Payment reserve
Money set aside for a specific payment: the executing party receives it only after execution.
Payment reserve: a condition under which the payer’s money is set aside for a specific payment and does not pass to the executing party until the payment has been executed. In essence, it is the escrow principle applied to a payment through an agent. The idea is familiar from banking practice: an amount is blocked for a transaction but not yet debited in favor of the recipient.
Why this matters in a foreign trade payment
In the usual agency setup, the importer transfers roubles to the agent, and from that moment the money is with the agent. If the agent delays the payment, has its account blocked or refuses to execute the payment order, the client is left to demand the money back. This is the main risk of paying through an agent, especially a random agent from the market.
A reserve changes the order: the agent receives the money only after the payment to the supplier has been executed.
How a reserve differs from similar mechanisms
- Letter of credit: the bank pays the seller against shipping documents. This is a form of settlement with the supplier.
- Escrow and deposit arrangements: the same principle, the money waits until a condition is met. A reserve applies it to a payment through an agent, without a separate account at a depository bank.
- A reserve protects a different stretch: between the payer and the agent, while the payment is being executed.
What to watch for
If you are offered a reserve, clarify three things: who controls the money before execution, what counts as execution of the payment and what the agreement says in case the payment is not executed. The answers should be in the documents, not in correspondence.
VEDmost offers two payment schemes. The usual scheme has no reserve: the roubles are transferred to a company of our own network under the agency agreement, which sets the execution period. This is how regular clients pay. If you need a guarantee, on request the roubles wait in a special escrow account at a Russian bank and are released only upon execution, for an additional fee. More on the Payment protection page.
Request a quote
Describe the payment. We'll reply with a proposed route and terms. We name the agent in advance, and the rate and fee go into the payment order before your roubles are debited.