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Understand Merchant Account Hold or Freeze

Account Hold

When the banks withhold some of the money from the merchant account is called Merchant holds.
The merchant account remains active and the account holds money that acts as a deposit for doing business.
Furthermore, in case of any fraudulent activity or chargeback issues, this money can be used.
However, the Merchant Account is not standard practice for both banks and the merchant especially in the case of low-risk merchants.


Account Freeze

If the Merchant is suspected to be involved in a suspicious activity then the Merchant Account is subjected to freeze.
During the freeze, the merchant is not allowed to make any transaction using that Merchant Account.
Then the Bank investigates the issues and unfreezes the account if no solid evidence is found against the Merchant.
The merchant should understand the reason behind the Account Freeze. This can help to avoid Merchant account hold or freeze in future.

What Causes Merchant Account Hold or Freeze?

As we discussed, the Bank has the right to Hold and Freeze the Merchant Account without prior notice. This is a step of precaution in case of any frauds. Here are some situations that can lead to potential Merchant Account Hold or Freeze.

Before opening the Merchant Account, the bank asks the Merchant to sign the terms and agreements. And if the Merchant does not follow the bank norms, the bank has every right to freeze the merchant account.
High Number of Chargeback – If your business is causing a large number of chargeback every month then the bank will investigate your business methods and discontinue your banking facilities.
Dealing in Undisclosed Goods and Services – Before opening the Merchant Account, you must inform the bank about your business with a detailed description. In case, you are caught dealing in other goods then you can be subjected to Merchant Account Freeze.
Suspect of Fraud – If you or your business is involved in any kind of fraud or illegal activity then banks can take actions by freezing the account.

How to Avoid Merchant Account Hold or Freeze?

  • Get a nice payment processor for your Business Account. Also, get a High-Risk Merchant Account if necessary.
  • Moreover, if you are about to make changes to your business and starting to sell different goods or services, then make sure you inform your Payment Processor about the change.
  • Reduce the number of chargebacks. The excessive number of chargebacks can cause a variety of losses including the Merchant Account hold.
  • Finally, if you are going to make an exceptionally large transaction then inform the payment processor regarding your transaction details.

You can also hire an expert to help you avoid Merchant account holds or freeze. For such services, contact Merchant Stronghold and connect to an expert. We provide the best credit card processing services for all kinds of businesses.
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Location: Clearwater, FL, USA

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