Many businesses use merchant processors to process credit card payments. When you process a payment, you will most likely need it to operate your business. However, its possible for merchant processors to place holds on your money and not provide it to you in a timely manner.
In this episode, Bernard Roesch explains why merchant processors sometimes hold funds, how to protect yourself from this, and what to do if it happens.
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Why Merchant Processors Hold Money
Merchant processors sit in between your customer and your business. They process the payment from the customer and they provide that payment to you. There is risk in doing this transaction because its possible for you to not provide the service that the customer paid for. In this case, the customer can do a chargeback with their credit card company and the merchant processor is left to provide them with that money. If the merchant processor is not able to take that money from you, they are responsible for that money. Because of this risk, merchant processors evaluate the risk of different businesses as well as different transactions and often will flag transactions for holds until they can verify the transaction.
How to Protect Yourself from Merchant Processing Holds
Merchant processors hold payments for a wide range of reasons. If you’re a new merchant processing client, you should expect to have payments held initially. You can work with the merchant processor to provide documentation for transactions or to discuss your risk in advance. If you receive a document request from your merchant processor, be sure to process it quickly. If you don’t, there is a chance that payments will be held a few days later.
What to Do If Your Merchant Processor Holds Funds
If your merchant processor holds funds, you should contact them right away. Although many merchant processing customer service departments will not be as helpful as other companies, its important to understand that they have a process they must go through before you can receive your money. Be patient but also be prepared with the facts and to meet their requests so that you can get the issue resolved quickly.
Need Help With Merchant Processing?
It is best to have strong bookkeeping and accounting processes to catch merchant holds and to be able to provide proper documentation quickly if the hold occurs. If you need help getting best practices in place for your own merchant processing, contact Bernard today.
You can also visit MissionBusinessPodcast.com for more insights that Bernard has been sharing with us in the previous episodes.
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