What to Do When Stripe Will No Longer Process Payments

For every business across every industry, a quality payment processor is a necessary tool for success. Stripe is a popular choice, especially for new businesses. Unfortunately, merchants commonly experience probation or termination of their Stripe account, as well as Stripe holding funds from said accounts. If your Stripe account happens to be one of the many affected by a freeze, termination, or Stripe holding funds, read on to find out what you can do to get your account back on track.  

Why Does Stripe Freeze or Shut Down Merchant Accounts?

If your Stripe account faces closure, you’ve likely been deemed an unauthorized or banned merchant, an eCommerce merchant requiring delivery verification, or a high-risk merchant. By default, Stripe refuses processing if you have an unauthorized business. This applies to businesses selling goods or services within the adult, gambling, cannabis, and other industries considered high risk. Meanwhile, eCommerce merchants may encounter termination until they verify their identity and address.

If Stripe labeled you as a high-risk merchant, below are common reasons why:

• Offering digital goods and services
• Belonging to an industry deemed high risk
• Operating internationally and/or accepting payments from various countries

Stripe can close your account without warning

Stripe’s reputation for terminating accounts without prior warning or explanation, as well as Stripe’s holding funds from these accounts, has led to its unfavorable reputation amongst merchants.

There are instances in which Stripe may give you a 30-day notice to dispute flags on your account. However, this is not a guarantee that your account will remain open. Because Stripe does not have the proper infrastructure to investigate disputes for every business type, it is reportedly typical for them to side against your business. 

How to Tell if Stripe Closed Your Account

Stripe informs merchants of their account’s termination via an automated message. This standardized notice provides no specific explanation as to why your account was closed. There is no course of action to reclaim your account, find out why your account was suspended, or reinstate payment processing for your business.

Stripe states that they respond to customers within 24 hours, but according to many complaints, this quick response time is unlikely.

How long does Stripe normally take to pay you?

In the case of Stripe holding funds from your terminated or frozen account, prompt action is necessary to avoid losing your funds. Immediately contact Stripe’s customer support to inquire about your account closure.

If Stripe remains unwilling to reinstate your account, contact any customers who may have been affected by the termination. This gives customers the opportunity to pay you through another payment processor. 

If you disagree with the reason behind your Stripe account’s termination, you may file an appeal. In the case of a failed appeal, contact a lawyer if you believe the action violates Stripe’s terms of use agreement.

In the meantime, quickly set up a partnership with another payment processor to continue your business operations as normal.

What if Stripe blacklists you?

If Stripe blacklists you, submit a blacklist removal request explaining the situation and/or details of your business. Keep in mind that your appeal may be denied. It is ultimately their choice to keep or remove your business’s blacklist status.

What is the MATCH List?

The Member Alert to Control High-Risk (MATCH) list refers to a list documenting high-risk businesses. It’s also referred to as a Terminated Merchant File (TMF). Businesses unfortunate enough to make this list are essentially blackballed by many financial institutions. Merchants belonging to the MATCH often face more difficulty in obtaining a merchant account or payment processor. However, merchant service providers specializing in high-risk industries can connect these merchants to financial institutions still willing to consider providing them with services. 

Termination of your Stripe account can lead to your placement on the MATCH list. Once your business joins this list, removal is difficult and may complicate the continued operations of your business.

List of Stripe Restricted Industries & Prohibited Businesses

Stripe’s services are unavailable to certain countries, industries, and businesses. The payment service provider has a long list of prohibited practices, business models, jurisdictions, and regulated industries. And any connection to their barred list may result in account termination, as well as Stripe holding funds from said account.

Generally, restricted industries and prohibited businesses are as follows:

Businesses:

• Illegal products and services
• Products and services infringing on intellectual property rights
• Products and services deemed unfair, predatory, or deceptive
• Adult content and related services
• Specific legal services
• Products or services related to firearms, explosives, and dangerous materials
• Gambling
• Marijuana
• Misuse of Stripe products

Industries:

• Financial products and services
• Those regulated by the government
• Pharmaceuticals and telemedicine
• Tobacco

Top Reasons Stripe Closed Your Account

The reason behind a frozen or terminated Stripe account usually falls under one of two scenarios.

The first scenario occurs when a customer claims they did not authorize a purchase from your business. This is further exasperated when multiple complaints appear within a short window of time.

The second scenario occurs when the financial institution processing payments terminates its partnership with your business. This termination often results from a high rate of chargebacks or a series of customer-issued complaints.

Too many chargebacks

Payment service providers, like Stripe, typically only partner with merchants who maintain a 0.2 percent to 0.3 percent chargeback ratio. A chargeback ratio is a metric through which financial institutions assess the risk level of businesses. When calculating your business’s chargeback ratio, entities will take into consideration the number of chargebacks and cash value amount of chargebacks.

If your business has a high chargeback ratio, financial institutions perceive it to be a high-risk business. Payment service providers avoid working with high-risk businesses as it strains their relationship with financial institutions.

Complaints from customers

The number of complaints against your business may be cause for a restricted or terminated account. Depending on your processing volume, Stripe may fast-track your account termination. In particular, many payment service providers feel the exposure of working with a high-risk business prone to customer complaints is not worth the reward of processing a low sales volume.

Reputation of bad business practices

Stripe evaluates the financial risk of partnering with a business based on the reputation of the industry to which it belongs and its owner. Additionally, a high chargeback ratio may indicate that a merchant is fraudulent. If that business were to close its Stripe account, those disputes don’t simply disappear. Stripe would be on the hook to cover any damages.

To avoid this undesirable situation, Stripe holds funds from a closed account to cover any applicable chargeback fees is a common practice.

Engaging in prohibited activities

Because account suspension, account termination, or Stripe holding funds can happen without warning, you may find yourself in a situation in which you’re suddenly unable to conduct your normal business operations. To save yourself from this situation, read the terms and conditions before signing up for a Stripe account. Stripe lays out exactly what businesses and industries they bar from their services. Make sure that your business does not breach any part of the contract. 

Even if you pass the approval process, Stripe may unexpectedly suspend or terminate your account at any time. Remember that Stripe has the right to suspend or freeze your account whenever they see fit. There is no requirement for Stripe to provide the details or reasoning behind their decision to terminate your account.

How Can You Start Accepting Payments After Your Stripe Account is Closed?

If your Stripe account is terminated or frozen, take immediate action to start processing payments again. Stripe will send an email notification asserting that you have 30 days to prove the activity resulting in your account termination is unfounded. In this case, you need to provide evidence that your transactions meet the terms of service agreed upon when you signed up for a Stripe account. 

If no agreement is met within the 30-day timeframe, Stripe will attempt to return any unused funds held in the account after deducting the associated fees. However, if complaints from customers continue, even following the provided evidence, Stripe may withhold your funds indefinitely.

Have a backup plan

If you are unable to regain access to your Stripe account, it’s time to consider a high-risk merchant account. Even if your Stripe account is still active, it’s a good idea to have a secondary payment processing option in mind. This way, you switch processors quickly in the event of a closed or frozen Stripe account. Remember that without a payment processor in place, you will be unable to accept any card or online payments from your customers.

Merchant service providers with experience servicing high-risk businesses are better equipped to deal with chargebacks, refunds, and fraud associated with high-risk industries. It’s best to opt for one of these companies or, at the very least, have one of these companies in your back pocket if you face Stripe account termination.

What To Do When Stripe Shuts Down Your Account: Closing Thoughts

The termination of your Stripe account often comes with no warning or details as to why it happened. Instead, you may receive one short email declaring the suspension of your account. Emailing Stripe’s customer support team may prove ineffective since they rarely reverse their termination decisions.

If your Stripe account faces forceful closure or withheld funds, consider setting up proper credit card processing with an experienced merchant account provider.