Deposits maintain stability and manage exposure to losses
As an acquirer, Adyen holds full financial responsibility over incoming chargebacks. When customers exercise their right to a chargeback via a reversible payment method, Adyen deducts the related funds from the merchant’s payout.
However, if the merchant stops processing with Adyen or ceases its operations, Adyen may no longer be able to offset the chargeback with available funds (i.e. incoming funds and payables) which results in a potential loss for Adyen. To manage the exposure to financial losses, Adyen may hold a deposit.
Deposits are also useful to protect merchants from settlement uncertainties in case of extreme scenarios (e.g. COVID pandemic). By holding the necessary funds, we can maintain the stability of cash outflow rather than having to block payouts when there are unforeseen events.
The deposit calculation is based on the difference between the potential exposure and available coverage.
Exposure is a sum of estimated potential losses on your merchant account. This includes: Fulfillment exposure, Chargeback exposure and Refund exposure. Coverage is a sum of ways to cover these potential losses. This includes: Processing coverage (Pending balance and Payable Balance) and Securities coverage (Bank guarantee, Actual deposit and Accepted Risk).
Manage deposit level
The deposit is dynamic and changes over time depending on the coverage and exposure on each merchant account. Below you can see what you can do to manage your deposit level.
Unified Commerce solution: Adyen’s terminals can be implemented in addition to ecommerce offerings. Point-of-sale transactions have zero order fulfillment time and lower chargeback and refund rates. Managing fulfillment period: you can reduce the deposit by limiting the period between the time the transaction is processed and the fulfillment of the related goods or services. Managing chargeback rates: you can decrease exposure by limiting the number of chargebacks on the account. Supplying Adyen with a bank guarantee, or standby letter of credit in place of a deposit.
Tip: Learn when your deposit will be released after your Adyen account is closed.