In practice
Travel, events, pre-orders, memberships and annual plans all take payment before delivery. If the merchant fails before delivering, customers dispute charges and the acquirer may have to pay. Acquirers manage the exposure with reserves or delayed settlement. See the travel industry file.
Common confusion
Future delivery is about timing, not product quality. A reputable merchant can still carry large exposure if it sells far in advance.
Frequently asked questions
Which businesses have future delivery risk?
Travel, events, pre-orders, annual subscriptions and memberships, and any business that takes payment well before delivery.
How do acquirers manage future delivery?
Typically with reserves, delayed settlement until delivery, or limits on how far ahead the merchant can sell.