Important Terms:
Funds Hold: A funds hold, or funding hold, is standard in credit card processing and helps to mitigate risk. A funds hold delays part or all of a deposit from reaching your bank account. These held funds usually come from processed transactions that STAX withholds to protect against identified risks from unusual processing patterns.
Funds Hold Workflow:
After account activation or an audit, your credit card processing account may be on a funding hold while the processor reviews and verifies your information. You will not receive deposits for processed payments until the review is done. If a funding hold occurs, one of the risk analysts at STAX, will contact you directly via email. The email might originate from a range of different email addresses. However, all of them will share a common domain, which is @staxpayments.com. This ensures that you, the recipient, can easily identify these emails as legitimate communications from STAX.
The content included in the funds hold emails can differ significantly based on the specific circumstances of each case and the type of documentation or information that is being requested. For instance, one email might include a detailed explanation of the reasons for the hold, while another might request additional information to resolve the issue. To illustrate this point, here is an example of what an email might look like; however, it is important to note that the actual content will vary depending on the individual case:
Subject: Action Required- Stax Payments/Service Fusion - MID 1111114157271111 Service Fusion Electric
Dear Mr. Smith,
Stax appreciates the opportunity to assist with your company’s credit card and/or ACH processing needs since 12/3/2020.
In order to comply with Visa and MasterCard regulations as well as the terms of the Merchant Processing Agreement, Stax regularly evaluates and periodically reviews merchant accounts. So that we may complete your review as accurately as possible, please provide the information requested below.
#1- Copies of your 3 most current bank statements
#2- We will need your expected annual volume for both credit card and ach- along with ticket sizes- we have outdated assumptions for both volume and ticket size and we do need to update
#3- We would like to review (5) transactions all split on Visa (0310) 2/3- have these jobs been completed?
#4- We have noticed a new owner for this business under Bill Jones if John Smith is no longer with this company we will need to have the new owner reapp this business with our sales team.
Your response to this request will help Stax maintain the required information needed for Visa and Mastercard compliance.
I kindly request the information be provided by the end of the day on Friday February 7th so that your review can be completed in a timely manner.
Your merchant account has been placed on a temporary hold until we can obtain all of the information above.
Minimize hold times by following these steps:
- Respond promptly to STAX's requests for documentation
Common Reasons for a Funds Hold:
- The account is brand new and the processor is finalizing the underwriting process by verifying your first few processed transactions
- A processed transaction seems unusual or outside of normal volumes
-
For example, if you typically process $100 transactions, but today you charged a customer $1,000, the processor will likely flag the transaction and request information to ensure it wasn’t fraudulent or accidental
-
- Uncommon account activity
- Large number of declined transactions
- Large number of refunds
- Multiple charges on the same card in a short period of time
- A high number of chargebacks
-
Processors typically look for a chargeback ratio of under 1% of total transactions (in number or dollar amount). If your chargeback ratio begins to exceed this, your account may be flagged
-
Typical Documents Requested by the Processor
- Proof of authorization, like a signed contract
- Copy of the invoice for that transaction
- Your business bank statements (3 months)
- Detailed business description
If you plan to process a transaction that falls into one of these categories, you can proactively reach out to support with the proper documentation, to prevent or reduce a hold.