What is a Risk Hold?
Have you ever had your credit card deposit placed on a Risk Hold? We understand the frustration you feel when this happens. A Risk Hold is common for new merchants and can also occur when you have a very large or questionable transaction. Risk Holds are implemented by the funding bank, but your credit card processor may be able to help get the money released sooner by acting on your behalf.
A risk hold is a fairly a routine procedure that many merchants experience in their first few weeks of processing. It can create fear and uncertainty, but you will almost always receive your money sooner or later. Most commonly a Risk Hold holds up settlement payments up for 72 hours, but it can be for as long as a week.
Risk Holds ensure that transactions are not fraudulent, which protects you as well as your customers. When you sign up for a new merchant account, you indicate on your application what your average transaction amount and your highest possible transaction amount might be. Think of this as establishing a line of credit for you. That might seem ridiculous since you are merely accepting the payments, but remember that a cardholder has six months to dispute a charge. If you process a credit card for $25,000, the bank must be able to take back $25,000 from you at any given moment that a chargeback is made against your business. You must have access to that $25,000 at all times to pay it back if needed.
Your merchant account is approved by an underwriter for a specific amount of money per transaction based on your business type, previous processing history, and transaction amounts. If you process a sale that is outside of your approved limit, the underwriters will issue a Risk Hold. This means the funds from that transaction may be held until proper documentation can be provided for the sale. Once the sale is confirmed with your customer, their credit card is in good standing, and the transaction is proven to be a one-time event, the funds are released.
In some cases, your merchant services provider may be able to expedite this amount by calling the funding bank and discussing the details of your transaction. In some rare cases with exceptional circumstances, Chosen Payments may choose to guarantee to the bank to cover any loss they might incur in the future from a particular transaction, which will release your money immediately. We consider these situations on a case-by-case basis.
For more information about partnering with Chosen Payments, please call 855-4-Chosen.