[dangrossman]

It's neither weird nor unexpected. Reserve accounts are a decades-old tool of the credit card processing industry for approving new or unusual businesses.

The bank is taking a considerable risk: whatever the merchant's expected transaction volume is, the bank could be on the hook for up to 6 months worth if that business were to go bankrupt or otherwise disappear without fulfilling its obligations to customers. They would all charge back their payments, and with the merchant gone, the bank underwriting the merchant account is on the hook for all that money. If they start out at $10k a month in revenue, that's $60k in risk for the bank.

If a company has no track record, poor or no credit, or a business model that doesn't fit well into a known risk model, the bank can mitigate the risk that it'll lose money by establishing a reserve account. It might be a fixed reserve (i.e. $3000 for a new company with low expected initial volume), or a rolling reserve (i.e. holding back 15% of your gross sales up to some limit for an existing account that has seen a jump in its chargeback rate).

The alternative is to deny the application altogether. Now, a bit of speculation... Stripe, PayPal Pro and other 3rd-party processors that act like first-party processors are able to take more risks (like letting you start taking payments right away without a formal application and underwriting) because they've negotiated permission with their underwriting bank to process payments on behalf of their customers with only one or a few real merchant accounts. By pooling many customers on one account, and charging a premium on the fees, they can absorb more losses and even handle merchants with >1% chargeback rates without the underlying merchant account reaching those risk barriers, which is all Visa/MasterCard/Amex care about... as long as on average, their customers are running legitimate, healthy businesses.