Help! My Credit Card Funding is Under a Risk Hold

Cash flow produced by sales are the essential focus of all small business owners. Whether you are selling baked goods, providing a laundry service, or caring for patients in a small family medical practice, capturing these sales of goods and services is what makes your business work.

With that in mind, it only makes sense that taking a large order or offering a bulk rate for services would be a great way to help your business thrive.

However, this kind of decision can cause serious problems with payment processing. Perhaps your business – like so many other small vendors – has experienced this kind of complication. You make a large sale, accept payment for that total, and suddenly your account is placed on hold for suspicious activity.

This can be even more frustrating when you are working with a payment processor that does not provide good customer service. Companies like Stripe and square may offer convenience to merchants, but they provide next to nothing in terms of support. This can make it seemingly impossible to get assistance when you encounter a risk of fraud – or something that your payment processor perceives as a risk.

Why does this happen? What can you do? Here is what you and your team need to know about risk holds – and how working with a dedicated risk department team can help you prevent and address the problem.

What May Cause an Account Hold?

There are several things that can cause an account hold. Also known as a risk hold, these roadblocks happen when a user or organization appears to make inconsistent or unusual financial transactions. Various types of suspicious activity can trigger a risk hold.

Unfortunately, these holds can also be triggered by everyday actions taken by vendors and consumers.

An account hold may be caused by any of the following:

• Breaking terms outlined in a contract, such as the maximum sale you forecasted at the time of opening your account, processing transactions considerably higher than the average ticket price, or overall monthly processing substantially higher indicated on the application.
• Potential fraud or other suspicious activity, such as a bot using your website to authenticate stolen credit card numbers.
• Excessive chargebacks. The card brands will eventually shut down your account when your percentage of chargebacks exceeds 1% of total sales.

Remember, this is not an exhaustive list. There are multiple reasons why a risk hold may be placed on a vendor’s account.

Problems Associated with Account Holds and Flagging

As you may already know, having a risk hold placed on your account can be crippling for a small business. When these holds are placed, they can arrest financial activity for days or even weeks. This can cripple your cash flow and may even cause some businesses to suspend operations until the hold can be removed temporarily.

What Happens if an Account Gets Flagged?

While an account may be placed into a risk hold without the merchant being notified, this is generally not the case. The problem is that this notification is not always prompt enough to make a real difference. It is always a good idea to keep an eye out for potential triggers for holds and corresponding risk flags that may result.

As soon as you notice or are notified of an account hold, contact your payment provider. Understand what information is being requested and what the Service Level Agreements (SLAs) are once you satisfy the request. This prompt response will give you the most possible time to address the problem. It may be as simple as verifying the transaction, or it may take several days and several rounds of documentation to get funds released.

Since funds will not be available from a transaction that is on hold, it is also important to have access to other funds so that business can carry on as usual. While held funds are unavailable, keep careful tabs on your overall business finances so that these funds are accounted for but not relied upon.

What if My Risk Department is Unresponsive?

While it is important to establish a risk assessment and response department, it does not guarantee protection from payment processing problems. Rather, it is a safety measure that may require additional effort on the part of a small business owner or operator.

If you find that your concerns are not being addressed or your risk hold response team is unresponsive, do not sit idly by. Waiting for the problem to be solved for you is a sure way to waste valuable time and miss out on necessary cash flow. Your best bet in this situation is to be proactive and direct. Identify the problem as best you can and bring your concerns directly to the payment processors or other businesses involved.

Ultimately, an unresponsive risk department is a failing risk department. Should you find that your concerns are not being addressed effectively, it may be time to outsource the task to a reliable third party. This way, your team can focus on providing excellent products and services to consumers, rather than constantly worrying about whether payment will be processed properly.

How Does a Dedicated Risk Department Assist with Account Hold Issues?

With all of the issues associated with an account being flagged for a risk hold, you might be wondering what can be done to prevent or address them beyond the measures you currently have in place. The most important factor is being transparent and communicative with your financial providers, as well as proactive. If you foresee a hold being triggered by current or upcoming activity, inform your providers right away and stay in communication throughout the hold period to resolve the issue quickly.

Some situations to inform your provider of include:

• Sharp increases in sales due to seasonal changes or other circumstances. (Think of the sharp increase many vendors saw during the coronavirus pandemic, for example.)
• Group orders, bulk discounts, or other large sales.
• Notable changes in prices of goods or services offered. This can result in an unforeseen spike in the amount of cash you have coming in, even if it is in line with your expenses.

Communicating these kinds of changes with your payment provider can help to reduce the instance of risk holds.

However, this is not a foolproof solution. There are many reasons why a vendor may not be able to provide this kind of prompt communication. If a vendor handles many transactions from many consumers, keeping tabs on potential account hold triggers can be nearly impossible. Likewise, it can be difficult to find the time to follow up with those consumers – or with financial providers – to resolve issues quickly.

This is why working with a payment processing provider that offers risk hold management is important. Providers like Paystri offer a dedicated risk department team that can reach out to businesses like yours when issues arise – and address them promptly. This can help you not only gain access to needed funds more quickly but identify and manage the risk of fraud, as well.

How does a risk department help? Here is what to expect if your account is placed on a risk hold:

• Risk notification. First, the processor’s risk team will reach out to a merchant directly. The team will inform the merchant that one or more transactions are on hold, as well as why they might be placed on hold.
• Request for information. To ensure that an appropriate decision can be made regarding the trigger situation, the payment processor may request information. This may include one or more of the following:
  • Transaction invoices for relevant sales
  • Description of product or service provided, if available
  • Date and information regarding the delivery of order(s), if available
  • At least three months of bank statements
  • Details about the reason(s) for increased sales, if available
• Review and decision.

While this process can take several days, it is important to remember that dealing with account holds without assistance can take weeks or even longer.

Choosing a Professional Partner for Risk Management

Once you decide to partner with a professional for risk hold management, you will undoubtedly be looking for a collaborator that makes things easy. Contact the team at Paystri to learn more about how we can help you accept and process payments, provide important conveniences for your clientele, and manage account hold issues with ease. You’ll be so glad you chose the company that offers fresh-baked solutions to your business’s financial puzzles!