A fixed reserve is a type of merchant reserve in which an acquirer, payment facilitator or payment service provider requires a merchant to keep a specific sum, for example 20,000 US dollars, on deposit or withheld from settlements. The money protects the provider if the merchant cannot cover chargebacks, refunds, fees or fines, for example because it stops trading. The reserve may be funded upfront or built up by withholding a share of each settlement until the target is reached.
Fixed reserves differ from rolling reserves, where a percentage of each day's sales is held for a set period and then released, as described under rolling reserve percentage. They are typically imposed after merchant underwriting identifies higher risk, such as future delivery of goods, high dispute rates or a short trading history. The terms, including when funds are released, are set out in the merchant agreement and reviewed over time.