Synchronizing Stripe balance reserves

• Reserve transaction (Stripe Connect)
• Reserved funds
• Payout minimum balance hold and Payout minimum balance release
• How Minimum Balance Hold Works
• Releasing Minimum Balance
• Benefits of Minimum Balance Holds
• Payment network reserve hold and Payment network reserve release
• Payment Network Reserve Hold
• Payment Network Reserve Release
• How It Differs From Other Reserves
• Issuing authorization hold and Issuing authorization release
• 1. Authorization Hold and Release
• How does Synder work with these Balance reserve transaction types

There are several cases where Stripe withholds some of your balance from payouts for a while, and later releases it.

In your reports from Stripe you might see the following transaction types that are actually balance holds and releases:

• Reserve transaction
• Reserved funds
• Payout minimum balance hold and release
• Payment network reserve hold and release
• Issuing authorization hold and release

Below you will find a detailed explanation of each type and how Synder works with it.

Reserve transaction (Stripe Connect)

• Purpose: Reserve transactions are specific to Stripe Connect platforms and are used to manage negative balances on connected accounts. When a connected account’s balance becomes negative (e.g., due to refunds or chargebacks), Stripe creates a reserve transaction on the platform account to cover the shortfall.
• Mechanism:If the platform’s available balance is sufficient, Stripe deducts the necessary amount and moves it into a reserve. If the platform’s balance is insufficient, Stripe may initiate a bank debit from the platform’s linked bank account to fund the reserve.
• Release of Funds: When the connected account’s negative balance improves (e.g., through new charges), funds are released back to the platform’s available balance via another reserve transaction.
• Long-Term Negative Balances: If a connected account remains negative for more than 180 days, Stripe transfers funds from the reserve to zero out the negative balance permanently.

Reserved funds

• Purpose: Reserved funds are a portion of a business’s balance temporarily withheld by Stripe to cover potential risks such as refunds, chargebacks, or disputes. These funds act as a financial buffer to ensure liabilities can be met without impacting the business’s ability to operate.
• Use Case: Reserved funds are typically applied when Stripe determines that a business has an elevated risk profile (e.g., high refund or dispute rates, volatile transaction activity).
• Duration: The funds are held for a predetermined period (e.g., 30–180 days), after which they may be released if no liabilities arise during the holding period.
• Reporting: These transactions appear in the Stripe Dashboard under the “Reserve” section and are labeled as reserved_funds in balance transaction reports

Payout minimum balance hold and Payout minimum balance release

A Minimum Balance Hold and Release in Stripe is a feature that allows businesses to retain a specific amount of funds in their Stripe account to cover potential liabilities, such as refunds, disputes, or fees. This ensures financial stability and reduces the risk of insufficient funds for these purposes.

How Minimum Balance Hold Works

1. Setting a Minimum Balance:
2. Businesses can configure a minimum balance in the Stripe Dashboard under Payout Settings.
3. For example, if you set a minimum balance of €1,000 and your available balance is €5,000, Stripe will hold €1,000 and only pay out the remaining €4,000.
4. Automatic Retention:
5. Stripe automatically retains funds from incoming payments to maintain the set minimum balance.
6. If your balance falls below the set amount due to refunds or disputes, Stripe will replenish it using future payments.
7. Hold Amount Visibility:
8. The held amount is visible in your Stripe Dashboard as part of your account balance but is not included in payouts.

Releasing Minimum Balance

1. Adjusting or Disabling the Minimum Balance:
2. You can reduce or disable the minimum balance setting at any time through the Dashboard.
3. When you lower or remove the minimum balance requirement, Stripe releases the retained funds during the next payout cycle.
4. Release Transactions:
5. The release of funds appears as a transaction labeled payout_minimum_balance_release in your account activity.

Benefits of Minimum Balance Holds

• Helps ensure there are sufficient funds to cover potential liabilities like chargebacks and refunds.
• Provides businesses with better control over cash flow by reserving a safety net.
• Reduces the risk of negative balances or interruptions to operations caused by unexpected disputes.

Payment network reserve hold and Payment network reserve release

A Payment Network Reserve Hold and a Payment Network Reserve Release are mechanisms used by payment networks (e.g., Visa, Mastercard) to manage financial risks associated with transactions. These processes involve temporarily holding and later releasing funds as part of risk mitigation strategies.

Payment Network Reserve Hold

• Definition: A Payment Network Reserve Hold occurs when a payment network withholds a portion of funds from a transaction or a merchant’s balance. This is done to safeguard against potential risks such as chargebacks, fraud, or disputes.
• Purpose:
• To ensure there are sufficient funds available to cover liabilities that may arise from the transaction.
• To protect the payment network, the acquiring bank, and other stakeholders from financial losses.
• Duration: The hold period varies depending on the risk profile of the merchant, the nature of transactions, and the policies of the payment network. It may last anywhere from a few days to several months.
• Reporting in Stripe: In Stripe, these holds are categorized as payment_network_reserve_hold in balance transaction reports. They reflect funds withheld by the payment network for risk management purposes.

Payment Network Reserve Release

• Definition: A Payment Network Reserve Release occurs when the funds previously held in reserve by the payment network are returned to the merchant’s available balance after the hold period ends.
• Conditions for Release:
• The hold period has elapsed without any disputes, chargebacks, or other issues requiring use of the reserved funds.
• The merchant has met all compliance and risk-related conditions set by the payment network.
• Timing: Releases typically happen on a rolling basis or at a specified date, depending on the terms agreed upon between the payment processor and the merchant.
• Reporting in Stripe: These releases are categorized as payment_network_reserve_release in Stripe’s balance transaction reports. They indicate that withheld funds are now available for payout.

How It Differs From Other Reserves

Feature	Payment Network Reserve Hold/Release	Rolling Reserves (Processor-Level)
Entity Managing Funds	Payment network (e.g., Visa, Mastercard)	Payment processor (e.g., Stripe)
Purpose	Mitigate risks at the network level	Manage risks specific to merchants
Triggering Event	Risk factors tied to transactions	Merchant’s risk profile or chargeback history
Duration	Defined by payment network policies	Typically 30–180 days
Release Mechanism	Based on network rules and timelines	Rolling or fixed schedule

Issuing authorization hold and Issuing authorization release

Stripe Issuing provides tools to manage card-based transactions, including handling authorization holds, creating transactions, and managing disputes. Here’s a detailed overview of these processes:

An authorization hold temporarily reserves funds on an issued card when a purchase is initiated. Here’s how it works:

• Authorization Hold:
• When a cardholder makes a purchase, an authorization request is sent.
• Stripe checks the card’s balance, spending controls, and whether the card is active before approving or declining the request.
• If approved, the authorized amount is deducted from the issuing balance and held in reserve until it is captured or released.
• The hold ensures that funds are available for the transaction but are not yet transferred to the merchant.
• Release of Authorization Hold:
• If the authorization is not captured (e.g., the merchant does not finalize the transaction), the hold expires after a set period (usually 7 days for most merchants or up to 31 days for specific categories like hotels or car rentals).
• When this happens, Stripe releases the reserved funds back to the issuing balance. This is recorded as an issuing_authorization_release transaction.

Once the issuing authorization is captured, there is another transaction type – Issuing transaction – created, which Synder can also process and sync to your books. In fact, Synder is one of the few Stripe trusted partners that supports the Stripe Issuing flow.

How does Synder work with these Balance reserve transaction types

If you are on Per-Transaction mode, Synder will automatically create an asset account in your books, called Balance Reserve. You can change it in the settings, if needed. If you use Summary mode, there will be a new mapping line appearing on Mapping page, if Synder encounters such a transaction, it will synchronize it as:

• if the amount is negative: money out of your clearing account and money in to your Balance reserve account.
• if the amount is positive: money out of your Balance reserve account and money in to your clearing account.

The exact accounting entry that performs such a movement may vary across accounting integrations that you use with Synder. For instance:

Per-transaction sync mode:

Accounting integration	Accounting entity type
QuickBooks Online	Transfer (From and To accounts vary based on whether the transaction is positive or negative).
Xero	Invoice + payment for positive transactions (releases) Credit Note + Cash refund for negative transactions (holds)
QuickBooks Desktop	Transfer (From and To accounts vary based on whether the transaction is positive or negative).

Summary mode

Negative (hold) or positive (release)?	Debit	Credit
Negative	Asset account ‘Balance Reserve’	Clearing account
Positive	Clearing account	Asset account ‘Balance Reserve’