A merchant reserve is a sum that a card acquirer, payment processor or payment facilitator holds back from a merchant's settlements as security against later losses, chiefly chargebacks, refunds and fines from the card networks. The money still belongs to the merchant but cannot be spent until it is released. It is the card-acquiring use of a reserve account, which covers how reserves are sized, held and released.
The phrase is used in merchant agreements and by processors when explaining why part of a payout is missing. Reserves are imposed most often on new businesses, on merchants that take payment long before delivery, such as travel and ticketing firms, and on any high-risk merchant.
A merchant reserve can take several forms. A rolling reserve withholds a percentage of each day's sales for a set period; a fixed or capped reserve holds a lump sum. It differs from delayed settlement, where all funds are paid out later rather than a portion being kept back.