Merchant Account Hold: What to Do When Funds are Frozen

Merchant Account Hold: What to Do When Funds are Frozen

It is arguably the biggest fear of all e-commerce merchants: Having a merchant account hold placed upon your business. We see it happen far too often, and usually we, the payment service provider, is the recipient of the first phone call by a bewildered merchant wondering:

  1. Why his/her merchant account is frozen
  2. How does s/he get funds back


Firstly, at least in Instabill’s case, it is not us, the payment processor, who places the merchant account hold and withholds the merchant’s funds. It is the merchant’s acquiring bank.

When an acquiring bank freezes a merchant account, it affects the payment service provider as well: PSPs, such as Instabill, want to see an e-commerce business succeed because it earns a small percentage of transaction volume. Everybody wins when a merchant is processing transactions smoothly.

Prevent a Merchant Account Hold: Be Proactive

Optimally, merchants should take steps and be proactive to avoid the pitfalls that lead to a merchant account freeze:

  • Excessive chargebacks and refunds: More than ever, this is critical to avoiding a merchant account hold. Many merchants are hiring outside chargeback management firms and/or implementing a more stringent manual reviews processes.
  • Exceeding volume limits: Requesting a higher limit than needed from your payment service provider is a good, proactive strategy. So is requesting multiple merchant accounts.
  • Failure to meet minimum monthly standards for credit card processing: $5,000 per month is the minimum at Instabill. When merchants are unable to maintain such a minimum, an acquiring bank may hold funds.

What to do during a merchant account hold

A great deal of patience is paramount when a merchant account hold is set by your acquiring bank. Also necessary is a conversation with said bank and perhaps your payment service provider.

Merchants have a side of the story and it is worthwhile to share with, at the very least, to see if the merchant can negotiate a fair release schedule of the withheld funds. It is vital that the merchant understands the reason(s) behind the merchant account hold. Ask the acquiring bank to explain it, and use the explanation as a starting point for negotiation.

Instabill is always on hand

Money through Friday, 8 a.m. until 6 p.m. US eastern time, Instabill merchant account managers are available directly by calling 1-800-530-2444 to discuss ways a high risk merchant can prevent a merchant account hold. Inquiries after business hours will be returned the very next business day.

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