Demystifying the 10% Industry Standard
For many businesses, the idea of a 10% reserve might seem like an unnecessary burden, especially when cash flow is critical. As we mentioned earlier, it’s important to understand that this standard exists to protect your business as much as it protects the payment processor. By ensuring that there are funds available to cover unexpected events, the reserve helps maintain the integrity of your merchant account and keeps your business running smoothly.
Think of it as a safety measure—similar to insurance. You hope never to need it, but when the unexpected happens, having that reserve can mean the difference between a minor hiccup and a major financial setback.
Reserves might seem like just another hurdle in the complex world of payment processing, but they are a crucial component of a stable and secure financial relationship between your business and your payment processor. Understanding why reserves exist, how they protect both parties, and how to manage them effectively can demystify the process and help you incorporate them into your financial planning with confidence.