Square doesn’t put payment limits in place lightly, because we know we’re putting a ceiling on the amount of business you can bring in easily. It all comes back to your customers’ ability to dispute payments they’ve made to you—we’re trying to protect your business and our ecosystem from losing money when the customer’s bank rules that you have to return their money. Square makes this decision based on a number of different possible scenarios:
New to Square. If you’re new to Square and have a lack of processing history on your account, we may put a payment limit on your account until we know more about how you process payments.
High rate of payment disputes. If a lot of your customers are disputing their purchases and/or if you have insufficient funds to support/refund those disputes, we may put a limit in place until your rate of disputed payments goes down.
Erratic processing activity. Sudden changes in how many payments you’re taking within a given period, or the size of transactions you’re taking the velocity or volume of transactions on your Square account may result in a payment limit until a regular pattern re-establishes itself.
High-risk goods or services. We’ve found that some businesses sell products or services that are more prone to receiving payment disputes. We may put a payment limit on these kinds of businesses until we’ve established that they can maintain a low rate of payment disputes.