In practice
The processor withholds a percentage of payouts until the reserve reaches a fixed amount, then stops withholding but keeps that balance. Release usually happens after termination or a successful review. The cap field in the reserve calculator models this structure.
Common confusion
A capped reserve is not the same as an upfront reserve, which is funded as a lump sum before processing starts.
Frequently asked questions
When is a capped reserve released?
Usually after the relationship ends and the dispute window passes, or earlier if the processor agrees after a review.
Is a capped reserve better than a rolling reserve?
It costs more cash early and less later. Which is better depends on volume, growth and expected processing length.