Just switched payment processors for my little bakery. The new one is holding 10% of every transaction for 90 days. Is this just how it is now? Feels like a lot when margins are already thin.
Payments
Are rolling reserves normal for a small business?
Yeah, pretty common. They call it a rolling reserve. Usually for high-risk industries or new accounts. 10% for 90 days is on the higher side but not insane.
They did that to my cousin's candle shop for the first six months. After that they lowered it to 5%.
Bakery is high-risk now? What's next, rolling reserves for lemonade stands?
It's not about the industry being shady, it's about chargebacks. If someone disputes a $50 cake, the processor has to eat it if your account is empty. They Hold back to cover that. Annoying but logical.
I get the logic, but 90 days feels like forever. That's a chunk of my cash flow tied up. Did anyone negotiate?
You can try. Some processors will lower the reserve if you show a few months of low chargebacks. But they usually won't budge until you've been with them a while.
My cousin just waited it out. She said it felt like a tax refund when they finally released it.
Or just use a different processor. There are ones with no reserve for low-risk businesses.
Those no-reserve ones usually sneak in higher per-transaction fees. Do the math before you jump ship.
Good point. I'll run the numbers. Thanks, all.
Also, 10% is negotiable if you threaten to leave. They don't want to lose a bakery. We're the backbone of civilization civilization.