Square is withholding up to 30% of customer funds
Rolling reserves mean withholding customer funds for up to 120 days
While Twitter CEO, Jack Dorsey, has made headlines for his handling of President Donald Trump’s controversial tweets, Dorsey’s other company, Square, has received a growing number of customer complaints.
Thousands of Square users have complained the company recently began withholding 20-30% of the money they’ve collected from customers.
On Tuesday, Square confirmed the practice of withholding customer funds in a blog post. Described as a rolling reserve, Square withholds a cut of a seller’s processing volume and then releases it on a rolling basis. This process can take up to 120 days.
Square claims the practice of withholding customer funds targets risky sellers taking prepayments for goods or services provided on a future date. Risky sellers also include companies selling dispute-prone goods or services. Square explained it notifies sellers when it’s placed them in the program.
“We know that reserves can be frustrating for sellers so we use them sparingly, and we spend a lot of time building and adapting our tools based on feedback,” the blog post reads.
According to a recent New York Times investigation, some small businesses have been disproportionately affected by Square’s practice. Jesse Larsen, the owner of PennyWise Contracting, a Washington-based construction company, said Square began withholding 30% of each transaction in early May. To keep his business afloat, Larsen has put hiring on hold and was forced to sell some of his personal property.
Larsen isn’t the only Square customer impacted by Square’s rolling reserves. Over 1,600 business owners have signed an online petition asking Square to end rolling reserves.
“Small businesses can barely survive as it is, and now that Square, Inc. is withholding funds, many more small businesses are going to be closing because of Square,” reads the petition.
Square concluded its blog post by claiming it aims to "be transparent, offer sellers choice, protect buyers, and provide a better experience with Square." Unfortunately for Square, it seems plenty of its customers disagree.
Staying ahead of the game in the world of data
Create successful marketing campaigns by understanding your customers betterDownload now
Remote working 2020: Advantages and challenges
Discover how to overcome remote working challengesDownload now
Keep your data available with snapshot technology
Synology’s solution to your data protection problemDownload now
After the lockdown - reinventing the way your business works
Your guide to ensuring business continuity, no matter the crisisDownload now