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. 

Featured Resources

The complete guide to changing your phone system provider

Optimise your phone system for better business results

Download now

Simplify cluster security at scale

Centralised secrets management across hybrid, multi-cloud environments

Download now

The endpoint as a key element of your security infrastructure

Threats to endpoints in a world of remote working

Download now

2021 state of IT asset management report

The role of IT asset management for maximising technology investments

Download now

Most Popular

Microsoft CEO warns of video call fatigue
video conferencing

Microsoft CEO warns of video call fatigue

7 Oct 2020
Raspberry Pi Compute Module 4 launches with PCIe support
Hardware

Raspberry Pi Compute Module 4 launches with PCIe support

19 Oct 2020
Google blocked record-breaking 2.5Tbps DDoS attack in 2017
Security

Google blocked record-breaking 2.5Tbps DDoS attack in 2017

19 Oct 2020