Merchant Funds Withheld?

Global Handles Reserve Fund Disputes

At Global Legal Law Firm, we’ve specialized in electronic payments litigation since 2008, both locally and across the United States. Our law firm represents ISOs, processors, agents, credit card brands, and other entities throughout the electronic payments litigation process. Many clients come to us with issues regarding bank card processing and reserve funds, and we don’t recommend attempting to navigate such complexities without expert help. All kinds of organizations may need assistance with payment processing from traditional retailers to homeowner’s associations (HOA). If you’re experiencing problems with credit card payments to your business or HOA, let our expert attorneys help you set things right.

What is a reserve fund?

Simply put, a reserve fund is a kind of savings account, or another liquid asset, that an organization sets aside for a specific purpose. This may be done to pay known expenditures or to cover financial emergencies. How much money goes into a reserve fund will depend on its specific purpose and on a special assessment including financial forecasts. These assessments, also called reserve studies, are conducted by board members to analyze the financial and physical state of an organization. An HOA, for example, may use a reserve study to determine operating funds as well as the state of condominiums and other shared properties. An HOA could also use a reserve account to cover upgrades to amenities, major expenses like heavy maintenance, and anything else relating to the property.

Reserve funds come in two basic types for most businesses. These are revenue reserves and capital reserves. Revenue reserves are built using profits from the organization whereas capital reserves are set up to store income earned from non-traditional means. A capital reserve fund will generally finance replacement costs for capital losses.

Credit Card Reserves

Any type of business, including an HOA board, can set up a reserve fund for credit card payments. Most typical businesses these days accept cards, and an HOA may accept them as payment for HOA fees like dues. Any organization that accepts credit card payments needs to be protected in cases of chargebacks, and our law firm can help.

When a customer purchases an item or service via credit card, the credit card’s bank lends them the funds to cover the expenditure. The customer then has to pay the bank back for the purchase. This is simple enough, but there’s also the fact that your own merchant bank is issuing you credit for the purchase. If the customer chooses to dispute the purchase later, your organization may be left on the hook for the resulting chargeback. This is why it’s important to have a credit card reserve fund to cover such unexpected expenses if they arise. In fact, most merchant banks will require you to maintain reserve balances in order to protect themselves. This will usually be a rolling reserve at first (meaning you aren’t required to keep any certain amount in it), but if you’re deemed to be high-risk, your bank may require a minimum fund balance for your reserve account.

How Global Legal Can Help You

If you find yourself dealing with an unusual amount of chargebacks, being placed on high-risk lists, or are having any other issues with payments or reserve funds, our payment litigation experts can help. The first step is to help you with documentation. Ideally, you’ll have already been keeping organized records of your transactions and chargebacks. These charges can occur up to 180 days after the initial transaction, so it’s imperative to keep all receipts and other data up to date, especially since these charges can sometimes be quite large.

Naturally, our law firm will fight for you in the event of unjust charges. If it’s found that you do owe chargebacks, and your reserve fund doesn’t have enough money to cover them, we can help you get back on track as well. We’re available for free 15-minute consultations to figure out what you need and how we can start on a plan that works for you.


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