Category: STRIPE

  • Credit Card Decline Code 05: Do Not Honor (solution)

    Credit Card Decline Code 05: Do Not Honor (solution)

    Is your store riddled with “Do Not Honor” messages? You’re not alone.

    These codes harm your business and can ultimately lead to account termination. A cleaner processing statement not only looks better but also improves your odds of getting better rates.

    These decline codes are also not card network-specific. They apply to Visa, Mastercard, Discover, American Express, and virtually all others (credit and debit).

    Here’s what Decline Code 05 means and what to do about it.

    RID YOUR STORE OF DO NOT HONOR ERRORS

    What Does the Decline Code “Do Not Honor” Mean?

    “Do Not Honor” is a particularly common decline code. However, it often leaves merchants puzzled about its meaning and implications.

    The code indicates that the cardholder’s bank is unwilling to authorize the transaction. This message is one of the most generic decline codes in payment processing and is unique in its ambiguity.

    Why is it so vague?

    The reason lies in its versatility. “Do Not Honor” can be triggered by a variety of issues, ranging from insufficient funds to suspected fraud. It serves as a catch-all response when the bank decides not to specify the exact reason for the decline. This can be due to the bank’s privacy policies, risk management strategies, or simply an operational choice.

    For merchants using Stripe, understanding this decline code is critical to the survival of your store. It represents a point of transaction failure, which can impact customer satisfaction and overall sales. The key takeaway here is that “Do Not Honor” is a signal for further investigation. It prompts a need to look closer at the transaction details, the customer’s history, and possibly to reach out to the customer for resolution.

    WE CAN HELP CLEAN UP YOUR STATEMENT

    reason for do not honor credit card decline code 05
    The reason behind the declines.

    Why Does This Decline Happen?

    Understanding the “Do Not Honor” decline code is only part of the puzzle. It’s equally important to understand why this code appears in the first place. Here are some reasons Decline Code 05 may appear on your terminal:

    1. Insufficient Funds or Over Credit Limit: One of the most straightforward reasons is that the cardholder doesn’t have enough funds in their account or has exceeded their credit limit.
    2. Suspicious Transactions: Banks and financial institutions are constantly monitoring for fraudulent activities. If a transaction appears unusual compared to the cardholder’s regular spending patterns, it might trigger a “Do Not Honor” response as a precaution.
    3. Cardholder’s Bank Restrictions: Some banks have specific restrictions on where and how their cards can be used. Examples include internal bank policies and geographic location.
    4. Technical Issues: Sometimes, the decline isn’t about the cardholder or their account at all. Technical glitches in communication between the gateway, the merchant’s bank, and the customer’s bank can result in a “Do Not Honor” message.
    5. Expired or Invalid Card Details: Simple errors like entering an incorrect card number, expiry date, CVV, or an outdated billing address can also lead to this decline code.
    6. Lack of Customer Authentication: With the rise of 3D Secure and other authentication measures, a failure to complete these security steps can lead to a transaction being declined.

    PREVENT DO NOT HONOR DECLINES

    stripe account, do not honor decline credit card reason code 05
    Your Stripe account is at risk.

    How Does This Decline Code Affect My Account?

    When a “Do Not Honor” decline code surfaces in your Stripe account or payment gateway, it’s not just a one-off transaction issue. It can have broader implications for your business and how you manage your Stripe account.

    1. Impact on Transaction Success Rates: Each “Do Not Honor” code is a lost transaction, directly affecting your success rates. Frequent declines can signal potential issues with your payment process, affecting customer trust and your business’s reputation.
    2. Monitoring and Analysis Needs: Stripe provides detailed data on every transaction, including declined ones. A “Do Not Honor” code should prompt a careful analysis to identify patterns or recurring issues. This data is crucial for understanding the health of your payment ecosystem and for making informed decisions.
    3. Risk of Increased Scrutiny or Account Holds: If your Stripe account experiences a high volume of declines, especially “Do Not Honor” codes, it might draw increased scrutiny from Stripe. In extreme cases, this could lead to account holds or additional verification requirements, as Stripe might perceive these declines as indicative of higher risk.
    4. Implications for Customer Relationships: Every declined transaction is a potential lost customer. If a “Do Not Honor” decline isn’t handled well, it could lead to customer dissatisfaction and damage to your brand. Proactive communication and offering alternative payment options can mitigate this.
    5. Influence on Chargeback Rates: While a “Do Not Honor” code itself isn’t a chargeback, a pattern of declines can sometimes correlate with higher chargeback rates. This is because unresolved or failed payment issues might lead customers to dispute charges.

    IMPROVE CONVERSION WITH DIRECTPAYNET

    do not honor reduce credit card declines
    Simple ways to reduce Do Not Honor declines.

    How Can I Reduce “Do Not Honor” Card Declines?

    Dealing with “Do Not Honor” declines is a challenge. But there are several strategies you can employ to minimize these occurrences and ensure smoother transactions for your customers.

    1. Educate Your Customers: Often, customers are unaware of the reasons behind a card decline. Providing clear information on your website or during the checkout process about common decline reasons can help them preemptively solve issues like expired cards or incorrect information.
    2. Use Address Verification Service (AVS) and CVV/CVC Checks: Implementing AVS and requiring the CVV for transactions can significantly reduce fraudulent transactions, which are a common cause for “Do Not Honor” error codes.
    3. Enable 3D Secure: 3D Secure adds an additional layer of authentication, which not only reduces the likelihood of fraud but also shifts some liability away from your business. It’s a win-win for security and reduced declines.
    4. Limit Retries: Don’t let the customer continuously retry the transaction. If it didn’t go through the second time, it won’t ever go through. Set retry limits through your gateway.
    5. Regularly Update Your Payment Gateway: Ensuring your Stripe integration is up-to-date means you’re using the latest security and authentication measures, reducing the chances of declines due to outdated protocols.
    6. Communicate with Your Payment Processor: Building a relationship with Stripe and understanding the specific decline codes you’re receiving can provide insights into how to adjust your processes or address specific issues.
    7. Offer Alternative Payment Methods: Sometimes, a card just won’t work. Offering alternative payment methods like digital wallets, bank transfers, or even different card networks can help capture sales that might otherwise be lost.

    By implementing these strategies, you can reduce the frequency of “Do Not Honor” declines, creating a more seamless and efficient experience for both your customers and your business.

    OFFER A BETTER CHECKOUT EXPERIENCE

    other credit card decline codes, card decline reason codes, stripe code
    There are many, many credit card decline codes.

    Other Common Decline Codes on Stripe

    While “Do Not Honor” is a prevalent decline code on Stripe, there are several other codes that merchants frequently encounter. Understanding these can help you better navigate transaction issues and improve your overall payment success rate.

    1. Insufficient Funds: This code appears when a customer’s account lacks sufficient balance to complete the transaction. It’s a straightforward issue that typically requires the customer to add funds or use a different payment method.
    2. Stolen or Lost Card: When a card is reported lost or stolen, transactions attempted with it are automatically declined. This is a critical security measure to prevent fraudulent use.
    3. Expired Card: Cards past their expiration date will be declined. Ensuring customers update their card information is key to avoiding this issue.
    4. Invalid Card Number: If the card number entered doesn’t match any valid card format, the transaction will be declined. This often occurs due to manual entry errors.
    5. Incorrect CVV: The Card Verification Value (CVV) is a security feature, and transactions will be declined if the CVV entered is a mismatch. This is another common entry error, like an incorrect PIN or postal code.
    6. Transaction Not Allowed: This code is used when a card’s issuing bank does not permit the specific transaction type or transaction amount. It can be related to the bank’s restrictions or cardholder settings, or even just a precaution when using a new card.
    7. Duplicate Transaction: To prevent accidental multiple charges, Stripe will decline transactions that appear to be exact duplicates of one another within a short timeframe.
    8. Pick Up Card: This is quite aggressive and is a message to the merchant that you should not give the card back to the customer. The card should be reported.

    Each code offers a different insight into potential problems and their solutions, helping you maintain a smooth and successful payment process.

    CONTROL CREDIT CARD DECLINES TODAY

    the pathway to better payment processing.

    Stripe May Not Be Your Best Solution

    It’s clear that understanding and effectively managing these codes is crucial for the success of any online business. The “Do Not Honor” decline, along with other common codes, presents both challenges and opportunities for merchants to enhance their transaction processes and customer experience.

    The journey doesn’t end with recognizing these codes. It’s about taking proactive steps to minimize them, improve your payment systems, and ensure customer satisfaction. Remember, each declined transaction is an opportunity to learn, grow, and refine your approach to online payments.

    For those looking to take their payment processing to the next level, consider partnering with a dedicated merchant account provider like DirectPayNet. With specialized knowledge, tailored solutions, and a focus on reducing decline rates and managing risk, a partnership with DirectPayNet can transform the way you handle online transactions, leading to increased sales and happier customers.

    REDUCE CARD DECLINE RATES NOW

  • Is Stripe Holding Money? How to Keep Your Business Alive

    Is Stripe Holding Money? How to Keep Your Business Alive

    Your Stripe account shows held funds and you need answers ASAP. Let me walk you through exactly why this happens and the fastest way to get your business running again.

    AVOID ACCOUNT SHUTDOWNS

    Common Triggers for Stripe Fund Holds

    I see merchants facing Stripe holds every day, and understanding these triggers helps you avoid or prepare for potential holds. Let’s dive into the specific reasons Stripe might freeze your funds.

    Unexpected Sales Patterns

    I consistently notice that sudden spikes in transaction volume trigger immediate red flags. When your daily sales jump significantly above your normal patterns, Stripe’s algorithms flag your account for review.

    For example, if you typically process $1,000 daily and suddenly hit $10,000, expect Stripe to investigate.

    This also means that if you scale too quickly, you can get shut down. Not exactly a warm welcome for a booming business.

    Chargeback Issues

    Stripe takes customer disputes extremely seriously. Even a modest increase in chargebacks can trigger holds. The industry standard accepts a 1% chargeback ratio, but Stripe often acts more conservatively.

    Multiple chargebacks within a short period will almost certainly lead to holds. As well, a sudden increase in chargebacks will trigger hold even if you’re below 1%.

    Incomplete Account Verification

    While Stripe makes initial setup incredibly simple, they require thorough documentation for ongoing processing. Missing or incomplete verification items trigger immediate holds:

    • Business registration documents
    • Personal identification
    • Bank account verification
    • Tax documentation

    A lot of this information isn’t asked of you until you’re business grows past $20k/month. Stripe now sees you as a risk and needs to complete the underwriting process.

    High-Risk Industry Operations

    I work primarily with merchants in sectors that face extra scrutiny. These industries consistently experience more frequent holds:

    • Supplements and nutraceuticals
    • CBD and hemp products
    • Adult content or services
    • Dropshipping businesses
    • Digital products and subscriptions
    • Travel services

    In fact, most online businesses are high risk. Unless you sell something you physically have in stock right now, you’re high risk.

    Suspicious Transaction Patterns

    Stripe’s sophisticated algorithms constantly monitor for unusual patterns that might indicate fraud

    • Multiple failed charges
    • Unusual geographic patterns
    • Identical transaction amounts
    • High volumes of refunds
    • Transactions outside business hours

    Rapid Business Scaling

    While growth excites every entrepreneur, I’ve seen how it can trigger Stripe’s risk assessment. A sudden increase in monthly processing volume, even from legitimate business growth, often leads to holds while Stripe evaluates the situation.

    Customer Complaint Patterns

    Beyond chargebacks, Stripe monitors customer service issues. Multiple refund requests or customer complaints about your products or services can trigger a review and subsequent hold.

    This applies even if the complaints haven’t escalated to formal disputes.

    I always remind merchants that Stripe can hold funds for up to 180 days, particularly when they suspect potential risks. This makes understanding and avoiding these triggers crucial for maintaining healthy cash flow in your business.

    PREVENT HOLDS ON YOUR ACCOUNT

    Hold Duration Expectations

    Stripe allows itself quite a long time to hold your funds. Here’s what to expect.

    Initial Holds

    New merchants typically face a 7-14 day initial hold period while Stripe evaluates their business. This serves as a preliminary assessment period for your account.

    Standard Processing Holds

    For established merchants, Stripe typically maintains a 2-7 day standard processing schedule. This duration can decrease to 3 days once you build a solid transaction history.

    Extended Investigation Periods

    When Stripe flags potential risks, they implement longer holds:

    • Standard extended holds last 120 days
    • Additional 90-day extensions occur for high-risk cases
    • Maximum hold periods can stretch to 180 days to cover potential chargebacks

    Rolling Reserves

    Stripe sometimes implements rolling reserves, holding a percentage of your transactions for 30-90 days. This creates an ongoing safety buffer against potential issues.

    Account Termination Scenarios

    In cases where Stripe terminates the relationship, they typically hold remaining funds for 90-180 days. This extended period protects against any lingering chargebacks or disputes.

    I’ve seen cases where merchants face multiple hold extensions, pushing their total hold time beyond 210 days. This particularly affects businesses flagged for elevated risk levels or those experiencing unusual transaction patterns.

    DON’T LET STRIPE STEAL YOUR FUNDS

    Your Action Plan

    I’ve helped numerous merchants navigate Stripe holds, and I’ll share the exact steps you need to take right now to keep your business running.

    Immediate Payment Processing Solutions

    First, you need to restore your ability to accept payments. I recommend setting up multiple processors simultaneously:

    Square Integration (Day 1)

    • Create your account at Square.com
    • Complete their verification process
    • Install payment buttons on your website
    • Begin processing within 24 hours with their standard 2.9% + $0.30 fee structure

    NOTE: Square is a payments aggregator like Stripe, meaning they will also shut you down for the same reasons.

    PayPal Implementation (Day 1-2)

    • Set up a PayPal Business account
    • Add PayPal buttons to your checkout flow
    • Start accepting payments immediately while waiting for advanced features

    NOTE: PayPal is a payments aggregator like Stripe, meaning they will also shut you down for the same reasons.

    Both Square and PayPal make for great backup processors. Neither should be your primary.

    Long-Term Processing Security

    While temporary solutions work, you need a stable, long-term solution:

    Dedicated Merchant Account (Week 1)

    • Submit applications to multiple providers like DirectPayNet
    • Prepare your last 3 months of processing statements
    • Gather your business documentation
    • Complete underwriting requirements

    NOTE: It’s a good idea to have a folder on your desktop that has all of this information inside so you can easily drag and drop.

    A one-pager with the basics of your business is also a good idea.

    Stripe Communication Strategy

    Launch a multi-channel approach to resolve your hold situation:

    Email Communication

    • Send a detailed email to [email protected]
    • Include your account ID and relevant transaction details
    • Attach business documentation proactively
    • Request a specific timeline for fund release

    Formal Written Communication

    • Mail a formal letter via certified mail with tracking
    • Request signature confirmation
    • Include copies of all relevant documentation
    • Provide multiple contact methods

    Documentation Management

    I always tell merchants to maintain meticulous records:

    • Keep copies of all communication with Stripe
    • Document every customer interaction
    • Save all transaction records
    • Maintain a timeline of events

    Risk Mitigation Steps

    While working through the hold:

    • Implement stronger fraud prevention measures
    • Update your terms of service
    • Enhance customer communication
    • Document your improved processes

    Remember, your goal is to maintain business continuity while working through Stripe’s hold process. I’ve seen merchants successfully navigate this situation by following these steps systematically and maintaining professional communication throughout the process.

    SECURE YOUR BUSINESS FOR THE LONG TERM

  • Stripe Account Frozen? GetYourStripeBack!

    Stripe Account Frozen? GetYourStripeBack!

    Imagine checking your Stripe dashboard on a busy Monday morning only to find your account frozen and thousands in payments stuck in limbo.

    Your business isn’t alone in facing this challenge. While Stripe remains one of the most popular payment processors for online businesses, their strict risk management policies can catch even legitimate businesses off guard.

    In this guide, I’ll walk you through exactly what triggers these freezes, if you can get your account back online quickly, and most importantly, how to protect your business from future payment disruptions.

    AVOID STRIPE FREEZES FOREVER

    Understanding Account Freezes

    I’ve witnessed countless Stripe account freezes, and they typically fall into three distinct categories. A temporary hold requires specific actions from you to release funds, a full account freeze prevents both incoming and outgoing transactions, and an account termination completely cuts off your access to Stripe’s services.

    Common Triggers for Account Freezes

    Your Stripe account can face restrictions when their algorithms detect unusual patterns.

    The most frequent triggers include sudden spikes in sales volume, unusually large transactions, or an influx of international payments.

    I’ve noticed that businesses often get caught off guard when scaling quickly, as rapid growth can trigger Stripe’s risk assessment systems.

    Duration of Account Holds

    When Stripe freezes your account, they typically hold your funds for 90 days initially.

    However, this period can extend up to 180 days, especially if they keep renewing the hold period. This extended timeline allows Stripe to cover potential chargebacks and disputes that might arise after the freeze.

    NOTE: The withheld funds will NOT be used to pay for chargebacks, etc. That is Stripe’s last resort. You must pay out of pocket for anything that arises. The only way Stripe will use the funds they hold from you is if you default or claim bankruptcy.

    High-Risk Business Categories

    Certain business types face higher scrutiny. If you’re operating in industries like supplements, CBD, adult content, digital content, or dropshipping, you’re more likely to experience account freezes.

    Stripe takes a particularly cautious approach with these sectors due to their historically higher chargeback rates and regulatory challenges.

    They can only provide services to low-risk businesses because they are allowing your business to operate under their merchant account.

    The Role of Chargebacks

    A spike in chargebacks remains one of the most common reasons for account freezes.

    When multiple customers dispute charges within a short timeframe, Stripe’s system flags this as potential fraud. From what I’ve seen, maintaining a chargeback rate below 1% significantly reduces your risk of account restrictions.

    REDUCE CHARGEBACKS, IMPROVE CONVERSIONS

    Immediate Action Steps

    You most likely won’t get your account back. But you can get your funds back. Here’s what to do to keep your business running and to get your money from Stripe.

    Review the Freeze Notification

    I’ve learned from handling numerous account freezes that your first move should be thoroughly reviewing Stripe’s notification email.

    Look for specific compliance issues they’ve flagged and any requested documentation. Don’t skip the fine print – Stripe often includes crucial details about your next steps in these notifications.

    If there is something specific Stripe is looking for: do it, document it, submit it. If it’s something simple, then you may get your account back up and running. But the clock is ticking.

    Document Everything

    Start a detailed log of your account status and all communications. Take screenshots of your dashboard, recent transactions, and any error messages. I recommend creating a dedicated folder with your business documentation, including:

    • Business registration documents
    • Recent bank statements
    • Processing history
    • Customer communication records
    • Proof of product delivery

    This folder will also help you quickly apply to new PSPs (Payment Service Providers) and merchant account providers.

    Communication with Stripe Support

    Launch a multi-channel approach to reach Stripe’s support team. While their email support serves as your primary contact, I’ve found that taking additional steps significantly improves your response time:

    1. Open a support ticket through your Stripe dashboard
    2. Send a formal business letter via certified mail to Stripe’s legal department. Include your account details, business documentation, and a clear timeline of events. Always request a signature and keep the tracking number:

      Stripe, Inc

      ATTN: Legal Department

      354 Oyster Point Blvd

      South San Francisco, CA 94080

    Maintain Business Continuity

    While working through the freeze, you need to keep your business running. I recommend immediately:

    • Setting up a backup payment processor—open both a PSP like PayPal or Square to start accepting payments ASAP and a merchant account for longevity
    • Communicating transparently with your customers about potential payment delays
    • Documenting all new orders and customer interactions meticulously
    • Keeping detailed records of any revenue impact from the freeze

    Engage with Your Customers

    Contact any customers whose payments might be affected. Be proactive and transparent about the situation. I’ve seen businesses maintain customer loyalty during account freezes by offering alternative payment methods and keeping communication channels open.

    Keeping your customers somewhat in the loop can help reduce chargebacks, as well.

    Remember, your response in the first 24-48 hours can significantly impact how quickly you resolve the situation. Stay professional in all communications, and avoid making multiple support requests about the same issue – this can actually slow down the resolution process.

    OPEN YOUR DEDICATED MERCHANT ACCOUNT

    Prevention Strategies

    To avoid Stripe shutting you down or freezing your funds, here are some strategies to implement.

    Build a Multi-Processor Setup

    Your business needs more than one way to accept payments. I always advise my clients to maintain relationships with at least two payment processors simultaneously.

    This approach ensures you can continue processing transactions even if Stripe freezes your account. When setting up multiple processors, distribute your transaction volume between them to establish processing history with each.

    Stripe has a soft $20k/month volume limit. I’d advice processing low-ticket sales through Stripe and make sure you don’t get too close to that $20k limit.

    Risk Management Implementation

    Implement comprehensive risk management practices to protect your payment processing operations:

    • Monitor transaction patterns closely for unusual activity
    • Deploy fraud detection systems
    • Use real-time transaction monitoring
    • Maintain detailed customer records

    Maintain Compliance Standards

    Stay current with payment industry regulations and maintain strict compliance standards. Your business should:

    • Follow PCI DSS requirements rigorously
    • Keep detailed documentation of all transactions
    • Regularly update your security protocols
    • Conduct periodic security assessments

    Transaction Volume Management

    One of the most effective prevention strategies I’ve implemented with clients involves careful transaction volume management:

    • Gradually increase processing volumes
    • Alert your processor before significant volume increases
    • Monitor your monthly processing patterns
    • Document seasonal fluctuations

    Chargeback Prevention

    Implement a robust chargeback prevention strategy to avoid triggering account freezes:

    • Keep detailed records of all transactions
    • Respond promptly to customer disputes
    • Use clear billing descriptors
    • Maintain transparent refund policies

    Remember, prevention requires constant vigilance. I’ve seen too many businesses take a reactive approach and pay the price. By implementing these strategies proactively, you’ll significantly reduce your risk of experiencing a Stripe account freeze.

    GET A BACKUP PROCESSOR NOW

  • Is Stripe Payment Safe? Online Sales, User Data, and More

    Is Stripe Payment Safe? Online Sales, User Data, and More

    Let me hit you with a shocking stat: 42% of all global fraud cases happen right here in the US. As a payment processor who’s seen countless businesses get burned, I’m here to tell you why payment security isn’t just another checkbox on your to-do list.

    Stripe processes billions in payments annually, and chances are you’ve used them as a customer without even knowing it. But here’s the thing – while Stripe might seem like the go-to choice for your business, there’s more to the story than their slick marketing suggests.

    I’ve seen too many entrepreneurs lose their hard-earned money because they didn’t understand the full picture. Today, I’m pulling back the curtain on Stripe’s safety features, limitations, and hidden gotchas that could make or break your business.

    Whether you’re launching your first coaching program or scaling your ecommerce empire, you need to know exactly what you’re getting into. Let’s dive into the real deal about Stripe’s safety.

    GET PAYMENT PROCESSING THAT BACKS YOU

    Is Stripe Payment Safe for Customer Data?

    Let’s get real about Stripe’s security muscle – because when you’re handling other people’s money, you can’t mess around.

    Bank-Grade Encryption

    Stripe uses AES-256 encryption for all card data at rest. What’s even cooler? The decryption keys live on completely separate machines, so even if someone breaches one system, they can’t access your customers’ sensitive data.

    On your end, you see this as Stripe Tokens—tokenized customer data.

    Fortress-Level Infrastructure

    Here’s something that’ll help you sleep better at night: Stripe’s payment infrastructure runs on its own isolated hosting setup. Think of it like a vault within a vault – even Stripe’s own internal servers can’t see the actual card numbers. They’ve also got this sweet bug bounty program where they pay hackers to find security holes before the bad guys do.

    Fraud Prevention Arsenal

    As someone who’s battled payment fraud daily, Stripe’s approach here makes sense, even if it’s a bit trigger happy. They’ve packed in some serious firepower:

    • Real-time risk assessment that spots sketchy transactions before they happen
    • 3D Secure authentication (that extra verification step your customers sometimes see)
    • Customizable fraud rules you can tweak based on your business needs

    Compliance and Certification

    Stripe holds the PCI Service Provider Level 1 certification – that’s the highest level possible. But here’s the kicker – while Stripe handles the heavy lifting, you’ll still need your own PCI compliance. Don’t worry though – they make it pretty straightforward with their built-in tools.

    Next-Level Data Protection

    Every piece of data that flows through Stripe gets the royal treatment. They use SSL encryption for all connections, and their tokenization system means sensitive card data never touches your servers. That’s fewer security headaches for you and better protection for your customers.

    START TOKENIZING YOUR CUSTOMER DATA

    Is Stripe Payment Safe for Businesses Outside the US?

    Listen up, because location matters big time in the payment processing world. I’ve helped businesses from New York to Sydney to Stockholm set up their payment systems, and here’s the real scoop on Stripe’s geographic safety.

    Global Reach

    Stripe currently operates in 46 countries, and they’re constantly expanding. That’s impressive coverage, but here’s what you really need to know – once you’re approved in your country, you can sell to customers anywhere in the world.

    However, selling in another currency is a different story—and I do recommend selling in the customer’s currency to avoid confusion or a lost sale. Stripe allows you to turn on what’s called Dynamic Currency Conversion so customers from anywhere can see what they’ll actually pay.

    Cross-Border Transaction Safety

    You can process payments in 135+ currencies, which is a game-changer for international businesses. But there’s a cost to this convenience. International transactions come with an additional 1% fee, and you’ll pay another 1% if currency conversion is needed.

    Location Verification Requirements

    Stripe takes location verification seriously. They’ll need to verify your home address to comply with KYC (Know Your Customer) requirements. This isn’t just bureaucratic red tape – it’s actually protecting you and your customers from fraud.

    Many business owners want to open a US Stripe account for a variety of reasons. But if you aren’t physically in the US and your personal or business data isn’t in the US, then you’ll have no luck in succeeding.

    Regional Pricing Variations

    The payment landscape changed dramatically after Brexit, especially for UK and European businesses. For example, if you’re an EEA business selling to UK cardholders, you’re looking at a 2.5% + €0.25 fee structure. These regional differences matter for your bottom line.

    If you really want to open a Stripe account in another country, you should look into opening a business in that country with a physical address there and a person to man the helm. That person can help you

    Pro Tip: If you’re running an international business, consider setting up local currency accounts. This way, you can avoid those pesky currency conversion fees and keep more of your hard-earned money.

    GET MULTI-CURRENCY SUPPORT FOR YOUR STORE

    Is Stripe Payment Safe for Online Businesses?

    Let me drop some truth bombs about business risk that nobody else is talking about. After helping hundreds of businesses navigate payment processing, I’ve seen too many entrepreneurs get their accounts frozen because they didn’t understand their risk level.

    High-Risk vs. Low-Risk: The Real Deal

    Your business might be high-risk without you even knowing it. Stripe loves businesses that sell physical products with immediate delivery. But if you’re in any of these common categories, you’re walking on thin ice:

    • Online coaching or consulting
    • Digital courses or memberships
    • Subscription boxes
    • Dropshipping
    • Made-to-order products

    The Digital Product Dilemma

    I see this all the time with course creators and coaches. You think you’re safe because you’re making good money, but here’s the harsh reality – Stripe considers digital products high-risk.

    Why? Because there’s no physical inventory to back up your sales. If customers request refunds en masse, Stripe is left holding the bag. There’s also a higher likelihood of chargebacks and reported fraud.

    MCC Codes: Your Business’s Secret Identity

    Every business has an MCC (Merchant Category Code), and it’s like your payment processing DNA. Stripe automatically assigns you one based on your business type, but if they assign you the wrong code, you could be operating under false security. Always verify your MCC matches your actual business model.

    Risk Mitigation Strategies

    Want to stay safe? Here’s what I tell my clients:

    • Document everything about your delivery process
    • Keep detailed records of customer interactions
    • Build a solid refund policy
    • Consider splitting high-risk and low-risk products into separate accounts

    Remember, Stripe isn’t evil – they’re just protecting themselves. But as a business owner, you need to protect yourself too. If you’re in a high-risk category, you might want to look at specialized payment processors who understand your business model better.

    OPEN A HIGH-RISK PAYMENT PROCESSING ACCOUNT

    Is Stripe Payment Safe If I Don’t Have a Business Bank Account?

    Let’s talk about scaling your business – because what works at $5k/month might get you shut down at $50k/month. I’ve seen too many entrepreneurs hit the panic button when Stripe suddenly holds their funds, so let me break down what really happens when you start making serious money.

    The Volume Game

    Here’s a reality check – Stripe starts looking at you differently once you hit certain revenue milestones. While they don’t advertise these thresholds, I’ve noticed increased scrutiny typically kicks in around:

    • $20,000 monthly revenue
    • Sudden spikes in transaction volume
    • Rapid growth in international sales

    The Bank Account Evolution

    Starting with your personal bank account? That’s cool for now. But once you start scaling, you’ll need to level up your banking game. Here’s what I tell my clients:

    • Under $20k/month: Personal account might work
    • Over $20k/month: Get a business bank account ASAP
    • Over $50k/month: You need a dedicated merchant account

    The Underwriting Process

    Nobody talks about this, but Stripe will eventually want to underwrite your business. When this happens, they’ll typically:

    • Review your processing history
    • Check your business documentation
    • Analyze your customer dispute ratio
    • Verify your delivery methods

    Every payment service provide does this, Stripe just puts it off to the very last second. Operating this way lets businesses open an account in seconds. But when the time comes, your account will be frozen until Stripe approves you for a merchant account—and the rate won’t be favorable. That’s not even mentioning paused sales during the climb of your business.

    Reserve Requirements

    Let me be straight with you – as you grow, Stripe might start holding some of your money in reserve. This isn’t personal; it’s risk management. They might hold:

    • A percentage of your daily sales
    • Funds for a specific time period
    • Extra reserves during high-growth periods

    Reserves are normal. You should learn to allocate a percentage of your profit towards a reserve anyway, even if it’s not required.

    Keep in mind that Stripe won’t use your reserve funds to pay for things like chargebacks and refunds. That will still have to come directly from you.

    Pro Growth Tips

    Want to scale safely? Here’s what works:

    • Keep your chargeback ratio under 0.75%
    • Document your fulfillment process meticulously
    • Build a cash buffer for potential holds
    • Consider multi-processor relationships as you grow

    Remember, growth is good, but controlled growth is better. Don’t let payment processing be the bottleneck that kills your scaling dreams.

    BETTER PAYMENT PROCESSING IS HERE

  • StripeIsHoldingFunds! How to get your withheld funds back from Stripe

    StripeIsHoldingFunds! How to get your withheld funds back from Stripe

    Stripe is one of the most popular PSPs (payment service provider) in the world. It’s quick and easy setup also makes it one of the most accessible. But this PSP is not without its drawbacks.

    Stripe holding funds is one of the biggest issues we see from businesses who want to utilize its services. Here’s what to do to stop Stripe from holding funds and how to secure your business for long-term success.

    AVOID STRIPE HOLDS FOR GOOD

    Understanding Stripe’s Fund Holding Policies

    Stripe actively monitors and holds funds when specific risk patterns emerge in your payment processing activities. Let me explain exactly what triggers these holds.

    Why Stripe Holds Funds

    Your business can trigger a hold even with a stellar processing history. For example, if your chargeback ratio jumps from 0.05% to 0.2%, Stripe’s automated system flags this change as a potential risk indicator. This happens because sudden spikes, regardless of the absolute percentage, signal possible underlying issues.

    Stripe examines your sales volume patterns daily. A sudden surge in transactions, even from legitimate customers, can prompt an automatic hold while their risk team evaluates the activity. This applies particularly to seasonal businesses or those running successful promotions.

    Your business model plays a critical role in hold decisions. Stripe categorizes certain business types as higher risk, such as subscription services, digital products, or travel-related businesses. Operating in these sectors means Stripe applies stricter monitoring to your payment process.

    The payment service provider also responds to external factors. Changes in your customer dispute patterns, unusual refund requests, or shifts in average transaction values can all trigger holds. These holds serve as a protective measure while Stripe assesses whether these changes represent normal business evolution or potential risk.

    The Reserve System

    Stripe’s reserve system operates differently from traditional merchant account reserves. When Stripe places funds in reserve, they create a rolling hold that maintains a specific balance based on your processing volume and risk assessment.

    Your reserve doesn’t function as a chargeback or refund payment source. Stripe requires you to maintain sufficient funds in your account to cover these costs separately from any held reserves. Think of the reserve as a security deposit rather than a working capital fund.

    The duration of your reserve depends on several factors. Stripe typically holds funds for 30 to 120 days, aligning with the standard chargeback dispute window in the payment card industry. However, high-risk merchants often face longer holding periods.

    Third-Party Chargeback Alerts

    Stripe’s handling of third-party chargeback alerts creates unexpected challenges for businesses. When you subscribe to alert services like Ethoca or Verifi, these notifications sometimes enter Stripe’s system tagged as chargebacks or refunds rather than alerts.

    This miscategorization can trigger automated holds on your account.

    Your payment statement reveals how Stripe processes these alerts. Check your daily transaction records – if alerts appear as chargebacks rather than notifications, they artificially inflate your chargeback ratio. This classification issue affects your account health metrics even when you’re actively working to prevent disputes.

    The alert service you choose impacts how Stripe processes these notifications. Some services integrate seamlessly with Stripe’s system, while others generate alerts that Stripe’s platform may block or misinterpret. This variation explains why merchants using identical alert services often experience different results.

    PROTECT YOUR BUSINESS FROM STRIPE HOLDS

    Immediate Steps When Funds Are Held

    To get your money back from Stripe, you need to negotiate with the processor. Here’s how to do it for successful release.

    Communication Strategy

    Contact Stripe immediately through their dashboard when you discover held funds. Include specific details about your situation in your initial message. Document every communication attempt and response to build a clear timeline of your resolution efforts.

    Your response to Stripe should include:

    • Detailed explanation of any sudden changes in your business patterns
    • Evidence of legitimate transactions and customer satisfaction
    • Documentation of your fraud prevention measures
    • Proof of product or service delivery
    • Recent improvements to your payment process

    Prepare comprehensive documentation before reaching out. Stripe’s risk team responds more favorably to merchants who provide complete information upfront. Include your current chargeback prevention strategies, customer verification procedures, and any recent changes to your business model.

    This documentation and release request should also be physically mailed to Stripe’s legal department. Send it in a certified letter and require a signature.

    The negotiation process requires persistence and professionalism. Follow up every 48-72 hours if you don’t receive a response, but avoid sending multiple messages in short succession. Each follow-up should include new information or clarification of previously submitted details.

    Your communication approach changes based on the hold trigger. For example, if Stripe holds funds due to increased chargebacks, focus your response on:

    • Recent improvements to your fraud prevention systems
    • Changes in customer service protocols
    • Implementation of stronger verification methods
    • Detailed analysis of chargeback root causes

    Remember that Stripe’s support team handles numerous cases daily. Make their job easier by organizing your information clearly and maintaining a professional tone throughout all interactions. This approach typically leads to faster resolution and clearer communication channels.

    Alternative Payment Solutions

    You need to establish backup payment processing immediately when Stripe holds your funds. Start by opening a PayPal business account – it provides instant access to process payments while you work on a long-term solution. PayPal’s simplified setup and broad customer acceptance make it an ideal temporary option.

    We say PayPal because you won’t be able to open another Stripe account with the same details you used on the one that’s currently frozen. There are other options, like Square, you could try.

    Your next critical step is applying for a dedicated merchant account. Unlike aggregators like Stripe, dedicated merchant accounts offer more stability and control over your payment processing. These accounts provide unique identification numbers for your business and typically offer more predictable holding policies.

    Consider implementing multiple payment methods to diversify your processing risk. Digital wallets like Apple Pay and Google Pay, ACH transfers, and buy-now-pay-later solutions can help maintain cash flow while reducing dependency on a single processor. This approach not only protects your business but also provides customers with more payment flexibility.

    High-risk merchants should specifically seek providers specializing in their industry. These specialized merchant accounts might charge higher fees, but they offer more stable processing and clearer communication about fund holds. Working with a high-risk merchant account provider helps prevent future processing interruptions and provides better support during challenging situations.

    OPEN A HIGH-RISK MERCHANT ACCOUNT

    Long-Term Solutions

    Your Stripe account likely won’t be reinstated, which leaves you with only a couple of options. The first is opening a real, dedicated merchant account. The other is trying to use Stripe again (with changed business details). Only the first option will sustain your business for the long term.

    Dedicated Merchant Accounts

    A dedicated merchant account provides your business with a unique identification number and direct connection to an acquiring bank, offering greater stability than payment aggregators like Stripe. This solution proves especially valuable for businesses processing high volumes or operating in high-risk industries.

    Your dedicated merchant account delivers several key advantages over aggregator services. You’ll gain more control over your payment processing, including the ability to negotiate transaction fees and processing rates directly with the acquiring bank. The account also enables your business name to appear on customer statements.

    The application process typically takes 1-2 weeks and requires more documentation than aggregator services. You’ll need to provide:

    • Government-issued photo ID
    • EIN or tax ID number
    • Business bank account details
    • Voided check with your business name
    • Previous processing statements (if applicable)

    While the setup process takes longer, the increased account stability and reduced risk of sudden terminations make it worthwhile for established businesses.

    Consider maintaining both a dedicated merchant account and an aggregator service like Stripe. This dual-processing approach provides backup options and allows you to route different transaction types through the most appropriate processor.

    For example, you might process high-risk transactions through your dedicated account while using Stripe for lower-risk sales.

    NEGOTIATE YOUR TERMS TODAY

    Business Model Adaptations

    Transform your business operations to reduce processing risks and prevent future fund holds. Start by analyzing your current sales patterns and identifying high-risk elements that might trigger processor concerns.

    For example, shift from annual billing to monthly subscriptions to reduce the average transaction size and spread risk across multiple payments.

    Your customer verification process needs strengthening beyond basic payment authentication. Implement a tiered approach:

    • Level 1: Standard transactions require basic verification
    • Level 2: High-value orders need additional documentation
    • Level 3: International sales undergo enhanced scrutiny
    • Level 4: Recurring billing requires periodic revalidation

    Diversify your payment acceptance methods to reduce dependency on card processing. Consider adding:

    • ACH payments for recurring customers
    • Cryptocurrency options for tech-savvy clients
    • Digital wallet integration
    • BNPL services
    • Bank transfer options

    Your customer service model should evolve to prevent disputes before they escalate to chargebacks. Create a rapid response team dedicated to handling customer concerns within hours instead of days.

    Adjust your pricing strategy to account for processing risks. Consider building a small risk premium into your pricing structure to cover potential processing issues. This approach helps maintain profitability while creating a buffer for occasional payment disputes or processing challenges.

    DIRECTPAYNET WILL HELP SECURE YOUR BUSINESS