Why Payment Facilitators Hold Funds

You might be staring at your computer asking yourself, “Where is my money?”

Don’t stress — you’re not alone. Those who opt for Payment Facilitators reach this dilemma and it’s usually because their accounts are brand new, they've received a larger payment than normal or have a below-standard seller rating.

But that still begs the question, why are Payment Facilitators holding funds?

The Method

The answer boils down to Payment Facilitator’s underwriting policy, or lack thereof.

Payment Facilitators don't offer a traditional merchant account nor are they true Merchant Account Providers. Payment Facilitators have one merchant account that they lend out to their customers to use. Since there is only one merchant account in use, there is no formal underwriting — essentially anyone can sign up.

Sounds great, right? It’s a quick fix for any business needing to process credit cards in a pinch, but it leaves a huge opening for fraudsters, hence Payment Facilitators holding funds.

Holding Funds Is Strategic

Due to the lack of underwriting, Payment Facilitators can’t sufficiently screen who uses their mass merchant accounts. However, they can screen how their accounts are being used. To maintain order of what could become chaos, facilitators may hold funds up to 180 days to counter the risk of open enrollment.

That’s potentially six months until you can touch your money.

The amount you’re expecting will be put into your account, but it won’t be available for immediate transfer into your bank account. You’ll be notified via email or account notification explaining in detail why your funds are being held. While this is usually served with a side dish of serious frustration, facilitators aren't intentionally trying to infuriate you. Your money is put on hold in your account so it can be easily used in the event of a chargeback or dispute.

This is done to protect both your business and the Payment Facilitator. Because the facilitator would be responsible for the merchant account if anything went (really) south, it makes sense that it would take steps to protect itself first.

Get Proper Underwriting

Using a Payment Facilitator has its benefits, but when it comes to running a business you need constant cash flow to be successful. You can’t have a facilitator holding funds every time you make a big sale. If you want to grow, you’ll need to move away from this quick fix and set up a true merchant account to guarantee your funds hit your bank account in a timely manner.

First step? Start researching your options. There are six key factors to look for in a Merchant Account Provider, including next-day funding. Consider these traits and avoid providers that practice unethical billing to ensure you get the best merchant account for your business.

Pick the best Merchant Account Provider.

Do you have a horror story about a facilitator holding funds? Tell us about it! We would love to see a conversation get started.