The Fund Holds Playbook

Why Funds Get Frozen

Payment processors freeze funds when they detect risk signals that violate their underwriting assumptions:

• Volume spike — Processing 3x+ your normal volume triggers automated holds
• Chargeback threshold breach — Most PSPs freeze at 1% chargeback rate (some as low as 0.65%)
• High-risk transaction patterns — Large tickets, unusual geos, refund spikes
• Compliance gaps — Missing docs (business license, product samples, supplier agreements)
• Industry changes — PSP added your vertical to their prohibited list mid-contract

Immediate Actions (First 48 Hours)

1. Gather Documentation

Prepare your "unfreeze packet" before the PSP asks:

• Last 3 months of bank statements
• Invoices for disputed transactions
• Proof of product delivery (tracking numbers, customer communication)
• Terms of Service + refund policy (timestamped, matching what customers saw)
• Business license + incorporation docs

2. Respond to ALL PSP Requests

Every missed deadline extends your hold by 7-14 days. Set up:

• Email forwarding rules for [your-psp]@*.com → your phone
• Daily calendar reminders to check PSP dashboard
• Dedicated Slack/email thread for freeze response

3. Identify the Root Cause

Run a free GuardScore audit to see:

• Which risk threshold you breached
• What compliance docs you're missing
• Whether your backup processor will accept your profile

Unfreezing Timeline

Preventing Future Holds

Setup a Backup Processor (Before You Need It)

Most merchants wait until they're frozen to find a backup. By then:

• You're desperate (worse negotiating position)
• You have a freeze on your record (harder approval)
• Your cash flow is dying (can't wait 2-4 weeks for approval)

Smart merchants set up a backup processor at 50% of their primary's volume threshold. Use GuardScore to see which backup processors accept your profile.

Monitor Your Risk Metrics Weekly

Track these numbers in a spreadsheet (or use your processor's dashboard):

• Chargeback rate: (chargebacks / transactions) × 100. Alert at 0.75%.
• Refund rate: (refunds / revenue) × 100. Alert at 10%.
• Auth rate: (approved / attempted) × 100. Alert if drops below 85%.
• Volume trend: Week-over-week growth. Alert if >200% spike.

Stay RDR/VAMP Compliant

If you're doing $50k+/month, you need:

• RDR enrollment — Rapid Dispute Resolution (prevents chargebacks from hitting your ratio)
• VAMP compliance — Visa Acquirer Monitoring Program (required for some high-risk verticals)
• Ethoca/Verifi alerts — Catch disputes before they become chargebacks

Not sure if you're compliant? GuardScore shows your compliance gaps in 2 minutes.

When to Walk Away

Some PSPs are known for aggressive holds and account terminations. Red flags:

• Rolling reserve >10% for low-risk verticals
• Holds lasting >30 days with full documentation provided
• Unclear termination reasons ("business decision" without specifics)
• Contract terms allowing 180-day holds

If you're stuck in a bad processor relationship, get matched with merchant-friendly alternatives.