and Whop both say reserved funds are still yours, and Whop says a reserve is never a fee. But your processor decides what comes back and when: Stripe's terms let it use a reserve for any amount you owe Stripe and release it only once Stripe is satisfied the risk has passed. Meanwhile the reserve comes straight out of your payouts while your ad bills, supplier invoices and payroll stay the same size. Run the numbers below before you accept one or argue with one.

The three types

Rolling reserve. A percentage of every sale is held for a set number of days. Each slice comes back on its own date, so after the first cycle, money comes back about as fast as new money goes in. PayPal calls rolling reserves the most common type.

Fixed reserve. The name means different things at different companies, so read your notice closely.

• At Stripe, a fixed reserve holds a percentage of each new sale until one release date, then pays it all out together.
• At Shopify Payments and Whop, a fixed reserve is a set dollar amount held for a period. Whop's version comes from your existing balance and never holds more than what's in it.

Minimum reserve. PayPal's term for a set amount you must keep in your balance at all times. PayPal's user agreement says it either takes the amount all at once, an upfront reserve, or builds it from percentages of sales until it reaches the minimum.

Stripe says it can also move part of your existing balance into the reserve. Its example holds 25% of a $100,000 balance for 30 days.

Why reserves run for months

A reserve covers refunds and disputes that haven't happened yet, so its length follows the dispute window. Stripe's docs say card networks typically let cardholders dispute within 120 days of the payment, and that for future events or services the window can start on the event date instead. PayPal buyers can open an Item Not Received dispute up to 180 days after they pay.

Delivery time matters too. Whop says it sizes the hold to cover your fulfillment cycle plus the period after delivery when refunds and disputes usually arrive. Stripe's reserves FAQ lists industries with longer-than-average delivery windows as a reason for a reserve, and PayPal's user agreement lists your delivery time frames among its reserve factors.

The cash-flow math

One formula covers any rolling reserve:

Money held once the reserve is full = daily sales × reserve % × hold days

The examples below use a store selling $100,000 a month, about $3,333 a day, and ignore processing fees. Stripe's worked examples take the reserve after its processing fee, so real Stripe numbers run slightly lower.

Example 1: 10% held for 90 days

• Each day, about $333 goes into the reserve.
• For the first 90 days nothing comes back, so every payout is 10% smaller.
• By day 90 the reserve holds about $30,000.
• From day 91, each day's release roughly matches each day's new hold. Payouts return to normal size if sales stay flat, but the $30,000 stays locked for as long as the reserve runs.

Example 2: 25% held for 30 days

Each day, about $833 goes in, so payouts drop by a quarter. By day 30 the reserve holds about $25,000, and releases start on day 31. It hurts more each day, but for one month instead of three.

To compare two reserves, multiply the percentage by the days. Here, 10 × 90 = 900 and 25 × 30 = 750, so the gentler 90-day reserve holds more of your money.

Example 3: growth makes the reserve bigger

A rolling reserve tracks your sales. Scale to $200,000 a month and the 10%, 90-day reserve climbs toward $60,000, during the same months you're spending more on ads and stock. Set that cash aside before you scale.

Example 4: fixed and minimum reserves

A fixed-amount reserve is a one-time hit. Whop's example, $5,000 placed on June 1 with a 90-day hold, releases in full on August 30. A minimum reserve stops growing once it's full. Say PayPal sets a $20,000 minimum built from 20% of sales: about $667 a day goes in, it fills in about 30 days, then payouts return to full size while the $20,000 stays put.

Check the reserve against your margin

Say your store keeps 20% of revenue after product, shipping and ads: $20,000 a month at $100,000 in sales.

When the reserve percentage is higher than your margin, you pay your bills from savings until the reserve fills. Work out your monthly processing cost in the fee calculator before you set your margin figure.

What each company publishes

Shopify Payments

• Two types: a fixed amount (its example is $1,000 for 120 days) or a percentage (its example is 10% of transactions for 120 days).
• Shopify says it reviews the account before the reserve expires and decides whether to keep, reduce or raise it.
• Shopify says leftover funds come back in full at the end of the period, in your upcoming payouts. If a reserve lists specific requirements, Shopify says it removes the reserve automatically once you meet them.
• Shopify's US payments terms let it hold "a certain amount (including the full amount)" of the funds for a transaction.
• Shopify says you can track reserved funds on the Payouts page, under Finance. On hold now? Read our Shopify Payments hold plan.

Stripe

• Stripe has two types: fixed (one release date) and rolling. It says reserves normally run 30 to 90 days.
• Stripe says that if a reserved sale is refunded or disputed, it uses that sale's reserve to cover it immediately.
• A few days before a reserve expires, Stripe reviews the account and may remove, decrease, increase or extend it. In rare cases, Stripe says a reserve may be required indefinitely.
• Stripe says that if a reserve can be appealed, the option appears on the Balances page.
• Stripe's terms let it fund a reserve by debiting your bank account. More in Stripe paused your payouts.

PayPal

• Two types: rolling and minimum, alone or together. PayPal's user agreement treats these separately from payment holds, which generally last up to 21 days.
• PayPal's user agreement lists its factors: how long you've been in business, your industry's chargeback risk, your processing history, your credit history, your delivery time frames, and above-average returns, chargebacks, claims or disputes.
• PayPal says it usually takes chargebacks and disputes from your available balance and uses the reserve if you go out of business or stop taking PayPal.
• If your business improves, PayPal says it may lower or remove the reserve. More in PayPal is holding your funds.

Whop

• Two types: rolling (its example is 10% for 90 days) and a fixed amount (its example is $5,000 for 90 days), alone or together.
• Whop says it may place or increase a reserve for new accounts, high or rising disputes, many unresolved Resolution Center cases, delivery long after payment, and sudden changes in sales patterns.
• Whop says a lower percentage applies only to new sales, and that if it removes a reserve entirely, it releases the held funds right away.
• Buy now, pay later sales carry separate reserves set by the provider: 15% for 180 days through Splitit, and 12% for about 12 months through SeQura, per Whop's docs.
• Whop says your Balances page shows each reserve with its amount and release dates. More in our Whop ecommerce launch coverage.

How to get a reserve lowered

Work on the inputs you control:

• Cut disputes. Refund unhappy customers before they go to their bank, and respond to every dispute you get. Shopify, Stripe, PayPal and Whop all list chargebacks or disputes among their reserve factors.
• Ship faster and say so. Stripe's reserves FAQ suggests clear shipping, return and refund policies on your site, an easy way for customers to contact you, and a process for telling them about delays.
• Keep records. Stripe's reserves FAQ tells you to keep detailed receipts, agreements and proof of shipment.
• Warn before you change. Shopify's US payments terms require 30 days' notice before you change your product or service types, and Stripe's terms require a prompt update when your business activities change. Stripe lists "an unexplainable sharp increase in processing volume" as a reserve reason, and Whop lists a sudden change in your sales patterns.