eCheck Risk Reserve

A risk reserve account might be required as a condition for providing eCheck services. The risk reserve account holds a certain percentage or amount of your eCheck proceeds in reserve to cover potential costs incurred from high-risk or chargeback transactions. To see how risk reserve works in a use case, see eCheck Reconciliation Reporting Case Study.
The risk reserve rate and target are determined during the underwriting process and communicated to the merchant when the application is accepted or might be requested at a later date based on financial condition, processing history, or increased limits.
A reserve might also be implemented at any time after the account is opened based on an increase in returns, chargebacks, or other risk factors.
Factors considered when determining whether a risk reserve account is required for your eCheck account might include:
  • How long your company has been in business.
  • How long your company has conducted business with
    Cybersource
    .
  • Your company's transaction history with
    Cybersource
    .
  • The credit-worthiness of the financial information you have provided.
  • The credit-worthiness of the personal guarantee you have provided.
  • Your company’s industry type.
The risk reserve is specified by these values:
  • The
    Reserve Rate
     is the percentage rate at which funds are withheld from each eCheck batch settlement for your account.
  • The
    Reserve Target
     is the maximum dollar amount that can be held in your risk reserve account.
A merchant can either have a fixed reserve or no reserve (none).
For a fixed risk reserve, the reserve balance is established by one of these factors:
  • The receipt of a lump sum deposit from you, the merchant.
  • Withholding funds at the reserve rate established for the account from each batch settlement until the reserve balance is equal to the
    Reserve Target
    .
Your fixed risk reserve can also be established by a combination of lump sum deposit and withholding of settlement funds.
As funds are transferred from your eCheck settlement sub-account to the reserve sub-account, the eCheck settlement balance is reduced and the reserve balance is increased by the same amount.
Fixed reserves are not automatically released to your merchant bank account; manual intervention is required. Risk reserve funds are withheld at the reserve rate until the reserve target is met. In the event that the reserve target setting for your account is reduced, the difference between the reserve balance and the new reserve target are transferred back to the eCheck settlement account, where available funds will be subsequently deposited to your bank account. When your reserve rate and reserve target are modified, changes become effective for the next batch settlement.