Reserve fund holds are devastating for cash flow. Whether Stripe is holding 10% or 100% of your revenue for 90, 180, or more days — you have legal options to demand release of your money.
Stripe can hold a portion of your funds in "reserve" as protection against chargebacks and refunds. But there are legal limits to how long they can hold your money.
A reserve is when Stripe withholds a percentage of your transactions (typically 5-30%) or a fixed dollar amount from your payouts. They claim this protects against future chargebacks, refunds, and disputes.
The problem? Many merchants find their reserves growing with no clear path to release — essentially an interest-free loan to Stripe using YOUR money.
Stripe uses several reserve structures:
Reserve hold periods vary dramatically:
The most problematic are "indefinite" holds where Stripe provides no release timeline. I've seen merchants with funds locked for over a year with no explanation.
Stripe imposes reserves for several reasons:
Stripe is a California money transmitter. That means they're subject to California Financial Code requirements that limit how long they can hold your funds.
Stripe, Inc. is licensed as a money transmitter in California (and most other states). As a money transmitter, they're subject to specific regulations about how they handle customer funds.
Under California Financial Code Division 1.2, money transmitters must transmit funds within a reasonable time and cannot hold customer funds indefinitely without proper justification.
Here's something most merchants don't realize: Stripe is earning interest on YOUR money while it sits in reserve. They invest these funds and keep all the returns.
For large reserves held over extended periods, you may have a claim for interest on your held funds. At current rates, a $100,000 reserve held for one year could accrue $5,000+ in interest that Stripe keeps.
Important: The longer Stripe holds your funds without clear justification, the stronger your legal position becomes. Document everything and keep records of all communications.
Answer these questions to generate a professional demand letter tailored to your specific reserve hold situation.
All information is kept confidential and used only to generate your letter.
The generated letter is professionally structured to maximize pressure for fund release while citing relevant legal authority.
Clear demand for release of all funds held beyond the original stated period. Specifies exact amount and timeline for compliance.
Demands itemized accounting of all held funds, including dates, transaction IDs, and specific basis for each hold.
References relevant sections of CA Financial Code governing money transmitters and customer fund protections.
For extended holds, includes demand for interest earned on held funds at prevailing commercial rates.
Sets firm 10-day deadline for substantive response and compliance, creating urgency for resolution.
Outlines next steps including DFPI complaint, small claims court, or civil litigation if demand is not satisfied.
See how much interest Stripe may owe you on held funds.
Based on 10% annual rate (California legal rate)
From DIY to full-service reserve recovery. All options help you fight for your funds.
My Trading Technology Legal Hub covers money transmitter licensing, FinCEN registration, and regulatory compliance for payment processors and trading platforms.
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