Seeing a reserve on your Stripe account can be frustrating, especially if you weren’t expecting it. One day, you’re processing payments like normal, and the next, a chunk of your funds is locked away. So what’s going on?
Stripe applies reserves when they see a potential risk with your account. It’s their way of protecting themselves against chargebacks, refunds, or anything that could lead to financial losses. But what exactly is a reserve, and why is Stripe holding your money? Let’s break it down.
What’s a Reserve and How Does it Work?
A reserve is when Stripe holds back some of your funds instead of making them available right away. This isn’t random. Stripe does this when they believe there’s a chance of chargebacks, refunds, or fraud. It’s a way for them to make sure there’s money in your account to cover potential losses.
Stripe uses two types of reserves: fixed reserves and rolling reserves.
- Fixed Reserve: A percentage of each transaction is held until a specific release date. On that date, the reserved funds are moved to your available balance and included in the next payout.
- Rolling Reserve: A percentage of each transaction is held for a set time period, like 30 days. Once a transaction passes that time window, the reserved amount is released to your available balance and included in the next payout.
For example, if Stripe applies a 10% rolling reserve with a 30-day window and you process a $1,000 payment, they hold $100. After 30 days, that $100 is released and made available for your next payout.
Reserves aren’t unique to Stripe. Other payment processors use them, too, but for business owners, they can be a major cash flow problem. The good news is that reserves aren’t always permanent, and there are ways to lower the risk of having one applied to your account.
Common Reasons Stripe Places a Reserve on Your Account
Stripe doesn’t apply reserves randomly. If they decide to hold a portion of your money, it’s because they see some level of risk with your account. That risk could come from chargebacks, industry types, unusual sales patterns, or even potential fraud. Here’s a closer look at the most common reasons Stripe places a reserve on an account.
High Chargeback Rates
Chargebacks are one of the biggest reasons Stripe applies a reserve. When customers dispute charges and request refunds through their banks, it signals a problem. Too many chargebacks make Stripe think your business is risky, even if the disputes aren’t your fault.
For example, if you sell digital products and customers frequently issue chargebacks because they “didn’t receive” their purchase (even though they did), Stripe sees that as a warning sign. To protect themselves, they might hold a percentage of your sales in reserve to cover potential refunds.
If your chargeback rate is consistently above 1%, there’s a good chance Stripe will take action. Lowering chargebacks is one of the best ways to reduce the likelihood of a reserve.
Your Business is Part of a High-Risk Industry
Some industries are more likely to experience chargebacks, fraud, or regulatory issues, which makes them riskier in Stripe’s eyes. If your business falls into one of these categories, you’re more likely to have a reserve applied to your account.
Examples of high-risk industries include:
- Subscription services with recurring payments
- Online coaching or digital courses
- Travel and ticket sales
- Adult content
- Nutritional supplements
- Electronics and high-value items
Even if your business operates legitimately, Stripe still considers certain industries a higher risk. If you’re in one of these categories, you should be extra cautious with chargebacks, refunds, and customer complaints to avoid getting hit with a reserve.
Sudden Huge Increase in Sales
A big jump in sales might sound like a good thing, but Stripe doesn’t always see it that way. If your transaction volume suddenly spikes (especially if it’s way higher than your usual sales, Stripe may place a reserve on your account to make sure you can handle potential disputes.
For example, if your business typically processes $5,000 a month and suddenly jumps to $50,000, Stripe might assume something unusual is happening. They worry about businesses taking a flood of payments and disappearing before fulfilling orders, so they hold back some funds just in case.
If you’re expecting a big increase in sales, like from a product launch or seasonal rush, it’s a good idea to notify Stripe in advance. This can sometimes prevent a reserve from being placed.
Suspected Fraud or Compliance Issues
If Stripe detects suspicious activity on your account, they may apply a reserve as a precaution. This could include things like:
- A high number of refunds or disputes in a short period
- Transactions that seem unusual compared to your past activity
- Mismatched business information or incomplete verification details
Even simple mistakes can trigger Stripe’s fraud detection systems. For example, if you recently changed your business model or started accepting payments in a new category, Stripe might flag your account for review.
To avoid this, make sure your business details are up to date and that you’re following Stripe’s terms of service. If they do place a reserve due to suspected fraud, reaching out and providing extra documentation can sometimes help speed up the release of funds.
Can You Remove a Reserve?
If Stripe places a reserve on your account, it’s not necessarily permanent. In many cases, reserves are reviewed over time, and if your business shows low risk, Stripe may remove or reduce it.
Here are some steps that can help:
- Lower your chargeback rate – Keeping chargebacks below 1% shows Stripe that your business is stable. Using chargeback prevention tools can help prevent disputes before they turn into chargebacks.
- Maintain consistent sales patterns – Avoid sudden spikes in transaction volume, as they can trigger risk concerns. If you expect a big sales increase, notify Stripe in advance.
- Provide clear refund policies – A straightforward refund process can prevent customers from resorting to chargebacks.
- Contact Stripe for a review – If your reserve has been in place for a while and your business is running smoothly, reach out to Stripe to request a re-evaluation. They may reduce or remove the reserve if they see a lower risk.
Final Thoughts
Stripe reserves can feel like an unnecessary hurdle, but they exist because Stripe wants to protect itself from financial risk. The frustrating part is that even responsible businesses can get caught in the process. While reserves aren’t always avoidable, there are ways to minimize the chances of getting one and steps you can take to have it removed.
Chargebacks are one of the biggest reasons Stripe holds funds, and too many can put your account at risk. That’s where we come in. At Chargeblast, we help stop disputes before they turn into chargebacks, keeping more of your money where it belongs. A lower chargeback rate means a lower chance of reserves, so if Stripe is holding your funds, we’re here to help. Book a demo today to see how we can simplify the way your business handles chargeback.
