eCommerce Lifestyle

What To Do If Your Merchant Account Places a Reserve On Your Sales


​​What would you do if Shopify placed 30% reserve on all of your sales?

Sounds like a nightmare, right? Well in today’s episode, I share tips on how you can maintain your margins, even though reserves are still attached to your account.

If you’ve encountered this problem before, let me know what you did in the comment section.

What's Covered in This Episode:

Two Types of Reserves

  • Fixed: X% for X days then gone
  • Rolling: X% for X days then continues to roll

​How to approach each reserves:

  • ​Try to negotiate
  • ​Spread out the methods you are using to accept payment
  • ​Open another merchant acount
  • ​Cycle orders between the new Merchant account & Shopify Payments
  • ​​Switch back Shopify Payments exclusively after the reserve is gone
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Links From This Episode:

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What's up, everybody? Anton Kraly here, and welcome back to the Drop Ship Lifestyle YouTube channel. What you're about to watch is the video version of my podcast, which is called eCommerce Lifestyle. We post two new episodes on this channel every single week, where the goal is to help store owners increase their revenue, automate their operations, and become number one in their niche. So if you're running an e-commerce store, I would highly recommend that you click that subscribe button, turn on notifications, so you can be notified every single time we release a new video just like this. So with that being said, let's go ahead and get into the podcast.

What's up, everybody? Anton Kraly here from, and welcome back to the podcast. If you haven't heard, in a recent episode, I think it was a couple weeks ago now, I had an episode called Shopify Payments Deemed Her Business as High Risk. In that episode, I answered a woman's question who had emailed in and actually had her Shopify Payments account closed down. In that episode, I gave her some tips and feedback and recommendations on what I would do if that happened to me to ideally get the account back up and running, and also what I would do to find another solution right now so I can still maintain sales in the short term while working with Shopify Payments. So if you haven't heard that one, I would recommend you check it out. I'm going to link it in the description of this podcast.

But in this episode specifically, what I want to do is answer a question that's relate, but a little bit different. This one just came in on a live stream that I hosted on Monday. This question was asked by Ruthie, who said, "If Shopify has placed a 30% reserve on all of my sales for a minimum of 120 days, what can I do since this is more than my profit margins?"

So Ruthie, first of all, I'm sorry to hear that happened to you. But what I want to do in this episode is first explain to everybody what that means, and then explain what I would do if that happened to me. By the way, this has happened to me, not specifically with Shopify Payments, but with other merchant accounts that we use.

So first of all, what is a reserve? There's two types of them, and what they basically are is a way for the merchant account, the company that connects your bank to the credit cards and debit cards of people that are buying from you, it's a way for them to kind of hold on to some of that money to kind of protect themselves. The reason that they do this is to make sure ... Ruthie, I know you're not doing this, but let's just say you were running a business where people were paying you for orders. Let's say you were doing $100,000 a month in sales, and two months went by and you never shipped anybody anything. So you did $200,000 in sales. Let's say you had all that money go into your bank account from the merchant account. Let's say you just took all that money out as cash; and then 60 days later, all of these people that bought that didn't receive their products started calling their credit card companies, started calling their banks that they have debit cards with, and saying, "Hey, I ordered from the store. I never got my product. I want to file a chargeback."

What would then happen is the merchant account that gave you that money, that deposited that money in your account, would try to get it back. If there was no money in your account, they couldn't get it back, so they would be liable in that situation for $200,000.

So, first of all, the reason companies attach reserves to accounts is, again, not because they just want to be greedy. It's because they think, "Let us protect our downside by holding on to this amount of money for X amount of days in case something bad happens with this business so that we can kind of protect ourselves and not be liable for this cash."

Now, with that being said, there are definitely ways to negotiate, there are ways to make sure this doesn't happen, and there's ways to protect your margin and actually make money while these reserves are attached to your account.

Now, the next thing I'll say is, why are these reserves usually just put on accounts? Typically, there's an automation that runs with every merchant account, where if certain things happen, then reserves are applied. Those certain things could be a huge spike in sales. Maybe when you get approved for a merchant account, like when you're filling out the application, you say, "I expect my sales volume to be about $5,000 to $10,000 a month." Okay. I'm making that up, but let's say you said that. Then month three, you do $50,000 a month in sales. Well, now what they originally approved you for isn't true anymore because your sales grew. So that might flag something in the system where they're like, "Okay, let's take a second look at this account."

Other things that could flag the merchant accounts to put reserves on is if maybe you got a chargeback, or if your chargeback ratio went above a certain percent; because again, the reason they want to do this is to protect themselves. So those are a couple things that could trigger this in their system to make them put this reserve on the account.

So there's two types of reserves that merchant accounts can put on your account. Now, in Ruthie's case, this is specifically Shopify Payments. But again, this can happen with PayPal, this can happen with any merchant account you use from any bank, from any other platform out there. So it's not only related to Shopify, but let's talk about the two different type of reserves that can be placed on your account.

The first is a fixed reserve, which from what Ruthie's question says, sounds like they applied here. What they said here with a fixed reserve is, it's going to be 30% of all sales. Then they did say for a minimum of 120 days. Typically, what we've seen with that is when they give you that actual timeframe, in this case 120 days, at the end, so on day 121, assuming everything goes smooth, meaning there's not a whole bunch of chargebacks and the account isn't risky within that next 120 days, on day 121, all of that money will be deposited in your account. The reserve will be removed, and you continue to do business as usual.

Now, this is actually the best case scenario because it means you're not dealing with the second type of reserve, which is known as a rolling reserve. The way rolling reserves work is, let's just say ... Again, this isn't what happened to Ruthie; but if this is what happened, they might say, "Hey, because we're now kind of concerned about this account, we are attaching a rolling reserve for 120 days of 30%." The way that would work is if a sale came in today, day one, Shopify Payments or whoever your merchant account is, PayPal, whoever, they would hold 30% today; and on day 121, the sale from today, that 30%, would be deposited in your bank. Then if you got a sale tomorrow, they would hold 30%; and then 120 days from tomorrow, that money would go in. So that one is the one you really don't want, especially if you're running a business where you have higher actual costs because then you're always that far behind with getting your payments.

So we've had them both happen. We've been able to make it work both ways. But what I want to focus on in this episode is specifically that fixed reserve because that is more appropriate to the question.

So the first thing I would say is when any merchant account reaches out and tells you, "Hey, we've just applied this reserve to your account," the first thing you want to do is try to negotiate it with them. We've never had it where we've had a reserve applied and got them to just say the next day, "Okay, it's gone." We've never had that happen, even with over a decade of history. But what we have been able to do is respond and say ... Be nice, always be nice. Be nice always helps. Don't freak out. Just respond to them and say, "Hey, understand. Just want to let you know that 30% really does hurt our margins. It's going to be hard for us to operate, and I want to show you that we have ... This is our chargeback history." Because again, that's the main reason. So if you've been in business even six months, send them all of your previous orders and show them that you had no chargebacks, or show them that your chargeback ratio is 0.2%. Just show them that history. So send them that.

Another thing you can send them is tracking numbers. So in that first response, send them, "Hey, we've had 100 orders. Here are all of the 100 orders in a CSV file or a Google Sheet or an Excel sheet, whatever, and here are tracking numbers for all of them. Again, proving to them that you are doing business ethically.

Now, another thing that you definitely don't have to send and they don't require this; but if you have already been in business for a while and you have basically a balance in your bank account, if you basically have your own reserve there, you can even send them that. Send them again what your current chargeback ratio is, which is ideally much less than 1%. Send them a list of your recent orders with tracking numbers, so they know that customers are getting what they actually ordered. And optional, but if you have funds in the bank, send them a screenshot of that or a bank statement so they know that you are financially stable. Then just say, "Is there any way you can lower either the amount of days or ideally the percentage of the reserve?"

What we've found, as long as we're nice about it, we always get it down. I think the reason is because they know, right? They know that people are going to kind of refute, and they always ask for the biggest. But if you're nice about it, if you respond the right way, I see no reason why they wouldn't lower this to 20% at a minimum, maybe even less. But again, send them that information, and if it checks out, then I do think that you can get that down. So definitely do that. So that's the first thing I would do, negotiate that deal.

The second thing that you should definitely be doing is spreading out how you're accepting payments. Right now, you're accepting Shopify Payments. You also want to accept PayPal. Now, PayPal, again, the same thing can happen, but it's not happening right now. Add the PayPal button to your store, integrate it with Shopify, have that as an additional way that customers can pay you.

Also, you want to be sure you're accepting Amazon payments. What this allows customers to do is just check out with whatever payment information they have stored in Amazon. That's not through Shopify Payments, so you'll get that money all right away as well, just like with PayPal.

Then also, you want to be offering financing so that you have another way people could pay, another payment form that's not attached to a reserve. I recommend you go to and try to get approved with them first. You can also use They're basically the same thing. So you could try to get accounts with both of them, see who approves you, who approves you faster. Get those on your site literally today so anybody that orders with any of those three payment methods, again, you get the funds right away. So you definitely want to do that.

Now, the third thing that I would do if I was you, and that I recommend you do, is get a backup merchant account, something to replace Shopify Payments for the short term. You can do this at, the number two, They integrate with Shopify. You can open a merchant account there. That should not have a reserve on it when you first open it.

If you don't want to use 2Checkout, or you just want another option, just call your local bank, go into your local bank, go to your local bank's website, whatever, and ask for a merchant account with them. Open up a merchant account directly with your bank. Again, that should be opened with no reserve, and attach that to your Shopify store.

What I want to say about either of these methods, whether you're using 2Checkout or a merchant account with your local bank, I don't want you to replace Shopify Payments forever with that. What I want you to do over the next 120 days is cycle between how you're accepting money as your main integration with Shopify.

So what I would do is maybe for the next two weeks, instead of Shopify Payments, I would have my Shopify store using the 2Checkout integration. So again, no reserve. Then what I might do is, two weeks later, switch my integration back to Shopify Payments and let a couple sales come in there. Those would have the reserve attached. Then I would go back to my merchant account that didn't have a reserve, do business as normal. Maybe two weeks later, link back up Shopify Payments, get a couple orders. That, again, I would know had the reserve attached, but then I would go back, and I would cycle it like this for the next 120 days.

Because then what you're doing is showing Shopify that, "Hey, orders are still coming in." Whenever you relink that payment processor, you're showing them that these customers aren't filing chargebacks, they're getting what they ordered, but you're able to do most of your business through these other payment integrations, meaning you don't have to deal with this reserve.

Then, at the end of 120 days, again, assuming everything goes good with the orders that come in through Shopify Payments, that reserve should be removed. Whatever that negotiated percent is that they're holding should be deposited into your account. Then what I would do on day 121 is switch back to only Shopify Payments as my payment integration. I would keep that backup merchant account, whether it was with 2Checkout or my local bank, just in case I ever needed it again. But I'd be in the free and clear 120 days later. I would have it so most of my sales came in without a reserve in this time period. I would do it so that my relationship and the trust between Shopify Payments and myself was built over these 120 days.

So Ruthie, I hope you found that helpful, anybody else that might be experiencing something similar. That is my advice. That's what we've done in the past. Again, not specifically with Shopify Payments because we haven't had issues with them specifically, but with other merchant accounts that we've used over the past 13 years now.

As always, guys, I hope you found that helpful. If you did, definitely let me know by leaving a review over on Apple Podcasts or leaving a comment below if you're watching the video version. As always, if you are watching this or listening to this and you're just getting started and you want to know how to build highly-profitable, semi-automated stores, be sure to go to I have a free two-hour long training there, and I'll also give you a free copy of my report that contains 237 profitable products to sell online in 2020. So you can get that at

So thank you, everybody. Appreciate you. Have a great week, have a great weekend. Get a bunch of sales, keep your money safe, and I will talk to you in the next episode of the podcast. See you.