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ENHow it works
The PSP holds back a share of every card payment and releases it after a set period: the reserve from the first day's payments comes back after 180 days, the second day's a day later. That is how the reserve keeps "rolling". It is insurance: if players dispute payments and the merchant is short of money, the acquirer pays the chargebacks and scheme fines. For gambling under MCC 7995, the reserve is usually higher than in ordinary retail.
Formula and example
Reserve balance = monthly card volume x reserve percentage x months heldFor example, €500,000 a month and a 10% reserve for 180 days: €50,000 is held back every month, and after six months €300,000 sits in the reserve at all times.
| Month | Held back | Released | In reserve |
|---|---|---|---|
| 1st | €50,000 | €0 | €50,000 |
| 3rd | €50,000 | €0 | €150,000 |
| 6th | €50,000 | €0 | €300,000 |
| 7th onwards | €50,000 | €50,000 | €300,000 |
That €300,000 is 60% of monthly volume: it cannot be spent on player payouts, marketing or salaries. As volume grows, so does the reserve.
How to lower it
- Track record: several months of stable volume with no sharp spikes.
- A low chargeback ratio: 3-D Secure, KYC, a clear descriptor and fast withdrawals, so the player has no reason to go to the bank.
- A review clause in the contract: for example, after 6 months with a chargeback ratio below the threshold, the reserve is lowered.
- A cap: the reserve builds up to an agreed amount and grows no further.
Common mistakes
- Switching PSP without calculating the reserve. For six months two reserves are frozen: the old one has not come back yet, and the new one is already building up.
- Not reconciling statements. A holdback error or a delayed release gets noticed six months later, when money is already short.
- Accepting the starting terms for good. The starting reserve is set for a merchant with no history. Without a review clause, it stays the same for years.