Introduction:
For many online businesses, including supplement sellers and health practitioners, cash flow is critical. One of the biggest concerns when using Stripe as a payment processor is having your funds suddenly withheld. Whether you're selling health supplements, running an e-commerce store, or providing wellness coaching, understanding why Stripe might hold your funds and how to avoid it is essential for keeping your business running smoothly. In this article, we’ll explore why Stripe may withhold funds, and why switching to a dedicated payment processor like Merchant Processing Pros (MPP) could be a better long-term solution.
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1. Why Does Stripe Hold Funds?
Stripe is a popular payment aggregator, which means it groups many businesses under a single merchant account. While this makes setting up payments quick and easy, it also comes with risks. Stripe uses automated algorithms to monitor for potentially risky transactions, and certain industries—like supplements or health services—are more likely to face issues. Here are some of the common reasons why Stripe might hold your funds:
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High-Risk Business Category: If your business operates in what Stripe considers a "high-risk" industry (like selling supplements, peptides, or offering alternative health products), your account is more likely to face scrutiny. Stripe might place a hold on funds as a precautionary measure to protect against potential disputes or chargebacks.
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Spikes in Sales Activity: If your business experiences a sudden increase in sales or larger-than-usual transactions, Stripe may flag your account for review. During this review, your funds may be held until they can verify that the transactions are legitimate.
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Chargeback Issues: High chargeback rates can be a red flag for Stripe. If customers frequently dispute charges on their cards, Stripe may see this as a sign of fraud or poor customer satisfaction, prompting them to hold funds or even terminate your account.
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Regulatory Concerns: Businesses in regulated industries, such as supplement sales, often face additional scrutiny. If Stripe believes your products may violate its terms or be subject to legal regulations, they may freeze your account until the issue is resolved.
2. How Long Will Stripe Hold My Funds?
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Temporary Holds (7-14 Days): These holds are usually short-term and occur when Stripe needs to review your account due to unusual activity or high-risk transactions. Once the review is completed, the funds are typically released.
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Rolling Reserves (Up to 90 Days): In some cases, Stripe may hold a portion of your funds as a rolling reserve to cover potential chargebacks or refunds. This is more common in high-risk industries, where disputes and refunds are more frequent.
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Permanent Holds: If Stripe finds that your business violates its terms of service or is involved in fraud, they may permanently withhold your funds and terminate your account. Recovering those funds can be a lengthy process, if possible at all.
3. Why Supplement and Health Businesses Face Greater Risks
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High-Risk Industry: Stripe's algorithms classify businesses that sell supplements, health products, or niche items (like peptides) as high-risk. This is primarily due to the regulatory uncertainties around these products and the potential for chargebacks.
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Compliance with Regulations: If your products fall into categories that require specific regulatory approvals, like the FDA for certain health supplements, Stripe may err on the side of caution and hold funds until they ensure compliance.
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Higher Chargeback Rates: In the supplement industry, customers sometimes dispute charges due to product dissatisfaction or unmet expectations. Stripe closely monitors chargebacks and may hold funds if the rate exceeds a certain threshold.
4. Why a Dedicated Payment Processor is a Better Solution
While Stripe is easy to set up and great for low-risk businesses, it might not be the best option if you’re selling supplements, health products, or anything Stripe deems high-risk. The unpredictability of fund holds can seriously disrupt your cash flow and business operations. This is where a dedicated payment processor, like Merchant Processing Pros (MPP), comes in as a better, more reliable solution.
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Individual Merchant Accounts: Unlike Stripe, MPP offers dedicated merchant accounts for each business, ensuring your business is thoroughly vetted from the start. This reduces the likelihood of sudden holds or unexpected account terminations.
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Tailored Solutions for High-Risk Businesses: MPP specializes in working with high-risk industries, including supplements and health products. They understand the specific challenges you face, from regulatory concerns to chargeback risks, and offer customized solutions to ensure your transactions are processed smoothly.
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Fewer Account Holds: With MPP, you won’t be subject to the same automated algorithms that trigger frequent holds in Stripe. Because you have a dedicated merchant account, there’s a higher level of stability and transparency, and MPP will work with you directly to mitigate risks without freezing your funds.
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Secure, PCI-Compliant Payment Processing: MPP offers secure, PCI-compliant payment gateways, ensuring that your customer transactions are protected from fraud. Their focus on security and compliance gives you peace of mind that your funds—and your customers—are safe.
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Better Support and Communication: With MPP, you get dedicated customer support that’s always available to help you navigate any issues. If a problem arises, you’ll be dealing with real people who understand your business, not just automated systems.
5. What to Do If Stripe Holds Your Funds
If Stripe has already placed a hold on your funds, here’s what you can do:
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Review Stripe’s Communication: Stripe usually sends an email explaining why your funds are being withheld. Be sure to read this carefully to understand the issue and take any actions they suggest.
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Provide Requested Documentation: Stripe may ask for additional documentation to verify your business or transactions. Providing this information promptly can speed up the release of your funds.
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Consider Switching to a Dedicated Payment Processor: If you’re facing repeated fund holds or account shutdowns, it may be time to switch to a more stable solution. Merchant Processing Pros offers specialized services for high-risk businesses, ensuring you don’t face the same frustrations you’ve experienced with Stripe
Conclusion:
While Stripe is a convenient option for many businesses, it can be a risky choice for those selling supplements, health products, or operating in high-risk industries. The frequent holds and account shutdowns can disrupt your business and hurt your cash flow. For a more reliable and secure payment solution, consider partnering with a dedicated payment processor like Merchant Processing Pros. With MPP, you’ll get a tailored payment solution, fewer holds, and dedicated support that truly understands your industry’s needs.
If you're ready to stop worrying about whether Stripe will hold your funds, it might be time to make the switch. Reach out to Merchant Processing Pros today for a more stable and reliable payment processing solution.
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