Dynamic Reserve

Lithic's Dynamic Reserve option lets programs provide a full prepaid experience to their customers without tying up excess cash. Instead of requiring 100% of all prepaid deposits, the reserve required in your Security Account will move up and down with your need for user spend.

Dynamic Reserve enables you to:

Issue Cards: Easily issue prepaid cards to your users and precisely manage their spend.
Maximize cash by maintaining a balance in your Security Account that is consistent with the last 30 days of your user spend, rather than 100% of prepaid balances
Assess Fees and Clawback Balance: Recover funds from end-user cards as needed.
Automate Reserve Management: Lithic will automatically pull in funds via ACH if your Security Account is too low due to a spike in user spend

Funding your Security Account

In this configuration, you must maintain a sufficient balance in your Security Account, from which Lithic will collect funds to support network settlement. Lithic ensures that on any given date, network settlement does not exceed the available balance in your Security Account. In order to fund your Security Account, you have two options:

Debit Origination: Initiate a debit origination via the Payments endpoint (see Getting Started with ACH Payments). This will pull money from an external bank account into your Security Account.
Credit Receipt: Perform a credit receipt to push funds into the Security Account from an external source. The Security Account will be assigned a routing and account number, which you can retrieve via the Financial Accounts endpoint.

Determining Funding Requirements

Lithic's risk team will work closely with your program during onboarding to determine the exact multiple of user spend required in the dynamic reserve. Then, we'll configure your program for this during production setup.

Enabling Card Spend

Once your program is configured and your Security Account has been funded, you can start registering users and creating cards.

To load a card with value, you will create a Management Operation transaction. This transaction checks that both the Security Account balance and the details of your contract support extending additional on-the-book balance to your program. Specifically, the decision is based on (1) the agreed exposure cap and (2) the balances of the Security Account, Program Receivables Account, and the volume of unsettled spend. If approved, the transaction increases the balances for both the Card and the Program Receivables Account; otherwise, it will be decline

Sample Request:

{
	"category": "MANAGEMENT_DISBURSEMENT",
	"type": "DISBURSE",
	"memo": "Initial load",
	"effective_date": "2025-04-09",
	"amount": 10000,
	"financial_account_token": "{card_token}",
	"direction": "CREDIT"
}

Network Settlement

Several times per day, Lithic deducts funds from the Security Account to pay off the balance of the program receivables account, which reflects the gross transaction volume since the last settlement. These transactions are visible under the Book Transfers endpoint and are available via the book_transfer.created data stream. Note that only Lithic can initiate these transfers.

Meeting Your Funding Obligation

Lithic evaluates daily whether the Security Account is funded in accordance with your contractual requirements. If underfunded, Lithic will initiate a next-day debit origination for the difference between the current and required balances. These transactions are visible through the Payments endpoints and are tracked via the payment_transaction.created and payment_transaction.updated events.

Additional Resources

For further reference, please consult the following documentation: