Why Your Merchant Processor Is Holding Your Funds

Do you ever think of a world without merchant processors? It is almost impossible to run a business in this day and age without at least two merchant processors. Merchant processors are convenient since they facilitate easy transfer of funds whether you need to go big or small when doing business. PayPal, Stripe, Square, Merchant One, Helcim, and Flagship are just a few of the merchant services available.

When using a merchant processor, the last thing on your mind is holding. If you are wondering whether a merchant processor has the legal right to hold your account, the answer is yes! This can be frustrating since you cannot access the withheld money. The next question is, why would your merchant hold your funds? Below are the reasons why:  

Your Account Has Suspicious Activity

If your merchant processor feels your account has fraud-like or suspicious activity, your finances will be held. Since fraudsters are always looking for new ways to beat the system, it is up to the merchant processors to keep them at bay. This is why, even when you are running legitimate transactions, they may also be categorized as suspicious activity.

Breach In Agreement

Remember when you signed that you agree to the Merchant processor’s service agreement? Breaking the outlined rules and regulations is a violation that is not taken lightly by merchant processors. How would you breach the agreement?

  • By having excessive chargebacks.
  • Processing more than the agreed volume.
  • Using the account to receive payment of undisclosed goods.

How To Avoid Holding Funds Setback

When running larger volumes, contact your merchant processor before running the transaction to keep them in the loop. Most people forget or ignore alerting their bank providers only to contact them when their funds are held up. Do not become a victim.

Also, if there are any changes in your business, inform your merchant processor. Do not forget to disclose what products you are merchandizing as non-disclosure can lead to holding.