How Square Keeps Businesses Safe

Since launching in 2009, our objective at Square has always been to give businesses the tools and technology they need to fully participate in the economy. We now work with millions of business owners globally, helping them run and grow no matter the size of their business. As we grow, we are constantly working to ensure that Square is secure for every business that uses the platform.

Just like any financial services business, Square is bound by the rules and regulations of each market that it operates in; Squareup Europe Ltd is authorised by the Financial Conduct Authority (FCA).

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Working to keep your business safe

Square has global teams dedicated to protecting both Square and the businesses that use Square from fraudulent and illegal activity. We use live monitoring programs and algorithms that analyse transactions as they’re happening to detect unusual or suspicious activity. This helps intercept suspicious transactions before charges occur, protecting our sellers from product/ service theft and chargebacks.

Occasionally this will mean that we’re unable to work with certain types of businesses, or that in some circumstances we hold funds on a business’s account to protect from financial loss. This could be for a number of reasons, from suspicious activity on the account through to a direct breach of Square’s Terms of Service.

This article will give you an overview of how this process works at Square, and what it means if we get in touch for more information about your business.

The Square Terms of Service

One of the ways we make sure Square is a safe platform for processing payments for everyone is through our Terms of Service. These rules set out the agreement between Square and each seller who uses our service. Every seller should take time to become familiar with the full terms before signing up with Square.

If a seller is found to be in breach of the Square Terms of Service, there are a number of steps that our account services team may take to rectify the situation:

  1. We may get in touch with the seller to inform them that they are in breach of our Terms of Service and will be deactivated
  2. We might contact the seller to confirm or obtain further information about the seller’s products or services
  3. If we are only able to support part of the seller’s activities or business, we may ask the seller to confirm that Square’s services will not be used to process payments for the products or services that are in breach of our Terms of Service.

If a seller continues to breach the Square Terms of Service without resolution, we reserve the right to deactivate any seller’s account in case of non-compliance with our request.

Prohibited Industries

There are a number of products and services that you are prohibited from selling with Square. There is a full list of these items available in section 3 of our payment terms, and we have explained them in detail in the table below.

Disclaimer: Prohibited products or services marked as ‘CNP’ are only prohibited in a Card Not Present environment, meaning orders placed via the internet or phone (Square’s API, keyed-in, invoices or Virtual Terminal transactions). So-called Card Present (‘CP’) transactions for these specific products and services are generally allowed.

Illegal, infringing or regulated products or services

Regulated products and services Prescription drugs CNP; supplements (e.g. HCG/HGH, steroids, kava); CBD (cannabidiol); pseudo-pharmaceuticals (e.g. weight-loss products, sexual stimulant or enhancement products); nutraceuticals (products marketed with claims of unsubstantiated health benefits); substances designed to mimic psychoactive products (e.g. salvia, bath salts, herbal smoking blends, kratom, alkaloid derivatives, synthetic cannabis); non-prescription and/or CNP sale of Latisse; plano/zero-strength contact lenses CNP and contact lenses CP unless the merchant is an optometrist; weapons (e.g. functioning firearms and parts, ammunition, hunting knives, swords); internet sale of age-restricted products (alcohol, e-cigarettes, vapes, accessories) without adequate age restriction notification; precious metals
Paraphernalia that may be used for any type of illegal activity Pipes, bongs; marijuana dispensaries; all marijuana-related products or services
Infringement and counterfeit products Counterfeit goods/replicas; fake references and other services/products that foster deception (including fake IDs and government documents)
Deceptive, unfair or otherwise questionable practices Social media ‘click farms’ (e.g. sale of clicks/likes/reviews/endorsements on social media sites); ‘get rich quick’ schemes (e.g. real estate investment with no money down, work from home etc.); infomercial sales (purchase to learn more model); bidding fee auctions (a.k.a. penny auctions); psychic products and services (spells, crystal healers, potions, fortune tellers); mugshot removal businesses; products such as Confederate flags, Nazi memorabilia etc. sold with the intention of inciting or encouraging racism, bigotry, or other negative stereotypes
Adult products or services Companion/escort services, prostitution; mail order spouse and international matchmaking services; pornography, adult book or video businesses (excluding non-pornographic photography, art); adult websites and content (audio, video etc.); adult membership clubs, strip clubs
Betting, gambling Buy-ins (e.g. poker, fantasy leagues); lottery clubs and business models
Country-related services Freight services to Cuba, Cuban tourism services; payments associated to an OFAC sanctioned country


Financial and marketing products and services

Financial services Credit repair/restoration; debt/interest consolidation or reduction services; insurance products and services; investment programs/businesses; mortgage/loan modification; collection agencies; car payments; third party payment services companies; advanced payments greater than one year; medical discount benefits cards; payday loans; cash advancing/gifting; prepaid phone cards; bankruptcy attorneys
Marketing services Lead generation; multi-level/pyramid and affiliate network marketing; deceptive marketing in any form; rewards/commissions paid through Square; unsolicited marketing services; telemarketing businesses; merchants offering rebates or special incentives
Memberships Memberships required to access products/services being sold; memberships required to access lower price point for products/services being sold (discount buying clubs); long-term memberships (>2 years)


Products or services otherwise prohibited by Square’s financial partners

High-risk business Timeshare businesses; virtual currency (e.g. bitcoin); money transmitters currency exchange; essay/paper mills; airlines travel clubs cruise lines; shippers/forwarding brokers CNP; financial consultants CNP; ticket brokers; prepaid access/stored value businesses CNP (e.g. vouchers gift cards phone cards etc.); extended warranty companies; businesses operating a negative renewal billing model; fulfillment centers; telephone-based IT services help desks
Illegal or questionable merchants Decryption and descrambler products including mod chips; jammers or devices that are designed to block jam or interfere with cellular and personal communication devices/signals; file sharing services/cyberlockers; data pass (merchants up-selling or cross-selling products or other merchants sharing or receiving cardholder data with or from third parties)
Partner credit policy - other Merchants engaged in or related to activity prohibited by or previously identified to be in violation of the card brands rules; embassy, foreign consulate or other foreign government

What it means when we request more information

We regularly monitor your transactions to keep your account safe. When we notice something that appears to be out of the ordinary, we may suspend deposits to your bank account until we can make sure everything is alright. We’ll get in touch within one business day of suspending your deposits to let you know what information we need to get your deposits moving again.

One of our best tools in keeping Square secure is checking in periodically to make sure that everyone is who they say they are, so we may occasionally contact you to collect information from you. The documentation and information we request from you as part of the security review gives us a sense of how we can be helpful and what we need to do to get your deposits moving again.

For some businesses this may take a little longer. If we need more information about your business we will proactively contact you and ask for it. Depending on the way your business is structured we may ask you for:

  • Information on the individual who has signed up the account originally
  • Information about who owns your business (including address and date of birth) such as directors, shareholders, owners and beneficial owners
  • Supporting documentation related to the business and payment activity

If there is a delay in receiving this information, or you are not responsive to our requests, then we may be forced to hold the funds in your account until we can verify your information. This is to ensure that Square is verifying the needed information in a timely manner and ensuring the protection of both your business and ours, from risk of fraud, chargebacks and regulatory breaches.

Holding funds

If, for any of the reasons above, we suspect that your account may be compromised or fraudulent we may place a hold on the funds in your account. When we hold funds, they are kept in a secure, non-interest bearing account until the situation is rectified. We also want to empower you to follow best practices that keep your account safe and your business running smoothly. When we notice activity that puts your business at risk of chargebacks, we may hold funds and ask for more information about your business to give us a sense of how we can be helpful.

If an account is deactivated we reserve the right to hold funds for up to, but not limited to, 180 days. This is to protect both buyers and sellers who use Square. Square may suspend access to the funds in your account upon deactivation in order to offset any potential refunds or disputes from your customers.

Anything else?

If you have any questions, we’re here to help.

We take the steps outlined above to make sure that Square’s system is safe and secure for all of the businesses that use the platform. For the vast majority of businesses these processes are unlikely to cause any issues.

For more information, or to contact our Customer Support team with any questions or concerns, please visit our Support Centre.


Related articles

How to Protect Your eCommerce Business from Fraud
What is a Card Not Present Transaction?

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