Stripe terminated your merchant account? Here is why it happened and what you have to do now.
When Stripe terminates a merchant account, the consequences can be devastating. The good news is, however, that you can still recover swiftly if you follow the right steps. In this blog post, we will explain why merchant accounts are getting closed by Stripe. On top of that, we will describe some quick recovery strategies that are available for e-commerce businesses so that merchants can bounce back quickly. Getting your Stripe account closed doesn't have to mean the end of your business.
Common Reasons for Account Termination
Stripe uses automated systems to assess risk, and if your business triggers these systems, you might lose your merchant account. Reasons for termination include:
- High Chargeback Ratios: if your business experiences more chargebacks than average, Stripe may consider it too risky to handle.
- Prohibited Business Models: Stripe’s restricted businesses list contains industries and activities that are prohibited or require pre-approval due to legal or financial risks. These include illegal products, regulated services (like gambling or pharmaceuticals), high-risk financial services, adult content, and businesses prone to chargebacks or fraud. Merchants operating in these sectors may find their Stripe accounts closed or face significant limitations. Find more information about this topic on their website: https://stripe.com/legal/restricted-businesses
- Fraud Prevention: Unusual spikes in transaction activity or unusual transaction patterns may trigger fraud alerts and lead to account closure.
- Violation of Stripe's Terms of Service: Read carefully their terms and conditions to avoid such situation.
- Regulatory Issues: Some closures are tied to laws and regulations that Stripe must comply with.
- Post Approval Screening: Stripe is often performing an enhanced and extended due diligence after the merchant has been approved and has started to process transactions. Those compliancy reviews may lead to account termination as well!
Immediate Steps To Take After Stripe Closes Your Account
Don’t panic if Stripe shuts down your account. Start by following these steps to assess the situation and recover quickly:
- Read Stripe's notification: The account termination will provide details on why your account was shut down. This information is critical for deciding your next move.
- Appeal if Necessary: You can try contacting Stripe to appeal the decision. Success is rare, but it's worth trying if the closure was a mistake. Stripe's customer support has received criticism for being slow, impersonal, and difficult to access. Here are some of the key negative aspects:
Read Stripe's Notification: Merchants often report difficulty reaching live support, with email responses being delayed or automated.
Inconsistent Resolutions: Merchants notice that customer support agents frequently provide generic responses or fail to offer concrete solutions to complex issues.
Lack of Transparency: In cases of account closures or withheld funds, many merchants feel that the explanations provided are vague, leading to frustration and uncertainty.
No Dedicated Representatives: Unlike some other payment processors, Stripe does not offer a dedicated account manager for most merchants, which can slow down issue resolution for growing businesses
- Secure Your Funds: Stripe often hold funds for up to 180 days. Plan accordingly by ensuring you have enough cash flow.
- Notify Your Customers: Inform customers about potential payment issues to maintain trust during the transition.
If you are looking for detailed steps on what to do when Stripe shuts down your account, this section lays the foundation for quick recovery.
Long-Term Solutions: Switching to a High-Risk Payment Processor
The closure of your Stripe account means it's time to explore alternative options, especially high risk merchant accounts that are more suitable to your business needs. Here's what you should do:
- Choose a Specialized Payment Processor: Companies like eFlow Processing are more open to businesses with higher risk profiles.
- Review Your Business Model: Assess if your business falls into a high-risk category and consider partnering with a more suitable payment provider.
- Negotiate Terms: work with Independent Sales Organizations (ISO) to find better terms and services that align with your business.
- Diversify Payment Solutions: Make sure to work on back-up solutions to ensure business continuity.
Choosing alternatives to Stripe after an account closure is critical to ensuring your business remains operational and scalable in the long run.
Best Practices to Avoid Future Terminations
To safeguard your business and avoid future disruptions:
- Monitor Chargebacks Closely: Use tools for fraud detection and chargeback prevention to reduce the chargeback risks.
- Strengthen Customer Service: Putting emphasis on the excellent support of your clients can reduce disputes and chargebacks, preventing potential account risks.
- Diversify Your Payment Processors: Never rely on one platform - having multiple processors can protect your revenue streams.
- Partner with Experts like eFlow Processing: Work with ISOs or high risk payment processors to get advice and tailored solutions.
For merchants looking to stay afloat after Stripe closure, implementing these best practices will help prevent the same issues with other platforms.
Moving forward after Stripe: Key Takeaways
Losing access to Stripe is daunting, but it doesn’t have to spell disaster. By following the proven steps to restore your cash flow, including switching to a high-risk processor and implementing better chargeback management, your business can quickly recover. Start by securing your funds, finding a new payment solution, and minimizing risk through diversification.
If you want to apply for a merchant account with us, we kindly invite you to fill out our pre-check form online: https://eflowprocessing.typeform.com/precheck
Our team of payment experts will be in touch shortly!
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