What is a merchant deposit for?

A merchant deposit is a sum of money that a business places with a payment processor or financial institution to secure its payment processing services. This deposit serves as a form of collateral against potential chargebacks, fraud, or other financial risks associated with credit card transactions. It can help ensure that the processor can cover any losses that may arise from customer disputes or non-payment. The deposit may be refundable after a certain period or based on the merchant's transaction history and risk profile.