Why Is Vantage Allowed to Hold Merchant Funds?
Credit card processing companies (also known as merchant service providers or acquiring banks) do have the right to hold a merchant’s funds under certain conditions — and it is outlined in the merchant agreement the business signed when opening the account.
Here’s how it works:
✅ When Can They Hold Funds?
- Unusual or Suspicious Activity
If a merchant has a sudden spike in volume, high average ticket sizes, or suspicious chargeback trends, the processor can place a funds hold or reserve to protect against potential fraud or loss.
Missing Documentation
If a transaction is flagged and the processor requests supporting documents (like an invoice, proof of delivery, or signed receipt) and the merchant fails to respond, funds can be held until the issue is resolved.
High Risk Industry or Behavior
If the merchant is in a high-risk category (e.g., online supplements, adult content, travel), stricter scrutiny and fund holds are more common — especially if the account is new.
Violation of Terms
- If a merchant violates the terms of service — like processing for another business under their account or misrepresenting their product — the processor can freeze funds and sometimes even terminate the account.
📜 Legal Backing
This authority usually comes from:
- The merchant processing agreement
- Card network rules (Visa, Mastercard, etc.)
- Anti-money laundering and fraud-prevention regulations
💡 What Can a Merchant Do?
- Respond quickly to any document requests.
- Maintain clear records of transactions, shipments, and communications.
- Avoid mixing business types or misrepresenting sales.
- Review your merchant agreement so you know your rights and obligations.
If a merchant believes the hold is unjustified, they can:
- Contact the processor’s risk department for clarity.
- Escalate to a supervisor or legal counsel.