PayPal is undeniably one of the most
popular payment processors in the market today. A lot of people and that is to
say, a lot of your customers have PayPal accounts so having it as one of your
payment options will give you a good advantage over the competition.
According to Statista, as of last year, over 377 million PayPal accounts were active worldwide. That is a lot of potential capital your business could be seizing right now.
So if you wake up one day and PayPal already froze your account, you might instantly go into panic and stress. Het, we don’t blame you. The problem is, if you’re a high risk merchant account holder, this reality may be closer to the norm than you would like.
To make things easier, here are a few
steps that you need to take when that happens:
Determine the
reason for freezing your account.
Of course, you need to understand
first why your PayPal account has been limited or frozen. Talk to a PayPal
representative to know exactly what’s wrong because reasons can vary greatly.
PayPal has a few safety protocols in place against fraud and they can be
triggered by some circumstances.
The most common reason is if you
received an abnormally huge amount of money in your account because it could be
a red flag for fraud.
In the case of high risk merchant accounts, you could reach a high threshold of chargebacks. Your account will be frozen if you reach a certain percentage of chargebacks. The industry standard for chargebacks is roughly 1%. However, high risk industries may have chargeback rates that reach upwards of 3 to 5% and that is just not going to work for regular payment processors like PayPal. If too many customers complain or reverse transactions, you are in hot water.
Additionally, your business may receive a freeze from PayPal, if you have questionable content on your website and if you logged into your account from a suspicious location. Or if you have too many complaints about malicious behavior.
Prevent it from
happening again.
In most cases, your account will be
frozen for a maximum of 180 days. But if you are able to prove with PayPal that
the reason for freezing your account is wrong, then you’ll most likely get it
back within a few days.
To prevent this from happening again,
experts recommend that you notify PayPal ahead of time if you’re expecting to
receive a huge sum of money. Or if you are going to deposit extra funds into
your account set higher numbers on the survey that you have to take when
signing up for PayPal Website Payments Pro.
In addition, always make sure that
all the information in your account matches your bank account.
Speak to the PayPal support team directly here.
Get a better
payment partner.
Although it’s easier to get an
aggregate merchant account, there are also a lot of downsides to it. Since you
don’t have your own merchant ID, being restricted in PayPal, for instance, will
automatically affect your standing in other aggregate merchants. So instead of
settling for these limitations, it’s better to look for a better payment
partner that can offer you an underwriting agreement where you pay transaction
fees and get better security for your account.
Unlike an aggregate account where you’re sharing a merchant ID with other businesses, a payment processor will provide you with a dedicated merchant account with your own ID so you can easily monitor transactions, spot abnormal activities, and get help with fraud and other problems with your account.
The Bottomline
PayPal is an excellent option for
your business to accept payment, especially if you’re just starting out or if
you’re tagged as a high-risk merchant where it’s harder to get approved for a
merchant account.
But there are always a lot of good
payment processors that cater to high-risk merchants so you can be more secure
in the long run.
We would recommend setting up additional payment processing profiles BEFORE you need them. Have a few merchant processing accounts with a number of different payment processors. This is completely legal and a method that many high-volume businesses practice constantly. So, if anything happens to your account, you can temporarily switch accounts and continue to accept money while you fix the problem.
We hope this has helped the many small business owners out there. Hope for the best, prepare for the worst and always bring an umbrella just in case!
