How to Make Your Payment Processor Release Your Money

Every Business Owner’s Worst Nightmare

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Have Your Funds Been Held?

Nothing brings your business to a screeching halt like finding out that your merchant account has been frozen, deactivated, or placed under review. It’s a shockingly common event in the credit card processing industry, and it can happen to anyone at any time. If you’ve experienced a fund hold before, then you know how frustrating it can be to get a straight answer from your processor. If this is your first time, then you probably have a lot of questions without any satisfying answers.

Why They’re Holding Your Money

Processors almost always hold your funds to protect themselves from risk. You may not know this, but your provider usually pays you before it officially receives your customer’s money from your customer’s bank. If it suspects that the customer’s bank will not process the transaction for some reason, then it will hold off on giving you your money to avoid eating the cost of the failed transaction. On very rare occasions, a processor might also experience a temporary interruption in its own banking relationships and freeze all payments until this interruption is sorted out. For a full breakdown of reasons why your processor might hold your money, see our article on Why Credit Card Processors Hold Funds.

 

How to Make Them Hand It Over

Your Contract Is the Culprit

Your processor probably never warned you that they could lock your account like this. That’s because you would have thought twice about getting a merchant account if you understood the risk involved. The unfortunate truth about fund holding is that whether or not you knew about it, you have already agreed to it.

For instance, see this section from Square‘s Terms of Use:

We may withhold funds by temporarily suspending or delaying payouts of Proceeds to you and/or designate an amount of funds that you must maintain in your Square Accounts or in a separate reserve account (a “Reserve”) to secure the performance of your obligations under any agreement between you and Square. We may require a Reserve for any reason related to your use of the Services. The Reserve will be in an amount as reasonably determined by us to cover potential losses to Square. The Reserve may be raised, reduced or removed at any time by Square, in its sole discretion, based on your payment history, a credit review, the amount of any arbitration award or court judgment against you in Square’s favor, or otherwise as Square or its processor may determine or require. If you do not have sufficient funds in your Reserve, we may fund the Reserve from any funding source associated with your Square Accounts, including any funds (a) deposited by you, (b) due to you, or (c) available in your bank account, or other payment instrument registered with us.

And this from PayPal‘s Terms of Use:

We may place a hold on payments sent to your PayPal account if, in our sole discretion, we believe that there may be a high level of risk associated with you, your PayPal account, or your transactions or that placing such a hold is necessary to comply with state or federal regulatory requirements. We make decisions about whether to place a payment hold based on a number of factors, including information available to us from both internal sources and third parties. When we place a hold on a payment, the funds will appear in your PayPal account with an indication that they are unavailable or pending. We’ll notify you, either through your PayPal account or directly by phone or email, whenever we place a hold.

And this from First Data‘s standard Program Guide:

You expressly authorize us to establish a Reserve Account pursuant to the terms and conditions set forth in this Section 25. The amount of such Reserve Account shall be set by us, in our sole discretion, based upon your processing history and the potential risk of loss to us as we may determine from time to time.

If you check your merchant account contract, you’ll probably discover that only one side’s discretion is taken into account in this situation, and it isn’t yours.

Be Proactive

That doesn’t mean you’re powerless. The first thing you need to do is find out why the hold occurred and then do what it takes to fix the issue as soon as possible.

Reverse Any Chargebacks

It is very likely that a chargeback is the reason why your money was held up. A chargeback occurs when one of your customers notifies their bank that they did not consent to a transaction. The chargeback resolution process is heavily weighted in favor of customers because credit card fraud is extremely prevalent, but you can overturn chargebacks if you respond to them quickly. Follow the rules for successfully disputing a chargeback through Visa and MasterCard and be sure to submit all paperwork in a timely fashion. If you can challenge the chargeback and win the dispute, your processor might be willing to release the rest of your money.

Identify Any Possible Rules Violations

If a chargeback didn’t prompt the hold, then it’s possible that you have violated your processor’s terms and conditions. Common violations include selling or advertising unauthorized products, misrepresenting your business type, or processing a transaction amount in excess of your account’s limits. You may be in violation of your contract without even knowing it, which is why it’s important to get in touch with your provider so that you can correct the issue as soon as possible. The longer you wait to bring yourself into compliance, the less trustworthy you will appear to be.

Be Cooperative

The last thing you probably want to do is have a polite chat with the people who have confiscated your money. However, calm communication and immediate compliance will go a long way toward convincing them to release your funds. Be sure to complete and submit all requested paperwork on time. Go out of your way to ask if you can provide more documentation to support your claim. In general, be as transparent and open as possible. You can report your provider and cancel your contract after you get your money back. Until then, you need to win their trust, no matter how annoying it might seem.

If Necessary, Be Aggressive

Let’s be realistic: even if you follow all of the rules and provide total transparency, your processor still might not play ball. And as your contract clearly indicates, they aren’t required to work on your timetable. That’s when your last resort might come into play: legal action. Hiring a lawyer is a long shot, and it can be a very expensive undertaking, but it might be your only option left.

Two Can Play the Contract Game

Contracts are designed to protect both parties in a business relationship. If you can prove that your provider has not held up its end of the deal, then you may be able to invalidate the agreement that gives it the right to control your funds. Look for anything that might constitute a breach of contract, such as rate increases, altered contract language, and written offers that were not upheld. Get company representatives to acknowledge your evidence in an email if possible. Remember, you don’t need to have an ironclad case that is sure to win. You just need to have a strong enough case that your provider would rather release your money than deal with arbitration or a possible lawsuit.

Be Prepared to Follow Through

Your processor has its own legal department and will likely not flinch if you threaten a lawsuit. That’s why you need to be ready to put your money where your mouth is. Before you mention anything to your processor about legal action, be sure that you’ve found a lawyer who is willing to represent you for a reasonable rate. Ultimately, a good lawyer may cost you more than the full amount of your withheld funds, so this path may not be worth it. This is true regardless of whether you are forced into arbitration or you file a lawsuit. If it doesn’t make financial sense to get a lawyer involved, then you might as well wait the 180 days for your money to be released and then move on.

 

Sometimes the Underdog Wins

Make no mistake: you do not have the upper hand in this situation. However, you can force your payment processor to release your money if you play your cards right. By taking proactive measures and diligently documenting your efforts, you will remove any cause for the hold on their end. If they continue to hold your funds without justification, you can take a more hostile approach. It’s not impossible. You can win this. You just need to be patient, persistent, and a little bit lucky.

If you are concerned about having your funds withheld by a future processor, you should consider working with a top-rated merchant account provider or a high risk specialist.


Have you recovered your held funds from a payment processor? Tell us how in the comment section below:

Thank you for reading my review. I hope that it has helped you with your research.

Why I'm Qualified to Write About Credit Card Processing and Merchant Account Services

I'm a former credit card processing sales director who left the industry because I didn't like how it takes advantage of small business owners. It feeds like a leech on businesses and thrives by imposing fees that are nearly impossible to comprehend. Seeing a need for change, I left and built this website help business owners better understand the industry, research merchant services providers, and get refunds of excessive merchant account fees. My experience of working "behind the curtain" in the industry, and using that knowledge for good, has resulted in millions of dollars returned to hard-working small business owners as well as enterprise-level companies.

From the time that I starting working in the merchant services industry to when I left to create this website, I've been on the pulse of payments for nearly 15 years. It didn't seem fair to keep this "insider" knowledge to myself. To lift the fog, I've reviewed hundreds of companies, read thousands of user reviews, and learned the pricing tricks of every provider. If you have questions about credit card processing, you can find the answers on this website.

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12 Reviews Leave Your Review Below

  1. Ksimone says:

    I had $1300 in my square account to purchase supplies and square deactivated my account. I had to do a refund for one of my clients of $278 and square pulled it directly out of my personal account linked to the square account rather then from the $1300 that $278 is part of. This makes no sense. They are holding up my business because I can no longer get the supplies I needed to complete an order and I can’t do refunds of any money since it’s tied up in some 90 day bullshit. I am beyond livid at this point.

  2. MIGUEL MARTINEZ says:

    SHOPIFY DID THE SAME THING. STAY AWAY. STILL WAITING FOR FUNDS TO BE DEPOSITED IN MY ACCOUNT.

  3. Gail G says:

    I sold a boat through eBay, and it was sold as “local pick up” only. I have my customer the option of paying through PayPal or on sight. He chose to pay on sight. After receiving, what he called “repeated”, emails reminding him to pay, he paid through PayPal. I did not send him any payment reminders. Still no problem…. I thought. He picked his boat up and paid during the last week of June. Now, PayPal is holding my funds until, “tracking info confirms delivery, the buyer personally verifies delivery to PayPal, or July 18”, which is 21 days from the date he picked up his boat. I emailed him and asked him to verify to eBay that it was a successful transaction and that his item was as described. He did that because that’s what I was told to do in the beginning. eBay released their hold so I thought great! No, not great. Now PayPal says because I normally sell coins, and this time it was a boat, they, PayPal, has determined it was an “unusual transaction”so PayPal placed a hold on my funds. So eBay sends PayPal an email on my behalf saying all is well here and she received a positive feedback the customer is happy please release her funds within 24 hours. 24 hours later, still held, so I call again, now I’m told call PayPal and explain your situation and tell them my name is #### and they can 3-way call me here at eBay and I will verify your info. So I did that, PayPal rep says, “we did receive from eBay that your sale was successful and customer is happy, however, your funds were placed on hold by our system, and we can’t manually release your funds because we don’t have a button for that option”. Really? The system did it and you don’t have a button? Ok can I speak with a supervisor please, I asked. I was told the supervisor would only tell me the same, I said ok fine, let them tell me please. I was placed on hold 37 minutes then disconnected. Three times over the past week I’ve called and same thing, I ask for a supervisor, I’m told supervisor will say the same, and all three times placed on hold until I’m home up on. Least wait to be hung up on was 29 minutes I think it was, and longest wait was 49 minutes. PayPal says now, the only person who can release the funds is the buyer or delivery confirmation. And supposedly they have sent an email to the buyer every time I’ve called them. I finally reached the buyer today who has been, guess where, yes on vacation with the new boat. The buyer tells me the only thing he got was one email that said he didn’t need to do anything else. So I said no problem maybe I can get them to resend. So I called again today, they said they resent him an email saying log into your account, click on my transaction and then click release payment. I’ve never heard of that but ok, the buyer says he didn’t get another email. I say no problem, they just said log into your PayPal and click on our transaction, see if you see an option that says release payment. He emails me back and says PayPal won’t let him log in now at all and he thinks he has been locked out. And that’s where I am now. Buyer is happy, eBay is happy, PayPal has their fee and are earning interest of my money so they are happy, the only person who isn’t happy is me, the person paying ALL fees associated with the sale, and The person paying PayPal to basically hold my money almost a month, if they even release it on the 18th. I’m beside myself.


    This post will help: How to Make Your Payment Processor Release Your Money

    -Phillip

  4. Sue Hood says:

    Opened an account with Square and deposited almost $5,500.00 using my customer cc information provided. Square deactivated my account and deleted my customer code so I no longer have access to phone support. No reason given. After one week, they advised our funds would be held for 90 days


    This post will help: How to Contact Square

    -Phillip

    1. They did the same thing to me. I charged a credit card for 10,000 dollars, prior to making the account I asked them if its okay that I charge a credit card 10,000 and they said “yeah that’s fine” 5 minutes prior to them deactivating my account without any explanation, I called them ti make sure my account was okay and when I will be getting my money, they said in the next hour, then they send me an email that my account has been deactivated and we will be holding your money for 4 months, meanwhile the driver for my company already shipped the clients cars and he is demanding his money. square up did not care, they just kept telling me that there is no way that we can reinstate your account, Dear Squareup, I don’t give a flying shit about the account, I want my money!!

    2. Kimberly says:

      Did you ever receive your deposit?

  5. Garry says:

    I started using Stripe for cc payments. I got all setup and they gave me the green light to accept payments and send invoices. I got a $10 payment and the next one was for $7800. Now after being encouraged by Stripe to start accepting payments as soon as its time to payout for the second amount there is a review on my account. The payment is legit from a well established company that’s been in business for 40+ years, they are easy to find and contact, there’s no dispute, nothing bad about the transaction. I ship the items before invoicing him so there was no risk on his behalf. I feel like they lured me to get a balance by telling me to go ahead and everything’s good just so they could put a hold on the money for their own money making investment greed. Don’t you think it would be in their best interest to review and approve everything about their clients before they allow them access to their services? That’s what makes me think something else is going on. They have it setup to purposely put a hold on your account and freeze your money so they can invest it and make a profit as long as they can. That’s why there is a part in there terms and conditions that states I’m not entitled to any of the interest profits from my money they hold. This is deceit. It shouldn’t be legal but wouldn’t surprise me in the US.


    This post will help: Why Credit Card Processors Hold Funds

    -Phillip

  6. Urszula says:

    Stripe is holding my 8000 euros without any explanations! After one year of processing small transactions in a small e-shop, one client made bigger order and – guess! – this is when I received information and account is CLOSED and my money TAKEN for ¨possible dispute”. WHAT?? I cannot make the order, I lost the client, I face being sued by him obviously.
    I wish I had read the comments and never started the cooperations with this STEALING company again. Please help,what can I do now??


    This post will help: Best Merchant Accounts for E-Commerce

    -Phillip

  7. Oscar Mairs says:

    Stripe has withheld $5000 of my money for over a month because they simply required additional verification. I have not heard from them since providing that identity verification. This business is a scam, avoid it all costs.

    This post will help: How to Make Your Payment Processor Release Your Money

    -Phillip

  8. Jill says:

    I’m a consumer I sold the laptop for $700 he got it he had pictures of the transaction postal marks $700 and it still being held then they made me go and get by $100 Google Play put that on there then sent me to security and security tried telling me that I had to go buy a $500 Google Play in order to get my $800 back but it also said that my $500 Google Play would also be refunded as well I said that’s bullshit and I’m gonna turn into the Better Business Bureau I hung up on him they’ve held my money now over a month
    I need help. Please
    Jill

    From The Editor
    This Post Might Help: Watch Out For These Square Customer Support Scams

  9. I’m very disappointed with Stripe now.
     Because we couldn’t solve the payment issue.
    Stripe didn’t refund my client’s nearly $50000.00. Has been kept in Strip company without return back or transfer to our company account for more than 2months.
    No response , no result. Endless delay.

    This has caused me lots of troubles and complains from client. Will ruin my business.
    We’ve kept sending emails to them.All automatically responds with seriously answers.


    From The Editor
    This Post Might Help: How to Make Your Payment Processor Release Your Money

    1. Stripe is holding 10.000 GBP to their account for no reason. They have accepted the account and agreed to the payments latest 3 payments, cumulating the amount above , they kept the money for 2 weeks ( for security reason ) everything was ready, today was the payout date for the first amount, tomorrow for the second and the day after tomorrow the payout for the third amount. and guess what . STRIPE HAS FREEZE THE FUNDS , telling they will refund the customers ( no complaint or chargeback is in progress , neither the customers are aware about this ); they have freeze the funds and ALSO SEND US AN INVOICE FOR THEIR PROCESSING FEE ( 300 GBP ) WHICH THEY HAVE TAKEN FROM OUR CUSTOMERS MONEY. THIS COMPANY IS BS . WE WILL TRY WITH FINANCIAL OMBUDSMAN IN LONDON TO SEE WHAT CAN WE DO . DO NOT SIGNUP WITH THIS THIEVES !!

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