With so many digital payment options, it’s hard to cater to customers who expect an Amazon-quality experience for offline purchases. Finding providers willing to work with high-risk companies can make things doubly difficult.
With a no-frills application system and instant digital payment processing platform, a Square merchant account seems like a great answer. That is, until you get that account deactivation email.
“Our account services team has reviewed your account and found a pattern of transactions associated with high-risk activity.”
It’s hard not to panic because, without that account, you can’t run your business. And you’re not alone. A quick Google search will show you hundreds of merchants that have had accounts deactivated by Square.
Why did this happen? How can it be fixed? Let’s walk you through the process.
Why Did Square Close My Account?
Before diving into the “whys” behind your account deactivation, you first need to understand how Square processes account applications.
Instead of the rigorous assessment most payment service providers (PSPs) use, Square takes merchants through a simple application process. The application, which asks a few basic questions about business type and activity and verifies identity, does not even require a credit check.
There is no underwriting or risk analysis, the process used to determine if a business qualifies as high-risk. Even if you declare your business type upfront, Square often does not screen for businesses on their restricted list beforehand. Which means that you won’t know that you’ve been classified as a liability until it’s too late.
Weeks, or even months after they’ve begun processing your customer transactions, Square’s fraud prevention team can flag your business as restricted. With no long-term contracts in place to protect you or fees paid for potential risk factors, Square has no recourse but to shut down your account until it has been assessed.
Aside from illegal activity and goods, Square’s restricted list includes:
- Buyers or membership clubs
- Subscription offers or services
- Internet/mail order/telephone order businesses
- Unauthorized multi-level marketing businesses
- Inbound or outbound telemarketers
- Betting and gambling businesses
- Adult entertainment oriented products or services
If you fall into one of these categories, you probably qualify as a high-risk merchant, a fact that Square’s application process did not catch before approving you. Other factors, like sudden upticks in processing volume, larger-than-average ticket size, or impending large transactions that Square was not aware might also contribute to account deactivation.
What Can I Expect?
If you received that dreaded deactivation email from Square, chances are one or more of these have already happened:
- Deactivated account with no warning
- Email notification warning you about potential high-risk activity
- Suspended payouts to your merchant bank account
- Holds on all funds in a Reserve account for 30-90 days
- Lack of access to customer support for explanations or solutions
Square often cuts off phone access with account deactivation and is notorious for letting emails go unanswered. Some merchants may never know what really happened.
What Do I Do Now?
It’s easy to wish you had read the terms more closely or considered reviews from other merchants before signing up, but that may not help when you are dealing with a deactivated Square merchant account.
The best solution is to look for a full-service payment solution provider that will work with your unique business needs. High-risk merchant accounts provide unique benefits that payment aggregators like Square, PayPal, and Stripe cannot.
You’ll also receive the revenues you’ve earned more rapidly, usually within 48 hours, which will help keep your business up and running while waiting for your frozen funds to be released.
A Square merchant account may have seemed like a great option at first, but as a high-risk company, you need a PSP that can make a fair upfront risk assessment and support your business, no matter what.
Rethinking Your Merchant Account With MerchACT
MerchACT specializes in high-risk payment processing for all sorts of industry sectors. We offer decades of domestic and international payments industry experience and expertise and a stellar industry reputation that sets us apart from our competitors.
We also leverage our industry relationships and payment processing expertise to offer consultative services and guidance tailored to your specific needs. Because we see merchant accounts as a win-win for PSPs and businesses, we consider our ecommerce merchant processing clients business partners, not account numbers.
MerchACT not only meets your current needs but also commits to ensuring that the payments solution you choose allows you to scale up for future growth.