# Reserves FAQ

## What is a reserve?
A reserve is a temporary hold on a portion of a business’s funds for a predetermined period of time. Reserves are intended to cover any anticipated losses that may result from a business’s processing activity. Reserves are a common industry practice used by payment processors, and other financial institutions to ensure that businesses are able to cover disputes and refunds from their customers. Funds held in reserve will be paid out once the reserve term is complete, minus any customer refunds or disputes that may have been covered by the reserve. Reserves don't impact a business’s ability to continue accepting payments.
## Why are reserves necessary?
Your platform partners with Stripe for secure payments. As a payment processor, Stripe is responsible for the disputes and refunds that arise when businesses take payments from their customers but are unable to fulfill their orders. When disputes happen, the payment amount, along with any additional dispute fee levied by the card network, is usually deducted from a business’s account balance.
However, the funds in the account might not be sufficient to cover any disputed amounts. To avoid such situations, Stripe keeps reserves to cover any expected future disputes to protect both the business and the customer.
## How is a reserve amount calculated?
The size of a reserve is determined based on the level of risk associated with any business. Risk in payments often comes down to the potential for incurring losses through disputes that the business may not be able to cover. Each account is continually monitored, where a range of factors (such as industry conditions, payment activity, dispute rate, refund rate, and financial stability, amongst others) are assessed when calculating the level of risk. .
These factors may indicate that a business has an elevated risk of customers requesting refunds or disputing payments, or that the business may have operational or financial difficulty in fulfilling customer orders. For example, if a business doesn't have enough funds in its account balance, refunds to customers might be delayed. Appropriately sized reserves are placed to help ensure sufficient funds are on hand to cover future refunds or disputes.
## Why would a reserve be placed on an account?
A reserve may be placed on an account when it's determined that the business presents an increased level of risk. This may be due to a number of reasons, including, but not limited to the following:
* The business belongs to an industry with longer-than-average delivery windows
* The business has an increased risk of not fulfilling customer orders
* The account has elevated dispute activity
* The account shows an unexplainable sharp increase in processing volume
Learn more about what factors or signals indicate high credit risk.
## How to check your reserve balance
You'll be notified via email when a reserve needs to be applied, and reserves are viewable by navigating to your balance page.
## When is a reserve removed?
When a reserve is applied to an account, an email will be sent with information about the terms of the reserve, including the amount or percentage of funds that will be held, and time period for which the reserve will be applied. A few days before a reserve is set to expire, another credit review of the account will be conducted to determine if the reserve should be removed, decreased, or increased. The decision to update the reserve depends on the business’s financial health, the number of refunds and disputes on the account, and several other factors that affect the risk profile. In some rare cases, a reserve may be required indefinitely to support a business.
## Why might a reserve be extended?
A few days before a reserve is set to expire, another credit review of the account is conducted to determine if the reserve should be removed, decreased, or increased. Unfortunately, if after completing this review, there is still an elevated level of risk, the reserve on the account may need to be extended.
The decision to update the reserve depends on the business’s financial health, the number of refunds and disputes on the account, and several other factors that affect the risk profile. To learn more about how you can lower your risk factors, see the question below.
## How to lower the risk presented by your account
Here are some ways to manage risk, prevent disputes, and generally keep your business in good health:
* If you receive any disputes, respond to them as soon as possible. To learn more about dispute prevention and common reasons why customers file disputes, see our docs on Disputes Prevention and [Dispute Prevention Best Practices](https://docs.stripe.com/disputes/prevention).
* Take steps to protect your business against payment fraud.
* Clearly display your shipping terms, return policy, refund policy, and any money-back guarantees on your website so that your customers can easily find this information.
* Keep detailed copies of receipts, agreements, and proof of shipment. For digital products or services, maintain access logs or documentation that ties usage back to customers.
* Provide an easy way for customers to contact you for any product or service-related issues.
* Establish a process for communicating any delays on delivery of products or services to your customers.
## How to appeal a reserve
It may be possible to appeal a reserve depending on the risk profile of the account. If a reserve can be appealed, the option will appear in the email or banner notification that informed you of the reserve.
If you're appealing a reserve, provide as much detail as possible when responding to our questions and include any relevant supporting documentation, as this will ensure we have a holistic view of your business and help us make an informed decision more quickly.
## What happens with reserved funds?
Reserved funds are intended to ensure there are funds available to cover refunds and disputes on an account. If a transaction gets refunded or disputed, its corresponding reserve will be released and used to cover the refund or dispute immediately. Reserve funds will be released in full at the end of the reserve period if they aren't needed to cover disputes or refunds.
## What are the different types of reserves and how do they work?
There are two different types of reserves: fixed and rolling. See our step-by-step guide for more information about how a reserve works.