PSP Rolling Reserve and Conditions

1) What is a rolling reserve and why is it a PSP

Rolling reserve is the retention of a portion of the PSP's daily settlement volume (e.g., 5-15% for 90-180 days) to cover chargebacks, returns, scheme penalties, and operational risks. The reserve "rolls": the amounts of each day are released after a fixed retention period, forming a rolling release schedule.

Differences from similar mechanisms

Holdback: one-time/permanent deduction percentage from net payouts without mandatory subsequent release.
Termination/Closure Reserve: retention for the period after termination of the contract (often 6-18 months).
Security deposit/Collateral: prepaid deposit in PSP/bank account.

2) How it counts: basic formula and example

2. 1. Daily deduction calculation

Reserve_Hold_Day = max(0, (Gross_Captured − Refunds − Chargeback_Credits))
× Reserve_Percent

Often PSPs are considered from net-settlement base, but without deducting commissions: fees are held separately.

2. 2. Release after period

If the retention period is'H 'days, then the amount retained on day'D' is scheduled to be released on day'D + H '(adjusted for banking days/holidays and min balance).

2. 3. Example

Reserve: 10% for 120 days.
Daily net base: 200,000.
Hold: 20,000 "parks" in the reserve pool of the day T and will be released in T + 120.
If chargebacks/penalties occur in period T.. T + 120, the PSP deducts them from the reserve pool and the release amount is reduced.

3) Risk triggers affecting interest and term

High chargeback rate (according to card schemes - compared with Visa/Mastercard thresholds).
Vertical increased risk (iGaming, gut, travel, ticketing).
Merchant's low story: new MID, weak financial reporting, thin capitalization.
Operational factors: slow returns, frequent complaints, descriptor/SCA violations.
Geography/channels: high-risk GEO, affiliate traffic with a high proportion of returns.
Compliance: sanctions/licensing risks, weak KYC/KYB.

4) Contractual terms to be pressured

1. Cap on reserve: upper limit (for example, not more than 1 × of the average monthly net).
2. Step-down schedule: upon achievement of KPI (low CBR, SLA returns) - automatic %/period reduction.
3. Release calendar: clear release dates with banking days and TZ defined.
4. No cross-collateral (or narrow frames): so that the problems of one brand/MID do not "eat up" the reserve of another.
5. Carve-out by methods: different reserves for cards/A2A/crypto.
6. Early release clause: the possibility of early release based on the results of the quarterly risk review.
7. Termination reserve is limited by the term and amount: a clear calculation formula and a return schedule.
8. Dispute process & evidence: review deadlines, transparent reports on write-offs from the pool.
9. Audit trail and reporting format: CSV/JSON breakdown by retention days/releases.
10. Force-majeure and scheme fines: limitation of liability and appeal procedure.

5) Impact on cash flow and liquidity

• forecast releases for the retention horizon (H),
• take into account negative carry-over (when the reserve pool goes negative due to chargers/fines),
• reserve operational liquidity for withdrawals, taxes, OPEX excluding "frozen" funds.

Metrics for CFO

Reserve Balance (day slice and history).
Release ETA hit-rate (the fact of releases on time).
Reserve as % of GMV/NGR.
Negative-carry streak (how many days in a row the pool is in the red).
Chargeback coverage ratio (what share of CB was closed by the reserve).

6) Accounting and posting (simplified)

• JT: Settlements with PSP (reserve)
• Kt: Calculations with PSP (current settlement)

• Dt: Bank (cashier's office)
• Kt: Settlements with PSP (reserve)

• DT: Expenses/losses (chargeback/finds)
• Kt: Settlements with PSP (reserve)

The main thing is to keep a separate subaccount for the reserve and keep the link "hold day → release day."

7) Operating data model

finance.settlement_batches (
batch_id, provider, mid, method,
provider_cutoff_at, provider_tz,
gross_captured, refunds, cb_debits, cb_credits,
fees, reserve_hold, reserve_release, reserve_balance_after, -- ключевые поля net_funding_after_reserve, file_ref, meta
)

finance.reserve_ledger (
id, provider, mid, hold_date, release_due_date,
hold_amount, released_amount, cb_consumed, fines_consumed,
carry_over, status, meta
)
/
status: OPEN      PARTIALLY_RELEASED      RELEASED      NET_NEGATIVE
/

8) Reconciliation and quality control

The Alerts

Missed release: no due date release - P1.
Reserve imbalance: `Σ(hold) − Σ(release) − Σ(consumed) ≠ Reserve_Balance` — P1.
Spike CB vs Reserve: CB growth> X% week-on-week with low Reserve Balance - P2.
Cross-collateral anomaly: write-offs for another MID - P1 (check contract).

SQL templates (simplified)

8. 1. Reserve balance by days

sql
SELECT
DATE(hold_date) AS d,
SUM(hold_amount)             AS held,
SUM(released_amount)           AS released,
SUM(cb_consumed + fines_consumed)    AS consumed,
SUM(hold_amount - released_amount - cb_consumed - fines_consumed) AS balance_delta
FROM finance.reserve_ledger
WHERE hold_date BETWEEN:from AND:to
GROUP BY 1
ORDER BY 1;

8. 2. Expected Releases on Horizon H

sql
SELECT release_due_date AS eta,
SUM(hold_amount - released_amount - cb_consumed - fines_consumed) AS expected_release
FROM finance.reserve_ledger
WHERE release_due_date BETWEEN:start AND:end
AND status IN ('OPEN','PARTIALLY_RELEASED')
GROUP BY 1
ORDER BY 1;

8. 3. Mapping to a Settlement File

sql
SELECT b.batch_id, b.provider, b.mid,
b.reserve_hold AS file_hold,
COALESCE(lh.day_hold, 0) AS calc_hold
FROM finance.settlement_batches b
LEFT JOIN (
SELECT provider, mid, DATE(hold_date) AS d, SUM(hold_amount) AS day_hold
FROM finance.reserve_ledger
GROUP BY 1,2,3
) lh ON lh.provider=b.provider AND lh.mid=b.mid
AND lh.d = DATE(b.provider_cutoff_at)
WHERE b.provider_cutoff_at BETWEEN:from AND:to;

9) Working with PSP: how to reduce the reserve

1. Reduced-risk pilot: Start with a limited GEO/channel.
2. Guarantees: bank guarantee/deposit can replace or reduce the% reserve.
3. Operational KPIs: fast returns, low CBR, high-quality KYC/KYB → arguments for step-down.
4. Risk segregation: separate MIDs by different brands/verticals.
5. Transparent reporting: own reports on CB/Refund SLA, SoF/KYC - allays PSP concerns.
6. Provider mix: diversify rails (A2A/crypto/local methods) - overall Weighted Reserve% for the platform drops.
7. Seasonality review: restatement of reserve after "peak" periods with confirmed low CB tail.

10) Relationship with liability and compliance

• high reserve% often correlates with bonus overload, weak verification and support delays;
• SoF/KYC levels and rate of returns directly affect bargaining position;
• regulatory penalties/chargeback arbitration increase reserve requirements.

11) Dashboards and KPIs

Reserve% by PSP/MID/method.
Expected Releases (7/30/90/180) - table of planned inflows.
CB Coverage: Share of chargebacks covered by reserve and risk balance.
Release Delays: average lag between due date and fact.

Cross-Collateral Flag: Share of write-offs "not in their MID."

Termination Reserve: volume and schedule of return after closing.

12) Implementation checklists

Data and integrations

• Import'reserve _ hold ', 'reserve _ release', 'reserve _ balance'fields from settlement files.
• Showcase 'reserve _ ledger' with link 'hold _ date → release_due_date'.
• Contract Terms Reference (percentage, term, cap, step-down, cross-collateral flag).

Controls and Processes

• Daily report on balance sheet and expected releases.
• Alerts by missed release/imbalance/cross-collateral.
• Quarterly risk-review with PSP (%/timeline revision).

Legal

• Prescribed caps, step-down, release schedule, termination reserve.
• Limited to cross-collateral, the right to audit reports.
• SLAs on file formats and deadlines.

13) FAQ

Q: Is it possible to "replace" the reserve with a guarantee?
A: Often yes: bank guarantee/cash collateral reduces the reserve or zeroes it on cards - depends on the PSP/bank.

Q: Why is the actual release less than expected?
A: CB/penalty write-offs occurred in between; check 'cb _ consumed', 'fines _ consumed' and see cross-collateral.

Q: What to do when closing MIDs?

A: Agree termination reserve with clear scope and calendar; Maintain due-date accounting and reminders

Q: How do you account for seasonality?
A: Build CB tail forecast 60-180 days ahead across payment cohorts; on the "low tail" ask step-down/early release.

14) Summary

Rolling reserve is the price of risk that the PSP puts in the merchant's cash flow. Correct strategy: transparent analytics, tight reconciliation of the reserve ledger, strong return/CB KPIs, rail diversification, and tight contractual frameworks (caps, step-down, release calendar, cross-collateral restrictions). So the reserve ceases to be a "black hole" and becomes a managed buffer that can be sequentially reduced.