How Long Does Stripe Hold Funds?

Accounts Wizard
February 22, 2021

If you’ve had to ask “how long does Stripe hold funds,” you’ve come to the right place

Stripe is one of the largest eCommerce payment processors in the U.S. and elsewhere. They primarily offer payment processing software and application programming interfaces for eCommerce websites and mobile applications. Working in various industries, including retail, B2B platforms, SaaS, non-profits, and more, Stripe advertises that their software helps create a holistic eCommerce experience that allows companies to accept payments and manage their business online. So, how long does Stripe hold funds?

With the rising popularity of cashless payments, Stripe has become a go-to payment processor amongst eCommerce businesses and brick-and-mortar businesses. Still, Stripe isn’t perfect. There are specific issues that need to be addressed, including the issue at hand: holds.

Why does Stripe hold funds?

Otherwise known as “withheld funds,” a hold is a method of freezing funds for an undetermined amount of time. Usually, payment processors such as Stripe issue temporary holds, in which merchants are informed that a portion of their funds are being held until a specific action is taken, such as the provision of documentation from the merchant. But funds can also be held in different ways, such as through account termination and account freezes.

There are several reasons Stripe might place a hold on a merchant’s funds, including a change in normal account behavior, high chargebacks or dispute rate, high-risk industry, or above average “high ticket” transactions. Stripe may just hold funds, but they may also “match” you, which blacklists your company. The industries most affected include CBD, firearms, e-cigarette and vape shops, and the like. These businesses are usually labeled as “high risk” and put on Stripe’s internal high-risk list, making it that much harder for them to get approved.

With Stripe holding funds for 90 days or sometimes more, companies suffer from a devastating combination of reduced cash flow and high operating expenses. Because of this, many companies face the risk of shutting down businesses completely if their funds aren’t released soon enough.

At this point, you may be googling “how long does Stripe hold funds?” and finding out that you are not alone. While it’s great news that you’re not the only business with hold problems from Stripe, it’s crucial to find out what you can do about it.

Working with Stripe: From a user agreement perspective

Frankly, if you continue working with Stripe, there’s not much you can do about it. Per their Stripe User Agreement:

In certain circumstances, we may require you to place funds in reserve or to impose conditions
on the release of funds (each a “Reserve”). We may impose a Reserve on you for any reason if
we determine that the risk of loss to Stripe, Customers, or others associated with your Stripe
Account is higher than normal. For example, we may hold a Reserve if: (i) your or your
Customers’ activities increase the risk of loss to us or to your Customers, (ii) you have violated
or are likely to violate this Agreement, or (iii) your Stripe Account has an elevated or
abnormally high number of Disputes. If we impose a Reserve, we will establish the terms of the
Reserve and provide you Notice of the amount, timing, and conditions upon which the funds in
the Reserve will be released to you. In many cases, the Reserve amount will be the entire
amount of Charges processed using the Payment Processing Services. We may change or
condition the terms of the Reserve based on our continuous assessment and understanding of
the risks associated with your Stripe Account, if required to do so by Payment Method
Providers or Payment Method Acquirers, or for any other reason. We may fund the Reserve
with funds processed through your use of Payment Processing Services, by debiting the Payout
Account or another bank account associated with your Stripe Account, or by requesting funds
directly from you.

And also regarding freezing your account:

We may suspend your Stripe Account and your ability to access funds in your Stripe Account, or
terminate this Agreement, if (i) we determine in our sole discretion that you are ineligible for
the Services because of significant fraud or credit risk, or any other risks associated with your
Stripe Account; (ii) you use the Services in a prohibited manner or otherwise do not comply
with any of the provisions of this Agreement; (iii) any Law, Payment Method Provider or
Payment Method Acquirer requires us to do so; or (iv) we are otherwise entitled to do so under
this Agreement. A Payment Method Provider or Payment Method Acquirer may terminate your
ability to accept its Payment Method, at any time and for any reason, in which case you will no
longer be able to accept the Payment Method under this Agreement.

By signing this agreement, you’ve agreed that Stripe can not only freeze or hold your funds but that they can reach into any bank account associated with Stripe and pull out funds.

You have other options

As a merchant, it’s important to remember that you have other options for payment processing. If you’re currently experiencing hold issues from Stripe, consider working with a third-party processor. Depending on your business, you may be much better off working with a high-risk merchant processor.

Being deemed high-risk isn’t a slight to your company; it’s just a classification for special types of companies and businesses that experience a lot of chargebacks, a high number of transactions, or offer subscription billing plans. Working with a high-risk-friendly payment processor provides you:

  • More stability
  • Higher approval rate
  • Fewer headaches with chargebacks, fraud, and a high number of transactions
  • An avenue to run your subscription business without frequent holds

Now is the time to stop working with payment processors like Stripe, who deprives you of your funds for merely being considered “high-risk.” With an expert team with extensive knowledge of regulatory requirements, fraud protection, chargeback support, as well as extensive experience with high-risk merchant accounts, your business can look to WizoPay. With low rates, eCommerce shopping cart integrations, and other means of service, we guarantee the quality, custom support that will exceed your expectations. Get in contact with our team of experts today and take your merchant account to the next level.


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