PayPal and Stripe are two very popular online payment platforms globally. However, Stripe and PayPal accounts being locked is a common problem, especially for small and medium-sized businesses.
Understanding why PayPal and Stripe lock merchant accounts and how to avoid this situation is extremely important. In this article, PlutusPay will learn about the reasons leading to account locking, the consequences of this and how you can avoid this unwanted situation.
Source: Internet
Why do paypal and stripe payment gateways block accounts?
For those who do POD and Dropshipping who have had experience in several sales seasons and have had their PayPal and Stripe accounts locked, this has become familiar. However, for newbies, you may not understand this issue clearly, so PlutusPay will share more experiences to help you.
For newly opened accounts
- PayPal requires verification that you are non-shipping (ie, selling to customers but not shipping)? Therefore, they will ask you to provide shipping tracking numbers, proof of identity, and other information. The fact that quite a few sellers used to do this on PayPal has caused PayPal to apply stricter measures.
- When a new account is opened, you have not completed the procedures to authenticate your personal or business documents, and have not declared your information. US tax under FATCA and other requirements.
- PayPal, Stripe discovered that the company or account holder had a “criminal record” in the past.
- You unfortunately opened an account at an inappropriate time. If you open an account during peak account "scans", you may not have time to do anything and your account will be suspended for 180 days.
For accounts that have gone through the initial stage
- Return and complaint rates are too high: Usually a return and complaint rate below 1% is considered the best. Stripe tends to accept lower levels of refunds and complaints than PayPal, and if you exceed this level even slightly, your account may be locked immediately. PayPal may increase the claim processing fee for your account. Usually, this situation often occurs after the sales season, when the customer has received the goods and wants to return them.
- Sudden increase or decrease in sales or product changes: This is also a common situation during the sales season. When sales suddenly increase or decrease or there are product changes, the account may be locked.
- When PayPal prepares to impose Reserves and Holds: In this case, PayPal often requires the account to submit additional funds or other documents.
- Intellectual property rights violations (Trademark): You can be reported or sued for intellectual property rights violations. In some cases, you have to deal with the plaintiff's lawyer for PayPal to reopen the account. This is quite an annoying situation because it usually takes a long time to handle.
Source: Internet
Effects of account blocking
There are the following effects when your account is locked:
- Impact on business operations: When your account is locked, you will not be able to continue receiving payments or performing financial transactions on the PayPal or Stripe platforms. This can seriously affect your business activities, especially for small and medium-sized enterprises.
- Impact on seller reputation: Having your account locked can also hurt your reputation in the market. Customers may not trust and refuse to buy from a website whose account is locked.
- Difficulty in processing payments: When your account is locked, you will have difficulty processing payments from customers. Resolving this situation can cost time and money, affecting the payment process and financial management of individuals and businesses.
Preventive measures
Here are some ways to avoid getting locked out of your account:
- Update complete and accurate information: Make sure you update accurate and authentic information about your company and business line on PayPal or Stripe portals. This helps increase transparency and trust in the eyes of customers.
- Optimize operational processes: Ensure that you manage your finances accurately and professionally, especially transactions on Stripe or PayPal portals
- Minimize financial risk: Limit financial risk by only accepting safe forms of payment and using tools to check for unusual daily activity to ensure risk is limited as much as possible.
Source: Internet
Conclude
Having your account locked on PayPal or Stripe can seriously affect a seller's business and reputation. To avoid this situation, it is necessary to update complete and accurate information, optimize business processes and minimize financial risks.
Account locking is a necessary measure of PayPal or Stripe to prevent fraud and minimize financial risks. However, to ensure transparency and fairness, these platforms need to improve their complaint resolution processes and ensure proper compliance with regulations. This helps build trust and gain trust from sellers and customers in using their platform.
If you are planning to build a cross-border business store or want to scale-up your current business. You can refer to our PlutusPay services such as: Payment gateway rental service, Stripe portal rental, PayPal portal rental.
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