Having a business account makes it easy for the merchant to conduct transactions with other merchants and businesses as well. Therefore, it makes it possible to trade efficiently. However, there are cases when the payment processor might freeze your business account. What happens in such a scenario? Please read on to find out what a frozen account refers to, the reasons why this can happen, and what you can do when it happens.
What is a Frozen Business Account?
What comes to mind when you hear of a frozen business account? This refers to a situation where no transactions can take place in a business account. Therefore, when your business bank account is frozen, the business cannot access the funds realized after making sales. This also interferes with the business’ ability to process payment cards.
Remember, whenever there is the slightest hiccup in your business’ payment processing flow, the chances of it coming to a halt are quite high.
The good thing is that freezing an account isn’t permanent in most cases. It is a temporary shut down by the processor. There are different reasons why a processor might decide to freeze a business account.
Why a Payment Processor Might Freeze Your Business Account
These are some of the reasons why the payment processor can freeze your business account.
- When the activities taking place are similar to that of a fake merchant. A fraudster might use a fake identity to open a business account. The payment processor may assume it is a legitimate merchant since he gets all the verification questions right, thanks to the fake identity. Remember, fraudsters can even use stolen credit/debit cards. Therefore, the transactions they run can be quite contrary to what their business model is.
- When the business account makes transactions amounting to figures that are higher than the average. There are particular price ranges for different businesses dealing in different products and services and different industries. Therefore, when a payment processor notices that something is off, it gets alert. The business might either be selling different products from the ones it applied for or processing payment methods that aren’t theirs.
- Having too many chargebacks. When the payment processer notices that a business has frequent chargebacks from its clients, it is a sign that something might be amiss.
- Having questionable transaction details. When a payment processor notices that a business uses one physical address to process transactions on numerous credit cards, it gets alarmed as the credit cards might have been stolen.
- When there is a need to analyze the merchant’s processing habits. A payment processor may want to know whether or not the business complies with its rules and meets the terms of the agreement or needs to make adjustments.
Remember, when the payment processor freezes your account, it does not necessarily mean you are at fault. Rather, the transactions come to a pause to give room for further investigations. They have to hold your funds until safety is assured.
Payment Processors and Fraud; What Are They Looking For?
There are different fraudulent activities that payment processors are on the lookout for to ensure customer safety and state law and rules compliance. These are some of the frauds they can look for;
- Customer fraud; This is where the consumer frauds the merchant by either purchasing with stolen credit card information or testing numerous stolen credit cards for approval on a merchant’s website.
- Merchant fraud; This is where the fraudster intends to process illegal transactions or go contrary to the agreement with the payment processor. It can happen under a stolen identity, illegitimate storefronts with unfulfilled orders, or opening an account for a low-risk business when in reality, it runs a high-risk business.
Therefore, payment processors have to keep monitoring the activities taking place in a business account. This is to ensure it always stays alert in case of any red flag during transaction processing.
What to Do When Your Payment Processor Froze Your Account
At this point, how about learning what to do when the business account is frozen? This can take place to give room for further investigations to carry on regarding suspicious activity in the business account. Unfortunately, not all payment processors will give you a warning of potential freezing. Therefore, you may not realize the account is frozen until you can’t process transactions, or until you have mismatching bank account statements and sales records.
Keep in mind that freezing your business account stalls your income stream. So what should you do? The following are some of the things you can do;
- Avoid calling or yelling at the payment processor customer service. This might be your very first reaction, but not a good one at that. Remember, it is not the individual’s doing that your business account is frozen. Therefore, ensure you stay calm as they assist you and direct you to the most appropriate person to offer you the needed assistance.
- Ask for help from the correct department. Chances are that the payment processor’s customer service will lead you to the right department where you will get help. Therefore, once again, maintain your cool and calmness. Also, remember that you may not have control over a lot of things. What’s more, documentation is key at this point. So, ensure you provide the invoices, bank statements, or purchase orders in case the processor asks for them.
- Take advantage of small business loans. The fact that the payment processor freezes the business account does not mean that you will not need cash flow. Therefore, taking a small business loan e.g. a working capital loan is a great way of ensuring you have the money to cater for the expenses and other operations of the business when the freezing is still on.
- Take advantage of other modes of payment such as accepting/providing Bitcoin payments.
Having more than one payment option ensures that once business accounts are frozen you still have the cash flow to keep business activities ongoing. As a strategy, it’s essential to start accepting crypto payments early. That account will serve as a reservoir in case your business account is frozen.
Businesses need an uninterrupted cash flow to operate smoothly. Unfortunately, this isn’t always the case. At times, the payment processor might freeze the business account. As earlier noted, there are different reasons to explain why this is so. The good thing is that there is something you can do. One thing that stands out is that you should stay calm. Also, you can make use of small business loans in the meantime. Importantly, try as much as you can to ensure the payment processor doesn’t freeze your business account.
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