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Payment Processors That Don’t Hold Funds

Payment Processors That Don't Hold Funds
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Josh Phelps
June 11, 2023


If you’re looking for a payment processor that doesn’t hold funds, then you’re in the market for a high risk merchant account provider. These types of payment processors create custom accounts for multiple types of businesses. Each account has its own specific contract that can be adjusted to reduce funding holds.

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Reserve Accounts

The location where your funds get held is a reserve account. The reserve is set in place in order to have extra money in the event something goes wrong. Banks control the money in the reserve account , and although a merchant can see how much is being held, they cannot access it until a bank decides to release it.

In most cases, reserve funds are predetermined in your initial merchant account contract. The bank chooses the amount during underwriting after assessing general risk factors associated with your existing payment processing history. In some cases however, they may freeze your account and halt transactions while holding the funds until they decide to release them.

How Long Can A Payment Processor Hold Funds?

In a situation where your account is frozen for review, a processor can hold funds for six months and sometimes indefinitely if they determine the money needs to be paid to customers. If your payment processor is holding funds, don’t count the days until you have the money back, this will cause headaches and slow down your growth.

Instead, understand that they are often very slow to release funds so you should not plan to have that money back in your bank account any time soon.

Why Do Payment Processors Hold Funds?

Payment processors hold funds to maintain a low risk profile and ensure your customers are supported with funds if needed. Nearly every merchant account has some level of reserve account which is where money stays when they are holding it. In a healthy merchant account, a payment processor releases funds steadily over time while maintaining funds in the reserve.

Why Are My Funds On Hold?

If have funds on hold, you need to quickly assess the reason why and work toward reversing it. There a number of reasons a bank may pause your payment transfer such as fraud, high chargebacks, or even having an MCC Code mismatch. In any of these cases, you should call your bank and see what you can do. Here’s more on each specific item:

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Josh Phelps is an experienced sales professional with eight years of expertise, including four years in payment processing. Throughout his career, Josh has successfully secured approvals for thousands of businesses, demonstrating his skill in navigating and optimizing the payment processing landscape.


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