Why It Happens and What You Can Do About It

Few things frustrate a business owner more than finding out that their hard-earned funds have been “placed on hold” by their payment processor. You delivered the service, swiped the card, and now your money is sitting in limbo. Unfortunately, fund holds are one of the most common — and least understood — issues merchants face in payment processing.

Let’s unpack why processors hold funds, why it’s especially common with Stripe and Square, and how Servistree’s proactive underwriting process prevents it from happening to you.

Why Payment Processors Hold Funds

Payment processors act as intermediaries between your business, the card networks (Visa, Mastercard, etc.), and your customer’s bank. They’re responsible for ensuring transactions are legitimate and compliant — which means they continuously monitor for signs of fraud, excessive chargebacks, or unusual activity.

When something looks “off,” their automated systems may temporarily hold your deposits until the transactions can be reviewed.

Here are the most common reasons this happens:

1. Unusual Transaction Volume or Amounts

If your sales suddenly spike or a single sale exceeds your normal average ticket size, it can trigger a risk flag. For instance, a veterinary practice that averages $400 per transaction might set off alerts after a $5,000 procedure payment.

Why it happens: Sudden changes signal potential fraud to automated systems, even when the sale is legitimate.

2. High Chargeback Ratios

Chargebacks — when customers dispute charges — are a major red flag for processors. Exceeding 1% can prompt holds or reserves while the account is reviewed.

Why it happens: Processors want to ensure there are funds available to cover disputed transactions.

3. New Account or Limited Processing History

New businesses or those without a processing track record are often placed under stricter monitoring or “rolling reserves.”

Why it happens: Without consistent history, the processor has no basis to predict your risk level.

4. Industry Risk

Certain industries, like HVAC, construction, online retail, and healthcare, have higher refund or dispute rates.

Why it happens: Funds may be held until the service is completed or product delivery is verified.

5. Compliance or Documentation Issues

Missing business licenses, mismatched EINs, or incomplete verifications can trigger temporary holds.

Why it happens: Regulators require processors to verify every merchant’s identity and legitimacy through KYC (Know Your Customer) protocols.

Why Fund Holds Are Especially Common With Stripe and Square

If you’ve used Stripe or Square, you may have experienced — or heard of — sudden fund holds or frozen accounts. These platforms are popular because they’re easy to set up and accept payments within minutes. However, the same convenience that makes them simple also makes them riskier for merchants.

1. Aggregated Merchant Accounts, Not Individual Accounts

Stripe and Square operate as payment aggregators. That means when you sign up, you don’t get your own merchant ID under Visa or Mastercard. Instead, your business shares a single “master account” with thousands of others.

If another business under that umbrella has high fraud or disputes, your risk profile rises too — even if you’ve done nothing wrong. As a result, Stripe or Square can hold or freeze funds for “review” without warning.

2. Automated Risk Triggers

Stripe and Square rely heavily on algorithms that detect changes in transaction size, volume, or frequency.

If your pattern shifts — for example, you sell a large equipment order or begin processing more transactions — the system may automatically pause your deposits.

With limited human oversight, these decisions are often made instantly and without explanation.

3. Minimal Underwriting Up Front

Getting started with Stripe or Square is simple: fill out a short form, link your bank account, and you’re live. But that lack of due diligence means underwriting happens after you start processing — when an issue occurs.

By contrast, Servistree’s onboarding process includes a complete underwriting review before you ever process your first payment. That up-front work prevents downstream holds and ensures your account is structured correctly from day one.

4. Limited Support When It Matters Most

When Stripe or Square place your funds on hold, getting help can be difficult. Many merchants find themselves stuck in email ticket loops or automated chat replies.

Servistree clients, on the other hand, have direct access to our risk and relationship management team, plus dedicated account managers who can escalate issues with Elavon (a U.S. Bank company) in real time.

No bots. No guessing. Just clear answers from professionals who understand your business.

How Servistree Prevents Fund Holds: The Power of Detailed Underwriting

At Servistree, we believe in doing the hard work up front to save our clients from cash flow nightmares later.

That means our underwriting process is more detailed and personalized than Stripe or Square — and that’s a good thing.

What Makes Our Underwriting Different

When you open a Servistree merchant account, our underwriting team reviews:

• Your business model, products, and services
• Expected average ticket and monthly volume
• Seasonal fluctuations or event-based patterns
• Delivery timelines for goods or services
• Legal business documentation and ownership structure

This thorough review might feel slightly more “intrusive” than the instant approval offered by Stripe or Square, but it’s exactly what keeps your funds safe and your deposits flowing without interruption.

Why It Works

Because we know who you are, what you sell, and how you process payments, we can:

• Configure your account settings to match your real-world business activity
• Approve higher transaction limits in advance
• Identify and prevent potential risk flags before they occur
• Communicate directly with Elavon risk teams to resolve anomalies fast

This proactive approach builds trust between you, the bank, and the card networks — resulting in fewer fund holds and faster funding.

What To Do If Your Funds Are Held

Even with good underwriting, unexpected reviews can happen. Here’s what to do:

1. Contact Your Processor Immediately

Ask for details:

• Which transactions are affected?
• What triggered the hold?
• What documentation is required to release funds?

Keep records of every conversation and ticket.

2. Provide Supporting Documentation

Provide signed contracts, invoices, or proof of service. The faster you supply evidence, the faster funds are released.

3. Be Transparent About Growth or Changes

If your business expands, launches a new product, or experiences seasonal spikes, let your processor know. Servistree works with clients proactively to adjust their risk profile before issues arise.

4. Reduce Chargebacks

Use clear billing descriptors, get written authorization, and respond quickly to customer disputes. Servistree also offers chargeback management tools to help you prevent and win disputes.

The Servistree Difference

At Servistree, we process payments differently — with transparency, accountability, and real human support.

Here’s what sets us apart:

• ✅ Detailed, up-front underwriting through our direct banking partner, Elavon (a U.S. Bank company)
• ✅ Next-day funding, including American Express
• ✅ Dedicated account managers and U.S.-based support
• ✅ PCI- and HIPAA-compliant systems for medical, dental, and veterinary practices
• ✅ No contracts or cancellation fees
• ✅ Proactive monitoring and personalized risk support

When you process with Servistree, you don’t have to worry about algorithmic “holds” or disappearing deposits. You’ll always know where your money is and when it’s arriving.

Final Thoughts

Fund holds are frustrating — and they’re becoming increasingly common with instant-approval platforms like Stripe and Square.

The difference with Servistree is that our detailed underwriting and human oversight eliminate the guesswork. By investing a little more time up front, we protect your business from the stress and uncertainty of withheld funds.

If you’re tired of wondering when your money will hit your account, it’s time to work with a processor that treats your business like a partner — not a risk profile.

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Ready to stop worrying about frozen funds?
Request a free rate and risk review today at www.servistree.com
or call 866-944-3244 to speak directly with our team.

At Servistree, we help businesses process payments with greater security, faster access to funds, and zero unnecessary surprises.