Payment Processor Reserve
Definition
Money a payment processor like Shopify Payments, Stripe or PayPal holds back from payouts as protection against refunds and chargebacks.
Want a deeper explanation?
Reserves are a cash problem, not a profit problem, but they can be serious ones. They often appear after fast growth, high chargebacks or a change in business type.
The held funds should be tracked as an asset so they are not lost in the books. Watch for: a cash forecast that assumes every sale pays out on schedule.
Example
After a sales spike, Shopify Payments holds 25% of payouts for 90 days, putting $60,000 out of reach right when you need to reorder.