ο»ΏBUSINESS FIRE DRILLS, S1 EP8
Stripe or PayPal Holding Your Funds? What to Do Before a Payment Processor Freezes Your Money
Drill 07: Before a Payment Processor Holds Your Funds
Clean transcript (lightly edited for readability from the recorded audio; speaker labels removed)
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It is the Friday after your biggest launch ever. You log in to check your balance. The sales are totally there. Every single one, exactly as they were coming in, exactly as you remember it. But the money isn't there. A huge chunk of it says "unavailable." And your ad bill and your contractors get paid on Monday.
Nobody stole anything. You didn't do anything wrong. Your payment processor just put a hold on your funds.
I'm attorney Tamsen Horton. Business moments are predictable. Panic is optional. This is your Business Fire Drill: Before a Payment Processor Holds Your Funds. Short and practical, so let's go.
Here's what the fire alarm looks like, and what you're going to see and hear. It doesn't sound like a fire alarm. It sounds like a dashboard banner.
"Your account is under review."
"We need more information to keep processing your payments."
"A portion of your balance is being held as a reserve."
Or a payout that's just late.
And here's what sets it off. These are the real-life ones.
The launch. You normally do $5,000 a month and you did $40,000 in two days. Freaking amazing, right? Best case scenario. It all, quote unquote, worked. Well, to a processor, that doesn't look like success. It looks like a change in pattern.
The new account. You've been on the platform for three months and they don't know you yet. They don't know your pattern. That's what that one is.
The refund run. A promo, a handful of refunds, a couple of disputes, all in one week. That would be a busy week.
Or the mismatch. You signed up to sell a $27 ebook, and now you're selling a $5,000 mastermind. Same account, very different business from what the processor can see.
It's the same fire alarm for all four. You are just seeing the banner.
This is Stripe, PayPal, Square, Kajabi Payments, all of them. Every one reserves the right to pause or hold your money. They're not just the pipes into your business, not just the thoroughfares. They are the risk managers.
Are we reacting or are we responding?
Reacting looks like this. You fire off the quickest, fastest, ticked-off angry support ticket your little fingers could muster. Or you post in your group of 10,000 of your closest entrepreneurial friends, "Stripe stole my money," "PayPal ripped me off," before you've even read what they asked for. Or you panic and move everything to a brand-new processor overnight, which usually backfires, because a new account with no history gets looked at even harder. Or you ignore the request for documents because it feels invasive and you're not sure you trust it, which just makes the hold last longer.
Responding looks different. You read exactly what they're asking, you send it, complete, the first time, and you keep running your business everywhere that you still can.
Run the drill before the fire starts. D-R-I-L-L.
D: Don't react. No angry tickets, no public posts, no overnight migrations.
R: Record everything. Screenshot the notice, save the email, write down the date and exactly what they asked for. Keep a copy of everything you send back.
I: Identify the real risk. Ask what triggered this. Was it the launch spike? A run of refunds or disputes? Is this a brand-new account? Is it a standard reserve, just part of the standard process? That tells you what will actually get it released.
L: Lead with calm. Send complete, accurate documents the first time. Piecemeal submissions can restart the clock. Be professional and prompt. The person reading it is a reviewer, not your enemy. They truly have no skin in the game. They are processing data. It is plain vanilla to them, even though it is a spicy hot tamale to you.
L: Lock in the lesson. When it's over, ask: if this had happened last Tuesday, would I have been okay? If the answer is no, that's what we fix. We look back and we go, oh yeah, no, I wouldn't have been okay if that had happened a week earlier. Ding, ding, ding, fire alarm. That's what we pay attention to.
Our fire extinguisher. Why do we keep fire extinguishers in our homes? So that if a small fire breaks out, I can quickly grab it, put the fire out, and my house doesn't burn down. In our businesses, it means we build this before the fire happens.
Number one, and I'd put this above everything else: a cash buffer. Thirty to sixty days of expenses. That is what really turns a hold from an emergency into an inconvenience. So as you are running your business, know exactly what your bare minimum number is, the number you need to not panic. That is the number I want you to have as a buffer, because then a delay of two or three days is irritating, yes, an inconvenience, yes, but you're not in the metaphorical trauma center.
Number two, your documents in one folder, in a digital, organized infrastructure that you can put your hands on. Business formation paperwork, your EIN, your ID, your proof of address, a few sample invoices. If they ask on a Friday afternoon, you can send it in ten minutes. Also, name every single piece of documentation with your business name, your name, and what it is. If anything gets opened, you don't want something displaying as "ID 68251 underscore TXT" or something oddball. Name everything. Have it all in a folder. You can even be really proactive and have the whole thing already zipped up.
Number three, a heads-up before a big launch. Depending on the processor you're using and how it's currently set up, if your processor gives you a way to do that, you can give them a heads-up. You can let them know, I'm anticipating an increase in sales in this timeframe, perhaps starting next week, perhaps starting tomorrow. Take a look and see if your processor provides it. If you're not sure, ask AI. It'll tell you.
Number four, clear purchase terms at checkout, so fewer customers turn into disputes. We just had the episode on before a refund becomes a bigger deal than it needs to be. When you have clear purchase terms, it's so worth it, because your chargebacks decrease and your refunds decrease when everyone is on the same page. That is what the Purchase Terms Generator is for. If you need more information on that, it is in the show notes. It is one of the three pieces that make up the legal infrastructure.
And number five, a second processor, set up and verified, even if you never use it. Set it up on a calm Tuesday, not in the middle of a hold. For myself, the majority of my offers have always run through Stripe. I've never had an issue. I also had offers I ran through PayPal, and I've now layered in offers that I run through Kajabi Payments. So while they're all payment processors, all the eggs are not in a single basket. If one basket runs into an issue, if an offer trips something up, I have verified platforms. And because Kajabi is my top-performing Team Tech employee, and has been since 2011, it's been very easy for me to do that. It was not onerous to have some things in Stripe, some in PayPal, some in Kajabi Payments. That has never been a heavy-lift task. To me, that is smart diversification.
If the hold is already on, we're in the fire: read the notice, pull the documents, send them once, and keep selling wherever you can.
Now, you have three options at this point.
One: do nothing, because you've got a cash buffer, your documents are in one place, and you know what your processor would ask for tomorrow. You could get it to them immediately. You're good.
Two: put the drill in place. No buffer? Let's start working on that. Documents scattered? Let's get them organized. Never read your processor's reserve policy? Start there this week.
Three: you immediately thought of a friend. The one who's about to launch, who's running everything through one processor with no cushion. Send them this episode. They will tell you thank you. It is an incredibly generous use of your time to put this on their radar.
Any one of those choices is absolutely valid.
Here's your free homework. Open your processor's account and find out one thing: what documents would they ask for if they put a hold on you tomorrow? Then put those copies in one folder. It might take you about 20 minutes.
A hold is not personal and it's not permanent, but it's a lot less scary when you're ready.
So tell me: has a processor ever held your funds? Did you ever find out why? And follow the links in the show notes to get the full library, the full kit, of Business Fire Drills.
Because business moments are predictable. Panic is optional. Run the fire drill before the fire alarm goes off.
