Stripe Froze and Suspended My Account! Navigating the Challenge

February 29, 2024

Let’s face it: all businesses, regardless of the industry, need a legitimate and trusted payment processor to generate income and drive success. Now that digital transactions are on the rise, it’s no surprise that business leaders continue to search for the best payment processing software that won’t make their heads ache or cause such inconvenience. 

Enter Stripe, a financial service and software company that offers swift and reliable payment processing and programming interfaces for mobile applications and e-commerce websites. Stripe allows businesses of all sizes to accept payments, manage financial services, and send payouts. It could be your company’s best friend – that is, if you use your account right. 

There have been instances when businesses experienced their Stripe accounts being frozen, closed, or even terminated. This means your funds could also get withheld. When this happens, you can’t do anything with your account. 

In this comprehensive guide, let’s delve into the most common reasons why Stripe freezes accounts and how to avoid such unfortunate circumstances. Moreover, we’ll also uncover the steps for reactivating and unfreezing your Stripe account. 


image of stripes' terms and conditions

Stripes’ Terms and Conditions

Understanding why Stripe froze your account also means understanding the software’s terms and conditions. These cover various aspects regarding the services Stripe offers, which may include the following:

  • Responsibly using the software
  • Knowing your duties as an account holder
  • Different operational particulars across multiple accounts
  • Legal policies and guidelines on fund handling and dispute
  • Tax law compliance

Businesses can choose from various payment methods on the platform, ranging from Google Play to ACH and Apple Pay, all available in varying geographies. Stripe also has the right to add or remove such payment methods. Additionally, the platform also has the right to amend the payment methods, and users should be responsible enough to stay informed about such changes. 

Another part of Stripe’s terms and conditions involves financial transactions. The platform allows businesses to add funds through payment cards, bank transfers, and other methods, provided that users fill in accurate information. More importantly, Stripe must be authorized to initiate debits to business accounts. Stripe also outlines the process for transferring or redeeming funds, including the conditions under which transfers or redemptions may be paused or terminated. 

What’s Not Allowed

Stripe does not allow using the platform for services that include illegal activities, gambling, certain adult services and content, and products like explosives and weapons and goods or services that infringe on intellectual property rights. High-risk jurisdictions and accounts are also prohibited, as well as financial services, without prior approval. 

image of the story behind stripe freeze your account


The Story Behind Stripe Freezing Your Account

There are several reasons behind Stripe freezing your account. It could be anything between the following:

  1. You have excessively high chargebacks (above 2%)
  2. Stripe sees your account as unauthorized.
  3. Your business makes too many transactions too quickly
  4. Stripe labels your business in the restriction category
  5. You lied about your business type or website
  6. It could be a geographical inconsistency. 

Knowing the real reason behind your frozen account makes it easier to uncover the solutions how to get your Stripe profile back. It is important to note that Stripe and other Aggregators like Paypal work by having a limited barrier for underwriting, often using automated systems, and then having a “flagging” system that puts accounts under further human review. Basically, they do less underwriting in the beginning in order to handle the volumes of accounts and rely on a lot of automated flags to catch merchants potentially breaking the rules.

Placing Excessively High Chargebacks

Stripe may suspend or freeze your account when it determines your account has too many chargebacks. At best, keep them under 0.9% to avoid issues with Stripe, as going above this rate will almost certainly put, at a minimum, a flag on your account.

Your Account is Unauthorized

Naturally, Stripe can suspend or freeze your account when it suspects it’s unauthorized. This can apply to businesses involved in the illegal selling of goods or offering services in gambling, cannabis, and other high-risk industries. Unauthorized accounts may also include unverified eCommerce merchants, especially when your business failed to confirm your identity and address.

image of you make huge transactions

You Make Huge Transactions

Stripe may also view your account as a liability when your sales volume skyrockets, let’s say at $25,000 per month. This means your business is selling way over the standard, and a need to investigate your products and services may arise. 

During the investigation, Stripe follows a due diligence process. The platform converts your business into a real merchant account, which does not support all companies. Stripe might close your account without warning or notifying your business to ensure the continuity of this process and the investigation. 


Your Business is Considered a High-Risk Merchant 

Unfortunately, you cannot use the platform if your business is classified under Stripe’s high-risk merchant accounts. Common eCommerce industries that are considered high-risk include dropshipping, coaching, travel, digital products, and supplements. The following are also the most common reasons why Stripe flags your business as a high-risk merchant account:

  • Your business belongs to a high-risk industry
  • Your account offers digital products and services
  • You are operating and accepting payments across different countries

Stripe Freezes Accounts Without Prior Warning

As a reputable payment processor, it’s part of Stripe’s terms and conditions to terminate and freeze accounts deliberately without prior explanation or warning. This also covers the platform holding funds from your business. If you’re lucky enough, a 30-day notice may be given to your account to dispute claims and flags on your account. However, there’s no guarantee that your account will remain open during the 30-day notice period. 

image of frozen stripe account

Frozen Stripe Account: The 180-Day Rule

If you’re wondering how long Stripe holds and freezes your account, don’t worry; it won’t take forever. Generally, the platform suspends your account for about six months or 180 business days. 

The 180-day or 6-month period should cover costs due to chargebacks, returns, fees, and refunds. You must understand that when your account is frozen, your business isn’t earning new money on your Stripe account. With this, Stripe ensures to have enough funds should emergencies arise.

What Stripe’s Merchant Agreement Has to Say

A specific section on Stripe’s terms and conditions mentions the platform’s right to hold, suspend, freeze, or terminate your account when there is a violation of the terms you agreed to when you signed up.

Holding and Freezing Your Account

Stripe reserves the right to freeze or hold business accounts suspected of engaging in fraudulent transactions, violating the terms of service, and breaching regulatory requirements. 

According to Stripe, it can hold your account, including your available money, for as long as necessary while the platform performs definitive investigations. Should there be a chargeback, Stripe has the right to hold the disputed money until chargebacks are resolved, taking at least 90 to 180 days. 

During the time when Stripe freezes or holds your account, there isn’t pretty much anything you can do while waiting. Your business is also unable to process new transactions and even withdraw funds. 

image of account termination

Account Termination

In more serious instances, Stripe also has the right to terminate or “close your Stripe Account at any time for any or no reason.” The platform has enumerated all the reasons behind its purposeful termination, highlighting selling or offering illegal activities, goods, and services. Additionally, this payment processor reserves the right not to reinstate the services suspended in your account.

During this period, Stripe can hold any available funds in your account for 90 to 180 days, covering potential disputes or chargebacks because of the termination. After deducting all chargebacks, the remaining balance will be credited to you after the entire termination process. 

The Possibility of Getting Your Funds Before The 180-Day Rule

Yes, there can be fortunate cases when negotiating with Stripe can potentially speed up releasing your account’s frozen funds – that is, if you’re willing to approach the platform’s customer service and lay out your concerns. 

One way to negotiate Stripe’s terms to release your funds before reaching 180 days is to learn why the platform suspends your account and explain the steps you underwent to prevent any risks. 

For instance, if your account gets frozen because of high chargeback rates, you can try reducing them and showing them to the platform. Should it be because of regulatory non-compliance, show proof of your actions to correct your mistakes. 

As one of the widely used digital payment processors, it’s no excuse that Stripe only wants to ensure safety and security on its platform. As long as you can prove your business is dedicated to resolving any issue, Stripe may gladly release your funds before reaching 180 days. 

Constantly Communicating with Stripe

You must also maintain constant communication with Stripe while resolving the issue. Always ask for regular updates if possible, and ask the platform’s customer representatives to guide your business in determining the problem as much as possible.

One way to ensure continuous communication is by contacting Stripe’s risk department (whose contact information isn’t easy to locate) or browsing through helpful resources on the platform’s Risk Management. You can learn about proper ways to mitigate risks, address frozen accounts, and the best measures to retrieve your funds faster. 

image of consulting a legal professional

Consulting A Legal Professional 

Sometimes, consulting a legal professional may be an option when the reason behind your frozen account is regulatory or legal issues. These experts can provide the best guidance on navigating such complex matters so that your business can start complying with the necessary principles, guidelines, and regulations. 

Creating A New Account: Will It Help?

The next thing you’ll probably think of is simply creating a new account so everything returns to normal. However, creating a new Stripe account won’t resolve any issues, especially with your previous account currently frozen and funds withheld. 

Stripe’s risk management systems can identify and link related accounts, primarily when you place yourself as your new account’s owner or business leader. The platform can detect issues you currently have in your old account, including withheld funds and suspended accounts. 

Moreover, did you know that recovering from a frozen Stripe account by creating a new account without addressing existing issues violates Stripe’s terms of service? Doing this can lead to even more serious restrictions and permanent suspension or bans across the platform., and possibly getting added to the MATCH LIST.

The Importance of Transparency in Setting Up Accounts

Transparency is key to preventing Stripe from holding your funds or freezing your account. Always ensure accurate details about your products, services, business model, transaction sizes, and monthly volumes. Update your account promptly to reflect any significant changes in your business, keeping Stripe informed and your operations smooth.

image of applying for a high risk merchant account

Applying for A High-Risk Merchant Account

Another practical step to address this issue is opening a new high-risk merchant account with another trusted payment processor. While this does not directly solve the problem of having your funds withheld by Stripe, it provides an alternate route to continuously process payments, maintain your cash flow, and keep your business operational while fixing your Stripe account. 

Below are also essential considerations before applying for a high-risk account:

  • Read and understand your chosen new payment processor’s terms, conditions, and service agreement.
  • Check whether the other processor caters to your business needs and current tech stack.
  • Practice transparency when creating a high-risk merchant account with the new processor to prevent experiencing the same issues you encountered on Stripe.

Shark Processing can help address high-risk business needs. This unique payment processing platform offers advanced fraud prevention, chargeback management, and security. We target sectors avoided by other processors, including adult entertainment, online gaming, and even cannabis. 

Shark Processing ensures easy integration, excellent customer support, and transparent billing. We aim to enhance and protect your business without the risk of account issues often encountered with services like Stripe.

Contact Shark Processing today to learn more. 

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