Rolling Reserves, Stalled Growth: How We Built the Case Against Shopify

Malahobrand approached our team in late 2024 with a serious operational bottleneck. After a promising launch in July 2024 and generating over $597,000 in revenue within four months, the company faced a significant liquidity crisis when Shopify Payments imposed a 15% rolling reserve on all payouts for 90 days.

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This reserve structure froze critical cash flow and created friction in sustaining ad campaigns, fulfilling orders, and investing in growth initiatives. The merchant had not yet engaged Shopify on the issue and sought strategic support for both reserve reduction and diversification of its payment infrastructure.

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Initial Risk Indicators

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• Shopify held £57,609.85, limiting access to funds needed for operations.

• The merchant had no alternate processors beyond Shopify and PayPal.

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There was no formal documentation submitted to Shopify outlining dispute mitigation efforts, supply chain reliability, or risk protocols.

Our Approach

We executed a multi-pronged 30-day intervention focused on financial relief, infrastructure strengthening, and long-term risk reduction.

Key Actions Taken:

1. Risk Assessment & Advocacy Report
We prepared and submitted a detailed risk analysis to Shopify, which included:

• Performance metrics: 0.05% chargeback rate, 1.67% refund rate, and 0.00% PayPal dispute rate

• Fulfillment audit and dispute resolution systems (Disputifier in use)

• Business process validation and customer-centric refund policies

• Chargeback event timelines showing most disputes occur within 27 days of order
   

2. Direct Advocacy with Shopify Payments
We negotiated directly with Shopify Risk and Trust & Safety teams to:

• Secure release of £37,795.69 from the reserve pool
  Adjust future reserves to £25,000 fixed and 10% rolling for 90 days

• Initiate a re-evaluation of reserve terms upon meeting a <1% chargeback threshold by Feb 27, 2025
   

3. Processor Diversification Strategy
We advised and implemented additional payment service providers suited to high-volume DTC merchants, reducing Shopify dependency and providing more flexible payout schedules.

4. Operational Resilience Enhancements

• Validated supplier contract and SLA documentation

• Strengthened order tracking and delivery visibility (17track integration)

• Supported customer experience initiatives: U.S. return hub and faster refund processing

Outcome