A holdback is any portion of a merchant’s funds that an acquirer withholds from settlement to protect itself against future losses. The rolling reserve is the most common form; others include fixed reserves, a set amount held for the life of the account, capped reserves, which accumulate until they reach a target balance, and ad hoc holds placed during risk reviews.
Why it matters
Merchants tend to discover the difference between these structures only when they try to get money released. A rolling reserve pays itself back continuously; a fixed reserve does not move until the account closes; an ad hoc hold has no schedule at all and is governed by whatever the merchant agreement allows. Reading the reserve clause before signing, and asking which structure applies, is the difference between a predictable cost of doing business and a liquidity crisis during your best sales month.