It is necessary to fund the reserve account for three reasons:
1. To cover any ACH reversals, including bank and ACH network fees, and any potential shortfalls that may result to cover purchases;
2. To cover any fraud from your cardholders; and
3. (Optional) To cover any rewards you plan to offer to cardholders.
Before going live, we will request that you deposit the following amounts in your reserve account:
Customers Deploying Non-Instant ACH Funding (Default)
By default, all companies are required to have cardholders wait for ACH transfers to clear before they can use money sent to the cards. This is called "Non-Instant ACH Funding." This clearing usually happens within 3-business days. There is still a 2-day window after the ACH clears for cardholders and/or the bank to kick back the ACH. This is not our rule, and we can't do anything to stop it.
Before going live, we require that you have only $1,000 in the reserve account to cover this 2-day risk window. We will monitor your program over the proceeding months for fraud and suspicious activity (e.g. frequent ACH reversals). If more money is required, you will receive a notice from our compliance team. We also reserve the right to close your program at your sole discretion if we see unusual activity.
If all goes well, the $1,000 should never be touched, and the money is yours to keep if you ever decide to leave Hydrogen.
Customers Using Instant ACH Funding (Transform Only)
Note: this paragraph applies to our Transform plan only, and all companies that want to use this feature must pass a compliance review. It is not mandatory that all Transform customers offer this.
More sophisticated companies can offer instant usage of cards when an ACH is sent by a cardholder. This means the cardholder will not have to wait 3-business days for the funds to clear to use the card. There is greater risk with this approach than the Non-Instant ACH Funding. You will effectively be maintaining your own ledger at the bank.
If you are approved for this feature, we require that you have at least 5-days of expected cardholder spending in the reserve account at all times. e.g. If you project $10,000 to be spent by your users in the next 5-days, you will be required to maintain this amount in the reserve account at all times.