Square Deactivated My Account: Why is Square Holding My Money?

Like any payments tool that offers solutions for accepting credit cards, Square occasionally deactivates user accounts. Of course, Square is a major player in its field. Its software can generate sales reports, manage inventory, and provide analytics compatible with your business. Instead of charging monthly fees, Square charges a per-transaction processing fee, which is a plus for certain small businesses.

If you ever join the Square Deactivated My Account club, you’ll find that Square’s customer service is limited in certain ways. We’re here to help! Below, we explain what to do if Square suspends your transfers or deactivates your account and how a high-risk merchant account can present a viable working alternative.

Why is Square Holding My Money?

There are several reasons why Square may have suspended your deposits. Some of these reasons can be ameliorated with a quick fix; others are more innately complex.

Below are two of the most common reasons for Square suspending a transfer.

1. Your bank isn’t verified, or you provided false or misleading information during registration. Square does not work with unverified banks, and requires that all merchants using its services provide the most accurate, up-to-date information possible. Similarly, if you’ve attempted to link an unsupported source, you’ll receive an error message instructing you to link a supported card.
2. After processing fees, your current request is below the minimum or above the maximum transfer amount. The minimum amount for instant transfers is $25, while the maximum is $10,000. Square doesn’t allow same-day transfers for anything under $25 or over $10,000 (after processing fees). Additionally, if you’re a new seller, you start with a limit of one instant transfer per day of up to $2,000. Your daily transfer limit will increase as you continue using Square.

Sometimes, Square can shut you down and freeze your funds for no apparent reason. For obvious reasons, this presents a considerable roadblock for business owners.

To understand how long Square may hold your money, you must first understand chargebacks. When customers purchase a product or service, they have a time limit for disputing the charge and filing the chargeback with their credit card issuer. The card network and issuing banks establish this time limit, which varies on a case-by-case basis.

However, most issuing banks give their cardholders up to twice that length of time to dispute a charge. ^[1] Chargeback Gurus. “Don’t Run Out the Clock: Understanding Chargeback Time Limits“. Accessed April 7, 2022. If the charge relates to a good or service that will be delivered in the future, such as a concert ticket, the clock starts from the original concert date, not the date of the original ticket purchase.

In other words, Square is not holding on to your money for petty or punitive reasons. Instead, they are simply waiting for that chargeback liability period to expire, so they are not responsible for the funds in question. If those chargebacks roll through post-account closure, they will be withdrawn from your Square balance to repay the customers. If your consumers don’t file disputes during that allotted timeframe, you can expect to receive your money back.

Reasons Your Square Account Was Deactivated

Square reserves the right to deactivate any account it deems high-risk, as they may for any of the following reasons:

Square may choose to deactivate your account in the instance of too many recorded disputes. However, Square’s website does not go into detail as far as what constitutes a higher-than-normal chargeback volume. If you use Square without any awareness of what constitutes the excess chargeback threshold, Square may choose to suspend or deactivate your account.

Nearly every company has terms of service comprised of policies that users must follow. Users can find Square’s terms of service on its website, and the platform reserves the right to deactivate any account violating its established terms.

It’s no secret that being hit with the term “high-risk” is a professional liability. After all, some folks simply will not do business with you if you fit the high-risk criteria. If Square deactivated your account, it might be because you’re selling goods or services prohibited by Square or because you’re engaging in one or more high-risk activities, such as:

High-Risk Transactions That Put Your Square Account Under Review

If Square decides that your business engages in excessive high-risk transactions, your account may be placed under review or even deactivated. Additionally, Square reserves its right to notify law enforcement agencies if you violate state or federal law.

Below, we will outline the types of businesses restricted or prohibited from using Square.

Most companies won’t do business with you if you sell unlawful, controlled, or regulated products. Similarly, firearms, ammunition, and weapons of any kind fall under the category of high-risk by Square, as do drugs and paraphernalia (this includes businesses selling CBD products with Square). Square is also one of the strictest companies when it comes to pharmaceutical sales.

Square also places restrictions on in-person sales of tobacco and alcohol, plus any sales related to escort services, adult books, or hate-based ideology.

Square maintains hard and fast restrictions regarding insurance or security-related products and services, including:

• Credit and debit cards
• Loans or traveler’s checks
• Currency exchange
• Money processing
• Stocks and trading

Square considers products that encourage hate, discrimination-based violence, or racial intolerance to be morally questionable. Businesses selling or promoting morally questionable products and services cannot utilize Square or its services.

Square also prohibits the sale of adult entertainment products or services in any medium, including the telephone, internet, or printed materials.

Square won’t work with businesses providing services that require licensing, as it considers these merchants at a higher risk for customer complaints. Suppose your account gets placed under review or, worse, deactivated. In that case, Square may contend that your company is engaged in sales that require licensing, such as sales of lottery tickets, betting, casino gaming chips, or fantasy football.

Square chooses not to work with non-profit organizations. If your company enjoys non-profit status, Square will review your status and possibly deactivate your account.

How to Reactivate My Square Account

As mentioned, Square reserves the right to close your account without warning. For better or worse, this is just an unavoidable component of using the Square platform.

However, in this specific circumstance, they must notify the user via email. Users may request reactivation by contacting customer service and submitting a complaint. If you’re lucky, Square will acknowledge receipt of your complaint within five business days. A final response will be provided within thirty working days.

Following this, you will receive an explanation of the outcome and how Square came to its conclusion. You’ll also obtain further information on escalating your complaint if you wish to dispute the result.

Are There Better Options?

The short answer is yes, depending on your circumstances and the specific details of your business. Payment service providers such as Square, PayPal, and Stripe remain popular choices precisely because they make it easy for users to get a leg up in their industry of choice.

Such ease, however, comes at a cost, as these services may or may not suit each company’s specific needs. Additionally, certain options, like Stripe, tend to approve merchants immediately, only to review their application after the fact. This means you may begin processing payments with a PSP, only to later have your account deactivated because they’ve finally reviewed your application.

Square Holding Your Funds? Final Thoughts

While you may be excited to start accepting payments for your business as quickly as possible, doing so with a payment service provider like Square may not be the best option. A more strategic approach would involve obtaining a high-risk merchant account as soon as possible.

By acquiring a high-risk merchant account with PaymentCloud, you’ll receive individualized services tailored to your business. You’ll also enjoy peace of mind knowing your application approval is imminent and your account has been underwritten before processing a single payment.

PaymentCloud is also proud to provide you, the merchant, with a dedicated representative who will advocate for you in any circumstances. While acquiring a merchant account can be a lengthy process, you’ll never find yourself months into doing business only to have your transfers suspended and your account deactivated. Kickstart your processing capabilities and start accepting credit card payments today!

All Businesses Deserve a Chance? We can approve almost any business type.

Open a merchant account today!