This is just a visual representation for Held funds, Deposits Withheld, Accounts Frozen. What to do?! This blog answers why card processor holds their funds, deposits and even freeze their account.

Card Processor: Held Funds, Withheld Deposits & Frozen Accounts

Card Processor. These two words may look simple but carry immense weight in the world of commerce. A realm where swift transactions and seamless payments are the lifeblood of businesses both big and small. As you all know, I’ve been in the business for quite a long time. With that, I have encountered a number of existing and potential clients who are frustrated with the increasingly tight scrutiny of card processors. Amidst the intricacies of this landscape, it’s vital to acknowledge a common concern that often arises. When your funds are being held, deposits are withheld, and accounts are frozen, what do you need to do?

Run a transaction that’s larger than usual? Your card processor will hold your funds in limbo.

Unusually high number of card not present transactions for your account type? Funds in limbo.

Business is picking up and has been doing quite well recently! Well, there’s bad news to go with that: they’re holding funds in limbo.

It is important to realize, that this doesn’t seem to be happening with any particular vertical and with any particular processor. But rather, a systemic shift across all card processors and business verticals.

Even so, if the last time you applied for a merchant account was seven, eight, or even 15 years ago, the regulatory environment is wildly different. And, for the first time in these last 15 years or so, the economy is in a much more inflationary state. Hence, higher inflation means higher interest, which means tightening credit. In detail, tightening credit means increased scrutiny for account approval. As a result, the scrutiny will increase in ongoing business activities with your card processor (i.e., transactions).

For example, if a merchant in operation for five years opens a merchant account for the first time, but the owner’s credit score is 600 or lower, they may not get approved. As a result, they might not even get a second look after offering increased documentation to the underwriters. A new account just might not be in the cards for them right now. That’s a difference between today and years ago.

For those already in operation, a large ticket or increased business can mean that the card processor is wary of these good times and needs to see invoices, authorization codes, and customer-specific data for some of these transactions.

Is this annoying? Yes.

Is it avoidable? Only somewhat.

Will it be better to have an account manager who’s easily reachable? Yes.

Is it better to be with someone familiar with these industry issues? Definitely.

Lastly, someone who can coordinate the release of your funds? Yes, absolutely!

Southwest Merchant Services can’t promise smooth sailing in this turbulent financial environment. However, we can promise that you’ll get to the shore with less headaches. Undoubtedly, way better than with your bank or trying to do it all yourself.

If your company has recently had funds held, had its account frozen, or any other additional scrutiny or inconvenience placed on it by card processors, REACH OUT TO US to find out how to get through those situations quickly, and to start working with a team that can solve them quickly for you going forward. Follow our social media accounts: Instagram and TikTok

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