If you’re reading this, you may have just experienced the shock and frustration of having your Stripe account shut down unexpectedly.
One moment, you were processing payments and running your online business smoothly. The next, you found yourself locked out of your account, unable to accept payments or access your funds.
As a business owner, this situation can be incredibly stressful and overwhelming. You’re likely wondering what happened, why Stripe closed your account, and most importantly, how you can get your payment processing back up and running as quickly as possible.
Let’s uncover the common reasons why Stripe shuts down accounts and provide you with both short-term and long-term solutions to help you recover and protect your business from future disruptions.
OPEN A DEDICATED MERCHANT ACCOUNT
Why Does Stripe Shut Down Accounts?
Stripe shuts down merchant accounts for several reasons, primarily driven by their risk management and compliance policies. Their algorithms continuously monitor transactions for unusual patterns that may trigger account closures.
Excessive Chargebacks or Disputes
If your account gets hit with a lot of chargebacks or disputes, Stripe might see your business as too risky. They could decide to freeze or close your account to avoid potential losses. Stripe aims to keep chargeback rates on their platform as low as possible to avoid issues with credit card companies and banks.
Selling Prohibited Products or Services
Stripe maintains a list of prohibited business activities, including those involving adult content, gambling, illegal products, or certain financial services (among many others). If your business falls into one of these categories, they will likely shut down your account.
Suspicious or Fraudulent Activity
Stripe’s system constantly monitors for fraud or anything that looks suspicious, such as sudden spikes in sales or transactions from high-risk areas. If something triggers their highly sensitive alarms, your account could be frozen or shut down. Unusual transaction patterns that deviate from your typical business operations may also lead to account closure.
Operating in a High-Risk Industry
Even if your business isn’t prohibited, Stripe may categorize you as high-risk based on your industry. This could include businesses offering digital goods and services with no physical proof of delivery, companies operating internationally and accepting global payments, or industries prone to high chargeback rates. If Stripe labels you as a high-risk merchant, they might decide to close your account.
Scaling Too Quickly
If your sales volume reaches a certain threshold, typically around $25,000 per month, Stripe may suspend your account. At this point, they see your business as a potential liability and need to investigate further. Stripe will initiate a more thorough due diligence process, as you’re now making significant money through their platform.
To avoid issues during this review, Stripe may preemptively close your account without warning until they can provide you with a dedicated merchant account that suits your business type and volume.
Immediate Steps to Take When Stripe Closes Your Account
When Stripe shuts down your account, you need to act quickly to minimize disruption to your business. Here’s what you should do right away.
Read Stripe’s Notification Email Carefully
Start by thoroughly examining the email Stripe sent you about your account closure. Look for specific reasons they’ve provided for shutting down your account. This information will help you understand the situation better and guide your next steps. Pay close attention to any instructions they’ve given about accessing your remaining funds or completing pending transactions.
Check Your Bank Accounts
Immediately log into your bank account and verify whether Stripe has stopped making deposits. If you see any pending transfers, contact your bank to confirm whether they’ll process these transactions. Understanding your current financial situation will help you plan your cash flow for the coming days or weeks.
Complete Unfinished Transactions
If you have any ongoing or pending transactions, try to complete them using an alternative payment method. Reach out to customers directly and explain the situation. Offer them other ways to pay, such as bank transfers or even cash on delivery if possible. This step ensures you don’t lose sales or disappoint customers who are waiting for their orders.
Communicate with Your Customers
Draft a clear, concise message to your customers explaining the temporary payment processing issue. Assure them that you’re working on a solution and provide alternative ways they can pay for your products or services in the meantime. Consider offering a small discount or incentive to maintain customer goodwill during this disruption.
Secure Your Financial Data
Download all your transaction history and financial reports from your Stripe dashboard before you lose access. This data will be crucial for your accounting, tax purposes, and potentially for setting up a new payment processor. Make sure to back up this information securely.
Start Researching Alternatives
Begin looking into other payment service providers immediately. Consider options like PayPal and Square for a quick setup, then a dedicated merchant account provider for long-term success. Research their terms of service carefully to ensure your business type is acceptable and to avoid similar issues in the future.
Seek Legal Advice if Necessary
If you believe Stripe has closed your account unfairly or in violation of your agreement, consider consulting with a lawyer who specializes in financial technology or e-commerce law. They can advise you on your rights and potential recourse.
Can You Get Your Stripe Account Reinstated?
When Stripe shuts down your account, you’ll likely find yourself wondering if you can convince them to reverse their decision. Unfortunately, in most cases, you’ll face an uphill battle.
Stripe’s Decision Is Usually Final
Stripe typically makes account closure decisions based on careful consideration of risk factors and compliance issues. They rarely overturn these decisions, even if you appeal. Once they’ve determined that your business poses too high a risk or violates their terms of service, they’ll stand firm on their choice to terminate your account.
You Can’t Reopen the Same Account
In the vast majority of cases, Stripe won’t allow you to reactivate a closed account. This is especially true if they shut you down for violating their terms of service or engaging in prohibited activities. Stripe takes these violations seriously and considers them grounds for permanent account closure.
Opening a New Stripe Account Carries Risks
While you might consider opening a new Stripe account, proceed with caution. Stripe’s systems are sophisticated and can often detect when a merchant tries to open a new account after a previous closure. If they catch you doing this, they’ll likely shut down the new account immediately. Moreover, this action could lead to more severe consequences, such as being permanently banned from using Stripe’s services.
Address the Root Cause
Instead of trying to get your old account back, focus on addressing the issues that led to your account closure. If Stripe cited high chargeback rates, for example, work on improving your customer service and dispute resolution processes. If your business fell into a prohibited category, consider pivoting your business model or finding a payment processor that specializes in high-risk industries.
Consider Alternative Payment Processors
Rather than fixating on reinstating your Stripe account, explore other payment processing options. Look for providers that cater to businesses in your industry or that have more lenient policies regarding your specific situation. Remember, different payment processors have varying risk tolerances and specialties.
Learn from the Experience
Use this setback as an opportunity to improve your business practices. Review Stripe’s reasons for closing your account and implement changes to prevent similar issues in the future. This approach will not only help you with alternative payment processors but also strengthen your business overall.
GET LONG-TERM PAYMENT PROCESSING
Short-Term Solution: Set Up an Alternative Payment Service Provider
When Stripe shuts down your account, you need to act fast to keep your business running. Here’s how you can quickly set up an alternative payment service provider (PSP) as a short-term solution.
Choose a Quick-Setup PSP
Look for PSPs that offer rapid account setup and approval. Popular options include PayPal, Square, Shopify Payments, and Stripe. These providers often have streamlined onboarding processes that can get you up and running within 24-48 hours.
Complete the Application Process
Visit the chosen PSP’s website and start the application process immediately. You’ll need to provide basic information about your business, including your legal name, tax ID, and business type. Have all necessary documents ready to speed up the process.
*NOTE: If you’re opening another Stripe account, you cannot use the exact same details as your previous Stripe account.
Set Up Your Payment Gateway
Once approved, quickly integrate the new payment gateway into your website or e-commerce platform. Many PSPs offer plugins or easy-to-use APIs that simplify this process. If you’re not tech-savvy, consider hiring a developer to help you implement the new payment system swiftly.
Test Your New Payment System
Before going live, thoroughly test your new payment system. Process a few test transactions to ensure everything works smoothly. Check that funds are depositing correctly into your linked bank account.
Most gateways and PSPs provide a test setting.
Update Your Checkout Process
Modify your website’s checkout process to reflect the new payment options. Update any payment-related information on your site, including logos and accepted payment methods.
Be Prepared for Higher Fees
Understand that as a quick solution, you might face higher processing fees or less favorable terms compared to your previous Stripe account. Consider this a temporary cost of keeping your business operational.
Start Planning for a Long-Term Solution
While this alternative PSP serves as a quick fix, start researching more permanent solutions immediately. Look into dedicated merchant accounts that can offer more stability and potentially better rates in the long run.
Long-Term Solution: Open a Dedicated Merchant Account
To ensure the long-term stability of your payment processing, consider opening a dedicated merchant account. Here’s how this solution can benefit your business and what steps you should take.
Connect with a Merchant Account Providers
Start by looking for merchant account providers that specialize in your industry or business type. Pay special attention to providers that work with businesses deemed high-risk by traditional PSPs like Stripe. Look for providers with experience in your specific niche.
DirectPayNet specializes in high-risk industries. If you’re Stripe account was closed suddenly, you are likely a high-risk business. We can help.
Negotiate Pricing and Features
Negotiate with the providers you’re in touch with regarding pricing, fees, and features. Interchange-plus pricing often results in lower overall fees compared to flat-rate pricing. Consider features like fraud protection, chargeback management, and recurring billing support.
Prioritize Customer Support
As a business owner, you’ll want a responsive and knowledgeable support team to help you navigate any issues that arise. Read reviews and ask for references to gauge the quality of each provider’s support.
Prepare Your Application
Gather all necessary documents and information for your merchant account application. This may include your business license, tax ID, bank statements, processing history, and a detailed business plan. Be prepared to provide more in-depth information than you would for a PSP like Stripe.
Undergo Underwriting
Be ready to go through a more extensive underwriting process than with a PSP. Merchant account providers will carefully evaluate your business to determine your risk level and set appropriate rates and terms. Provide all requested information promptly to speed up the process.
Integrate Your Payment Gateway
Once approved, work with your merchant account provider to integrate their payment gateway into your website or e-commerce platform. They may provide a dedicated support team to assist you with this process.
Test and Monitor
Before launching, thoroughly test your new payment system to ensure smooth transactions. Once live, closely monitor your processing for any issues or red flags. Address any concerns promptly with your account provider.
Remember, while a dedicated merchant account may require more effort and expense upfront, it can provide much-needed stability for your business in the long run. By working with a provider that understands your unique needs and risks, you can minimize the chance of future account closures and focus on growing your business.