I'm not sure why this guy had trouble understanding that he needed money in his account as collateral against the charge back. "Yeah, he'll probably send us the money if the charge back is upheld" is not a sustainable policy.
Clearing funds at any time (not just on business days), as Dwolla proposes[1], will mitigate some aspects of the OP's concern.
It appears to me that Square's service is superb and prompt, especially when compared with a traditional credit card processor that won't even accept email inquiries.
[1] http://blog.dwolla.com/ach-goes-real-time-with-fisync-free-f...
And this is exactly how merchant accounts work. the only thing square might be guilty of is not fully clarifying this with their customer base as their base is mostly unsavvy in this realm
Ooops sorry about withdrawing $10,000 instead of $100. What's a decimal place among friends? Hope you can still make that tax payment and payroll while we futzy around on our end.
Chargebacks happen; and you shouldn't expect that you will get paid for 100% of your sales. Deal with it or don't accept credit cards - the rules of the credit card game favor the cardholder a lot, that's why customers want to use their cards.
It’s perfectly reasonable to expect merchants to be prepared for chargebacks and have a buffer for that. It would be reasonable to have a few days’ notice to pay the money, or be able to designate a different account for them to debit the amount from, or submit a credit card that Square can draw from as security.
But if you are expected to have a month’s sales in the Square-linked bank account all the time, how is that different from simply “freezing all received funds for a month, all the time”?
Might as well be random.