We all know that when you own a business, it’s essential to offer multiple payment options to accommodate your customers’ preferences. This means choosing a payment processing partner that offers versatile options for effortless payments. In the past few years, Square has become a game-changer for many small merchants, bringing more flexibility to payments, especially with mobile devices. So much so, that there is now Square chargeback protection.
This celebrated flexibility has come with some limitations, however. Despite the payment processor’s popularity, many have taken issue with Square’s chargeback protection policy for high-risk merchants — or lack thereof. Because of this, many merchants are left with the puzzling question of how they can protect themselves and their business. But first, a quick look into why Square isn’t all it’s hyped up to be.
The uncertainty surrounding the pandemic has caused a number of disputed transactions and chargebacks to spike in the last year or so. Because of this, Square has decided to hold funds to protect against “risky” transactions. These risky transactions are mostly targeted towards high-risk merchants selling products such as CBD, firearms, adult entertainment, and the like. Square will provide these merchants with little to no coverage when a chargeback occurs.
Square has been holding on to 20% to 30% of funds from payments it processes, with very little warning. This has caused distress among their customer base, which is primarily made up of small merchants who may not be able to operate without access to all of their funds. Why, then, is Square doing this? According to Square, they’re holding funds to make sure they limit their losses when handling merchant disputes. This clearly demonstrates that Square is looking to protect themselves, not their merchants.
While Square chargeback protection may seem adequate at first glance, a closer look will reveal that it falls short in most areas of proper protection, especially for high-risk merchants. First off, their revenue loss coverage maxes out at $250 per month. While that’s more than most merchants offer, merchants selling high-value goods can expect one or two chargebacks to add up quickly.
Additionally, Square’s chargeback protection only applies to certain “eligible” products. This means that high-risk goods such as electronics and collectibles will not qualify. Lastly, merchants have to comply with Square’s best practices in order to qualify for reimbursement.
With these kinds of gaps in protection, merchants currently partnered with Square may be wondering what to look for instead. Here’s the protection and support that a high-risk merchant needs:
Needless to say, Square’s chargeback protection really isn’t much protection at all for high-risk merchants. Your business needs to be armed with a solution that provides real chargeback protection, limited or no hold options, and support. Luckily, WizoPay is here to help. When you choose us, we guarantee to make your life a little easier when it comes to all things payment processing.
Contact our team of experts today to discuss your options.