Are you struggling with a deactivated Square account? If so, you’re not alone. You’ll quickly find dozens of online complaints from business owners just like you that have dealt with the same problem.
What to Do If You Have a Deactivated Square Account
Your first question is likely to be “Why did Square close my account?” According to Square, there are only three reasons why a customer would have a Square deactivated account, including:
- Higher than normal number of chargebacks to account.
- High-risk activity.
- Breach in terms of service.
Not only are these reasons very broad, but numerous Square customers claim that they didn’t break any rules, yet their account was shut down. To make matters worse, Square isn’t well-known for having a strong customer service support team. Some deep-diving into each reason can clarify the meaning behind these policies so you can minimize the likelihood of payment interruption in the future. Or at the very least get an answer to “why did Square close my account?”
Higher Than Normal Number of Chargebacks To Account
A chargeback is simply a customer dispute about a payment. They contact the bank connected to the card they paid you with and ask to reverse the transaction. Square then initiates a dispute process with you. It’s a return on your service or product.
It’s common for any business to get returns, so what’s the big deal?
Even though the Square website doesn’t specify what “higher than normal chargebacks” actually means, leaving you in an eternal guessing game, it would be safe to bet they’re looking for a certain percentage of successful payments. Increased chargebacks could indicate that your clientele isn’t satisfied or that other high-risk indicators are coming into play. Your best bet is to make sure your purchase, return and cancellation policies are clear to every customer to minimize any chargebacks in the future.
And speaking of “high-risk”, you might be wondering about (potential) reason #2 for Square closing your account. This deserves some extra attention, so let’s address the third reason from the list above before we deep-dive into what’s the big deal about high-risk businesses.
Breach in Terms Of Service
If you want to go over the terms of service yourself or send them to your lawyer with a note asking “will Square reactivate my account,” you can find them here. Just like with your business policies, Square put these in place to create a guide for handling all the situations that could come up while operating as a payment processor. And just like when someone violates your terms of service, Square reserves the right to not do business with a customer. It might not always make sense or seem right, but thankfully other options will be covered later in this article.
It’s important to address a more specific aspect of high risk which is: Is your business a high-risk business? Square and other merchant service providers such as iZettle, PayPal, and SumUp have identified several high-risk businesses that they either don’t want to do business with or heavily restrict activity on. If Square deactivated your account, it might be they suspect your business is in one of the high-risk categories explained below.
How To Determine Whether Your Business Is High-Risk
You might be wondering, “what’s the big deal about a high-risk business?” Merchant services and payment providers deal with complex rules that change all the time. Not only Square, but many payment providers, err on the side of safety to stay out of blurry areas. Though some businesses labeled “high-risk” are cut and dry, others might not be so obvious. Some of the guidelines in doing a general determination of whether your business is high-risk are if your product or service:
- Is illegal in your or your customer’s jurisdiction
- Is controlled or restricted
- Brings up moral questions
- Requires licensing
It’s always advisable to be transparent with your payment provider from the start to make sure there are no surprises down the road. If your Square account has already been deactivated, it’s already too late and you’re left wondering how can you start receiving your payments and how can you make sure you never have to go through this again. What’s more frustrating is that Square’s guidelines are vague and you might be left with questions on how to determine whether your business is high-risk. This snippet from Square’s general terms of service makes it all clear as mud:
“If you want to use our services, you can’t do certain bad things. If we think you are doing these bad things, we have the right to share your information with law enforcement.”
There you go. But just in case you can’t see through the mud and you still have questions, here’s some more information about what kinds of businesses are restricted or prohibited by Square, PayPal, iZettle, and SumUp so you can determine whether your business is high-risk or not and possibly find payment processing alternatives.
Regulated or Illegal Goods
Some of these items don’t need explanation. Payment providers aren’t going to work with you if you’re selling firearms, weapons or related accessories. You can just imagine the red tape. Square goes as far as restricting the sale of knives and automated fuel dispensers. PayPal also restricts the sale of knives. Drugs and paraphernalia are either restricted or prohibited by PayPal, Square, iZettle and SumUp, but each provider has differences in its policies. None of them will sell paraphernalia that could potentially be used for illegal activity. CBD companies are also considered high-risk, but the rules vary by payment providers. Pharmaceuticals are another “high-risk business” marker for payment providers.
Square and iZettle are the strictest companies, creating a lot of red tape for businesses who want to go this route. PayPal provides a pre-approval process that allows certain pharmaceutical sales. Though legal, all payment providers have some form of restriction on alcohol and tobacco. SumUp won’t touch it and prohibits alcohol and tobacco sales entirely while Square and iZettle support only in-person transactions. PayPal has restrictions but makes exceptions through one of their pre-approval processes. Anything that encourages hate or crime runs the risk of getting your Square account deactivated, as they prohibit harmful products or anything hateful. PayPal and iZettle have followed suit with similar policies. Sorry, but just because it’s the oldest profession in the world doesn’t mean escorting and adult services are supported by payment processors. All four providers prohibit adult services and products, but their policies vary for online activities.
Delivering Products or Services in the Future
This simply means that if you don’t provide something that the customer receives immediately, payment providers might flag your business as high-risk as the guarantee of delivery is decreased and the risk of an unhappy customer increases. Square doesn’t allow “unsolicited vendors that require immediate payment for the future provision of products or services (e.g. door-to-door salesmen).” Whether or not solicited vendors can sell future things isn’t stated, but they don’t allow any prepaid phone services or phone cards. Square’s restrictions for travel-related items are more detailed. They restrict:
- Air carriers and airlines (except for small charter aircraft)
- Branded accommodation (e.g. hotels, bed and breakfasts, inns)
- Construction equipment rentals
- Card rentals
SumUp doesn’t work with companies that sell anything that’s delivered seven days or more after the transaction. This includes:
- Concert tickets
- Telecommunication services
- Travel bookings
iZettle won’t do travel-related business and for certain travel services, PayPal requires pre-approval.
Insurance, Protective Services and Security
Square and iZettle are highly restrictive for the following services, while PayPal and iZettle are a little more lenient. Financial services include:
- Anything investment-related, including stock and trading
- Money processing
- Debit and credit cards
- Prepaid financial services like money cards or traveler’s checks
- Currency exchange
The regulations and red tape that go along with these industries are a lot for payment processors to keep track of, and if they don’t have the infrastructure to stay on top of the ever-changing policies, it would make sense why they wouldn’t be able to support businesses providing social services.
Products or Services With Unpredictable Outcomes
If you’re providing services that have an open-ended outcome, i.e. a less-defined outcome for the customer, payment processors flag this as a risk factor for increased customer complaints – leading us to the dreaded chargeback discussed earlier. If you’re wondering “why is my Square account under review,” it might be because you’re:
- Involved with lottery or gambling, something that Square, iZettle & SumUp prohibit; PayPal has a more specific policy and yet another pre-approval process with some forms of gambling
- An infomercial guru: Square specifically prohibits doing business with this television format that tends to make promises for things that are simply too good to be true
- “Occult.” That’s right, Square doesn’t allow “occult materials” while SumUp and iZettle don’t allow fortune-telling.
- A non-licensed counselor: SumUp requires counselors to be licensed.
Protective Services Such As Insurance Or Security
Square won’t work with identity theft protection, credit protection or insurance companies while PayPal restricts insurance companies. SumUp won’t provide merchant services for armored cars, guard dogs and fraud protection services.
Non-Profits and Other Organizations
Square won’t work with buyer and membership clubs, iZettle has restrictions on donations and PayPal requires pre-approval for non-profit and charity donations. SumUp has restrictions on membership fees and political organizations.
Will Square Reactivate My Account?
Maybe you’ve discovered your business is in a high-risk category and you’re wondering “what are the options for high-risk businesses?”
Or possibly you’re still not sure why Square closed your account and you’re hesitant to get started with another payment provider like PayPal, iZettle or SumUp only to go through the inconvenience of a deactivated account again.
You might also be wondering, “How do I reactivate my Square deactivated account?” Unfortunately, according to Square’s policy, you’ll have to submit your complaint in writing and it can take up to 90 days for the company to make a final decision. That’s right, Square can hold your money for up to 90 days.
Three months without access to your payment processing system can be devastating for even the most established businesses. You’ll be left wondering if Square will ever reactive your account. Maybe yes and maybe no. There’s no way to know for sure.
The reality is that you don’t have time to wait for Square to give you an answer one way or the other. To keep your business running, you’re going to have to take matters into your own hands and find a new payment processing system. One problem you may face is that similar companies, such as PayPal, iZettle and SumUp may be hesitant to take you on as a customer. This is especially true if your business falls into any of the high-risk categories that were covered previously. This can be incredibly frustrating, especially after you’ve jumped through all the hoops to make sure your business is following the rules. You just want to make your money, right?
So, Now What?
Fortunately, there are alternatives available. For example, Bankcard specializes in helping high-risk businesses obtain the payment processing services they need. It also works with companies to help reduce their chargeback rates. Bankcard even works with companies that have bad credit ratings, offshore merchants and ACH processors.
Even if you operate a low-risk business with a Square deactivated account, Bankcard can still provide the payment processing services you need. Best of all, Bankcard can even grant high-risk companies instant approval in most cases.
Find out for yourself if Bankcard offers the payment processing services your company needs.