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By ActivityPay
# Rolling Reserves Explained: What Tour Operators Need to Know You just landed your biggest group booking of the season—thirty people for a multi-day rafting trip, deposits paid six months in advance
You just landed your biggest group booking of the season—thirty people for a multi-day rafting trip, deposits paid six months in advance. Then you check your bank account and discover your payment processor is holding back 10% of every transaction. For the next six months.
Welcome to rolling reserves, one of the most frustrating aspects of payment processing for adventure businesses. While your booking calendar fills up and you're collecting deposits for trips months away, a chunk of your revenue sits locked in a reserve account. That's money you need right now for guide payroll, equipment maintenance, and marketing for next season.
Understanding how rolling reserves work—and why they hit seasonal adventure businesses especially hard—can help you navigate this challenge and potentially negotiate better terms with your payment processor.
A rolling reserve is when your payment processor holds back a percentage of each transaction for a set period, typically 90 to 180 days. Think of it as a security deposit that refreshes with every transaction you process. If you process $10,000 in bookings today with a 10% rolling reserve held for 180 days, the processor keeps $1,000 until April next year.
Payment processors use rolling reserves to protect themselves against chargebacks and refunds. When a customer disputes a charge or cancels a booking, the processor needs funds available to return that money. Rather than coming after you for those funds, they hold reserves upfront.
For most retail businesses, this system works reasonably well. A coffee shop processes payments and delivers products immediately. Their chargeback window is relatively short and predictable.
But adventure tourism operates completely differently. You're taking deposits in January for trips happening in July. You're managing group bookings where one person pays for ten participants. Weather might force you to reschedule a climb, triggering partial refunds. Your entire business model revolves around advance bookings with significant time gaps between payment and experience delivery.
This mismatch creates serious cash flow problems when combined with rolling reserves.
Adventure tourism falls into what payment processors call "high-risk" categories. That label leads directly to more restrictive reserve requirements, often higher than standard retail businesses face.
Several factors drive this classification:
The time gap between payment and service delivery creates extended chargeback exposure. When someone books a zip line tour six months in advance, the chargeback window extends far beyond typical retail transactions. Payment processors see this extended exposure as increased risk.
Weather dependency and cancellations are built into adventure operations. A kayaking outfitter might need to cancel trips due to high winds or dangerous water conditions. While you handle these situations professionally with rescheduling and refunds, processors see increased transaction reversals compared to businesses with more predictable service delivery.
Seasonal revenue concentration means you might process 70% of your annual revenue during peak summer months. Processors worry about businesses that go quiet for extended periods, even when that pattern is completely normal for seasonal operations.
Group bookings with single payers create larger individual transactions. When a wedding party books a multi-day rafting trip for $15,000, that's a significantly larger transaction than most retail purchases. Larger transactions mean larger potential chargebacks.
These factors aren't about your business being risky in any meaningful way—they're about how traditional payment processing models struggle to accommodate the adventure tourism business model.
The timing of rolling reserves creates a vicious cycle for seasonal adventure businesses. Let's walk through how this plays out across a typical operating year.
During your peak booking period in spring and early summer, you're collecting deposits for trips happening throughout the season. But with a 10% rolling reserve held for 180 days, you're immediately losing access to thousands of dollars right when you need it most. This is when you're hiring seasonal guides, servicing equipment, restocking gear, and ramping up marketing.
By mid-season, you're delivering experiences and processing final payments. The reserve continues accumulating because you're at your highest transaction volume. Even as you're incurring your biggest operational expenses—payroll, insurance, permits, fuel—a growing chunk of your revenue sits untouchable.
When fall arrives and bookings slow down, the reserve finally starts releasing. You begin receiving funds that were held from spring bookings. But now your revenue is declining naturally with the season. You're getting back spring money in fall when you need it least.
Then winter hits. Revenue drops to nearly zero for many adventure businesses. Your reserve releases continue, which helps, but you're not processing enough new transactions to build reserves for next season. When spring returns and you need working capital to staff up and prepare for another season, you're starting the cycle again—processing deposits while reserves are held back from your newest transactions.
This misalignment between when reserves are held versus when they're released versus when you actually need working capital creates genuine hardship for seasonal operators trying to manage year-round expenses.
Not all reserves work exactly the same way. Understanding the different structures helps you evaluate processor agreements and potentially negotiate better terms.
Rolling reserves are the most common structure. A percentage of each transaction is held for a specific period, then released. As new transactions process, new reserves are held. This creates a constant "rolling" balance of held funds.
Upfront reserves require you to deposit a lump sum with the processor before you start processing payments. This might be $5,000 or $10,000 held indefinitely as long as you maintain the merchant account. While this locks up capital upfront, it doesn't drain a percentage from every transaction.
Capped reserves accumulate until reaching a predetermined maximum, then stop. For example, a processor might hold 10% of transactions until $20,000 is accumulated, then hold no additional reserves beyond that cap. Once established with a processor and demonstrating low chargeback rates, you might negotiate a capped structure.
Minimum reserves combine elements of other structures. The processor might hold 10% until reaching $15,000, then reduce to 5% for ongoing transactions. This acknowledges lower risk once you've established a track record.
The structure matters significantly for cash flow management. A 10% rolling reserve with a 90-day hold is considerably better than 15% held for 180 days, even if both are "rolling reserves."
Reserve requirements aren't always set in stone. Processors have flexibility, especially once you've established a relationship and track record. Several factors strengthen your negotiating position.
Documentation of your business practices matters more than you might think. If you have clear cancellation policies, weather reschedule procedures, and can show consistently low chargeback rates from previous years, bring this information to discussions with processors. Many adventure operators have excellent customer service and handle cancellations professionally—prove it with data.
Processing history gives you leverage. If you've been with a processor for a year or more with minimal chargebacks, you've demonstrated you're lower risk than their initial assessment suggested. Request a reserve review annually, presenting your chargeback data and processing volume.
Longer operating history helps establish credibility. A rafting company that's been operating for fifteen years with strong customer reviews and repeat business presents less risk than a startup, even in the same industry. Make sure processors understand your business tenure and stability.
Insurance and bonds can sometimes offset reserve requirements. If you carry substantial liability insurance and can demonstrate financial stability, processors may reduce reserves. Ask specifically whether proof of insurance or bonding affects reserve calculations.
Higher processing volumes often lead to better terms. If you're processing $500,000 or more annually, you're a more valuable merchant account. Processors may negotiate on reserves to keep your business, especially if you're considering switching providers.
While you work on optimizing reserve terms, you still need to operate effectively with reserves in place. Smart cash flow management becomes critical.
Build reserves into your financial planning from day one. If you know 10% of every transaction will be held for 180 days, factor that into your pricing and expense budgeting. Many adventure operators underprice their services, then discover reserves and processing fees make bookings unprofitable.
Maintain a larger cash cushion during shoulder seasons. Since reserves release during your slowest periods, having additional working capital available during peak season helps bridge the gap when you need funds most but reserves are being held.
Consider deposit structures that improve your cash position. Instead of taking small deposits far in advance, you might adjust your booking terms to collect larger deposits closer to the experience date. This reduces the time between when you receive funds and when you need them for operational expenses related to that booking.
Track reserve releases carefully so you know exactly when held funds become available. This helps with cash flow forecasting and prevents surprises when planning major expenses or investments.
Separate your payment processing across multiple accounts strategically. Some operators use one processor for advance deposits and another for final payments or point-of-sale transactions. This can provide more flexibility, though it adds complexity to reconciliation.
Understanding reserve terms before you commit to a payment processor prevents unpleasant surprises. Get clear answers to these questions in writing:
Pay particular attention to how the processor handles your business model specifically. A processor experienced with adventure tourism understands that advance bookings, weather cancellations, and seasonal patterns are normal—not warning signs. Generic processors often apply rigid risk models that don't account for industry-specific operational realities.
Sometimes reserve requirements create genuine business sustainability problems. If reserves are holding back so much capital that you can't cover operational expenses, make payroll, or maintain equipment safely, you need to address the situation directly.
Start by documenting the specific impact on your operations. Show your processor exactly how reserves are affecting your ability to operate safely and meet customer commitments. Many processors would rather adjust terms than have a merchant account fail entirely.
Explore alternative payment processing options built for activity-based businesses. Processors specializing in adventure tourism and seasonal operations often have more flexible reserve structures because they understand your business model isn't actually high-risk—it just doesn't fit traditional retail patterns.
Consider whether your chargeback rate or other metrics are driving excessive reserves. If chargebacks are higher than industry norms, addressing the root causes—unclear cancellation policies, communication gaps with customers, or operational issues—might be more important than negotiating reserve terms.
In extreme cases, you might need bridge financing or lines of credit to cover cash flow gaps created by reserves. While this adds cost, it's sometimes necessary during growth phases when reserves are scaling up with your transaction volume but your operational needs are scaling faster.
Rolling reserves represent one of the most challenging aspects of payment processing for adventure tourism operators. The mismatch between when reserves are held versus when they're released versus when you need working capital creates real operational challenges, especially for seasonal businesses.
Understanding how reserves work, why they're applied to adventure businesses, and how to negotiate better terms puts you in a stronger position. Whether you're evaluating a new payment processor or reviewing your existing agreement, knowing the right questions to ask and the leverage points you have makes a significant difference in the terms you receive.
The goal isn't to eliminate reserves entirely—they serve a legitimate purpose in the payment ecosystem. But with the right processor and terms that acknowledge your business model, reserves should be manageable, not crippling. Your payment processing should support your growth, not hold it back.
Rolling reserves are typically held for 90 to 180 days from each transaction. For example, if you process $10,000 today with a 10% reserve held for 180 days, the processor keeps $1,000 until six months later.
Tour operators are considered 'high-risk' due to the time gap between payment and service delivery, weather-dependent cancellations, seasonal revenue concentration, and larger group bookings. These factors create extended chargeback exposure that processors view as increased risk compared to businesses with immediate product delivery.
Yes, reserve requirements are often negotiable, especially with a proven track record. You can strengthen your position by documenting low chargeback rates, demonstrating long operating history, showing proof of insurance, and processing higher volumes annually.
Rolling reserves continuously hold a percentage of each transaction for a set period, creating an ongoing balance of held funds. Capped reserves accumulate only until reaching a predetermined maximum amount, then stop holding additional funds, which can significantly improve cash flow once the cap is reached.
Build reserves into your pricing and financial planning from the start, maintain a larger cash cushion during peak season, and consider adjusting deposit structures to collect larger amounts closer to the experience date. Track reserve releases carefully to forecast when held funds become available for operational expenses.