What Is Holdback?

Both lendsaas and mcarocket define holdback the same way: the percentage of daily or weekly card or ACH receipts withheld to satisfy payback, and both note it's a synonym for split or remit rate, the same mechanic described from a slightly different angle in this glossary's ACH vs. split entry.

Holdback is one of two remittance structures in this market. The other is a fixed daily ACH debit, a set dollar amount pulled on schedule regardless of that day's sales, and lendsaas's own glossary notes the fixed ACH debit is the more common structure in practice, with percentage-based holdback as the alternative.

The reason a percentage structure exists at all is that it's supposed to track actual sales rather than staying flat. lendsaas's glossary also defines a true-up as the periodic adjustment made when remittances deviate from the agreed percentage of actual sales, the mechanism that reconciles a holdback back to the deal's intended structure when the two drift apart.