The Reserve Fund structure in Subotiz Payments provides additional financial protection by temporarily holding part of each transaction. Mechanisms such as rolling reserve and fixed reserve support account stability, reduce settlement-related risk, and ensure compliant payout operations. Understanding these reserve models helps merchants anticipate cash flow and interpret balance movements accurately.
Reserve Funds Overview
A reserve represents the portion of processed funds that remains on hold instead of moving directly into the available balance. These amounts act as a safeguard for refunds, disputes, chargebacks, and other post-transaction adjustments.
Reserves are not fees. They are temporarily withheld amounts that return to the merchant on a scheduled release timeline defined by the account’s reserve policy.
Reserve Models in Subotiz Payments
- Rolling Reserve: A fixed percentage of each transaction is held for a predefined period and released on a future date.
- Example: A 10% rolling reserve with a 30-day period means 10% of today’s transactions will be released 30 days later.
- Characteristics：
- Applied to individual transactions.
- Released on a continuous, rolling basis.
- Generates predictable periodic returns.
- Fixed Reserve: A set amount is held as a temporary buffer until transaction patterns, risk indicators, or account performance improve.
- Characteristics：
- Not tied to transaction percentages.
- Functions as a risk-management cushion.
- Released following review or policy adjustment.
Reserve Activity in the Balance Module
Reserve-related activity appears in the Balance module through two primary entries:
- Reserve Fund: Amounts withheld during settlement, reducing the net settlement for that cycle.
- Reserve Release: Previously withheld funds returned to the available balance once the reserve period ends.
- Entries typically include:
- Reserve type (rolling or fixed)
- Amount
- Transaction time
- The amount withheld or released during the settlement cycle
Determinants of the Reserve Policy
Reserve requirements depend on several operational factors, including:
- Business model and industry classification
- Transaction patterns and sales volume
- Dispute and refund ratio
- Industry risk rating
- Account age and processing history
- Compliance and operational reviews
Reserve terms may be adjusted as account performance improves.
Reserve Release Example
For a 10% rolling reserve with a 30-day period:
- A $200 transaction on March 1 → $20 is placed into reserve
- On March 31 → the same $20 is released and added to the available balance
This creates a steady flow of withheld and released funds across cycles.
Reserve Funds support stable payout operations and provide essential risk protection. By understanding how reserve amounts are withheld and released, merchants can better project cash flow and interpret account activity within the Balance module. All reserve entries are fully recorded in the Subotiz admin to support clear reconciliation and financial planning.