
My Recent Experience With Square - DamagedProperty
http://jasongullickson.posterous.com/my-recent-experience-with-square
======
parfe
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.

~~~
pm24601
I'm not sure why you think it is a good idea to let random outside parties dip
into his business's working capital?

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.

~~~
PeterisP
The alternative isn't "not dipping in working capital", the alternative is
"freezing all received funds for a month, all the time".

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.

~~~
guan
The policy is clear, and based on other comments here probably mandated by the
payment networks, but that doesn’t mean it’s reasonable.

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”?

~~~
aneth
You are not expected to keep a month sales, just some small percent that will
vary by your customer's tendencies to chargeback. Since almost every merchant
account will have some chargebacks, and high volume ones will usually have
some persistent level of funds in chargeback limbo, having some billing
process to ask for funds is expensive and unnecessary. And what would happen
when Jason refuses to find his account because he didn't agree with the
chargeback?

------
Navarr
I read over this and all I can think is that OP didn't do what he should've.

Their process of pulling in funds when you have a negative balance is
automated. (check)

He said he'd fund it from another source, but as far as I read (got really
bored about halfway through) He didn't. So the automated process pulled in
money from his linked account, as expected.

This money was crucial because square has to be able to refund the chargeback
should it end in the customer's favor.

I don't understand OP's problem with Square. They handled this as best as they
possibly could?

~~~
RandallBrown
No, he told them he would fund it from elsewhere and they didn't respond to
that at all. They told him that the issue could be considered closed. Then,
later they tried to withdraw money again (after saying the issue was closed).

Square took days to respond, then complained to him that emailing them more
would get him marked as spam.

~~~
Navarr
Something that should've been incredibly clear here is that square required
money be available as backup in the event that there was a disputed claim.
SAYING that you'll fund it from elsewhere is not the same as doing so. And
they said that the issue was "preliminarily closed."

Followed up with

Your funds are eligible for automated release on or around 30 April 2012 once
additional confirmation is secured.

That in no way implies that he doesn't have to have backup. It clearly states
the process is ongoing.

This is a long and painful process, and its OP's fault for not having a system
in place for when this inevitably occurs. He should have had back up money for
such an occurance and didn't. That's his fault.

Finishing reading, there is that troublesome bit at the end about them not
releasing his money as quickly as they should've - but all in all they did a
damn good job considering their industry and their opponents.

I find myself agreeing with the two comments that are now on the OP's page.

------
noonespecial
It just goes to show that even with Square, charge-backs suck. People are
going to look you right in the eye and steal from you. Its a business reality.

The company that addresses this problem in the most painless way possible is
going to win. We can thank payapl for demonstrating the worst way to handle
it. The moral: be as least paypal like as possible.

I don't think its possible to cure the charge-back. As a merchant, you're
going to lose out. That just seems to be how it works. The win will come from
making the process as clear and painless as possible. Automatic systems that
keep overdrafting your bank while sending you robo-responses are not they way.

~~~
dsterry
Well there is Bitcoin which has no chargebacks and for a face-to-face
transaction there would be little need for an addon escrow service.

------
bmj1
I have to disagree (perhaps unfashionably) with the author's sentiment and the
comment below "I really like Square, but I always have this feeling that this
company is going to be oe (sic) more paypal and with this story it´s
confirmed."

\- The customer service was pretty responsive and reasonably polite for a very
fast growing company.

\- The author notes he has paid Square hundreds of dollars in transactions
fees so we can guestimate he's done $13k+ of revenue through Square (based on
$400 fees & 3% average fee), $180 was hardly a critical amount for him

\- What's the next best alternative, has anybody here experienced PayPal's
customer service?

~~~
adgar
You seem to be giving Square far, far more credit than any business deserves.
I suspect it is because Square is an HN darling, but hey, to each his own.

I take serious issue with your characterization that those Square responses
were "pretty responsive" and "reasonably polite."

* They took several days to respond to a time-sensitive billing issue

* They claimed to provide support they could not and did not provide

* They refused to even acknowledge that this was frustrating for the customer

* They refused to acknowledge that their automated systems may not be doing the best thing for the customer

* Instead of owning any responsibility, they blamed the customer, several times

* __They still haven't given him his money__

All over a _measly 180 dollars_. Seriously - Square jerked this guy around for
weeks over less than _two hundred bucks_.

How on Earth do you characterize those actions as responsive or polite? They
weren't "responsive" to the customer's support interactions or his time-
sensitive needs. They barely even "responded" at all, considering the e-mails
they sent were clearly stock PR crap with some blanks filled in.

~~~
PeterisP
* Chargeback's can't be resolved faster; * They can't (and shouldn't) give him this money - as it's quite likely that this money will never be paid, the dispute rules favor the cardholder quite much.

~~~
adgar
So the best response is to not respond to him for a few days at a time, and
when you do, assume the customer is acting in bad faith while you fill in some
form letters?

~~~
jguimont
They clearly stated that "no further actions are required" from his part.

~~~
adgar
That's usually the case when one summarily dismisses the customer.

------
jasongullickson
This is simply a precautionary tale; if you don't mind being treated this way,
by all means continue using Square.

I didn't, and I was unable to resolve the situation by working with Square, so
I shared my experience, warts and all, with others in the hope that others can
learn from my experience.

Could I have been more eloquent and professional? Certainly. But this is
something I was dealing with in my "spare" time, (and for the record, as
donated time and a favor to a nonprofit). If this was a business venture it
would have been handled much differently, but I don't think Square is
exclusively for serious business use (at least that's not what I get from
their marketing).

So please feel free to criticize my actions; had I ran across a similar story
myself before I found myself in this situation, it might have turned out
better, so I feel it is worth taking a few shots if it helps someone else down
the road.

Keep on hackin'

Jason

------
rglover
I didn't bother finishing this because the author persistently claims the
Square reps have a rude tone when quite the opposite is taking place. This
email stood out for me:

 _For the record I have never received such "guilty until proven innocent"
treatment from a company before and until now have sung the praises of square
and happily paid the fees associated with your service. If this issue is not
resolved immediately (today, 04/19/2012) I will no longer use or recommend
Square and will close my account as soon as this situation has come to an end.
I will also attempt to submit this request to your "support" system if I can
figure out how to find a contact email address there. Your prompt response is
appreciated, Jason J. Gullickson_

Nothing in the initial correspondence from Square prompted an acerbic
response. It sounds like the author felt threatened even though nothing really
happened. Sort of confused why you'd have a bank account with no money in it
when you're actively running transactions. Chargebacks, fees, and other
miscellaneous activity are par for the course. Be prepared. It's not Square's
fault.

~~~
rralian
If you would have finished it, you would have found that Square's service was
professional throughout. They never treat him as if he is "guilty until proven
innocent". The rep just tries to explain to him why repeatedly sending emails
will actually make their response take longer, and it's reasonable.

She could have used the passive voice in her explanation, "when someone [blah
blah] they will naturally inhibit", which would be harder to read as hostile.
But that's a pretty subtle point that I don't think can be expected for
someone who is likely judged on responses/hour and messages in queue. Plus, he
was being pretty hostile leading up to this, so I think her response shows
poise. These reps are humans after all, and they deal with irate and
unreasonable people all the time.

------
debacle
Throughout the entire exchange, Square is relatively prompt and incredibly
informative and professional.

This guy doesn't know how electronic payments work, and has clearly never had
to deal with managing a merchant account before.

~~~
bosch
Irrespective of if the author was correct in his use of the service, how is
not replying for days prompt and how is tersely worded e-mails informative and
professional? The whole thing reminded me of PayPal.

~~~
eridius
What do you mean? Re-reading the post, Square always responded by the next
business day. There was no "days" wait here. The only confusion was the OP
tried to make it sound worse by saying "over 24 hours", but all that means is
Square emailed him in the morning on one day, and on the afternoon on the next
day.

This part is also weird. He received a reply dated April 20th. He then says
"the next morning" he received another email about the withdrawn funds, and he
replied. Except his reply is dated the 24th. I have no idea what to think
about this. Deliberate misrepresentation of facts?

A bit later on we do finally see a multi-day gap in Square's responses, where
he emailed them on the 25th and Square replied on the 30th. However, Jason's
email didn't actually contain any questions or actionable statements, only
complaints and accusations of "thinly veiled threats". So I don't see the
response gap here as being significant.

------
twunde
There are a few issues with this article

1) The author never understood that he has to keep some sort of balance to
cover chargebacks. Square may need to better communicate this since they are
targeting people who may have never dealt with credit card processors. The
automated chargebacks themselves may be regulated by the government and if not
are standard practice to prevent fraud.

2) Square needs to upgrade its customer service division. The division is
obviously not able to respond in a timely manner at this moment. The first
thing they should do is change their policy to reflect that it's more likely
to be 24-48 hours before a response. Their response was factual and ok for a
big bank. However since Square promised to be different they should be
aspiring to be like Charles Schwaub's credit card service where you can get
someone on the phone at any hour and have them explain what's going on and why
and what you can do about it. That's the kind of service that most people who
use Square expect and should get. And specifically they should be available by
telephone.

------
staunch
I would have just let them hold the money until the chargeback was settled.
Who wouldn't? This customer was acting like an entitled brat for no reason.

------
sauravc
The author doesn't have a grounded view of the credit card chargeback process.
Square seems to be pretty well behaved despite his whining.

------
koeselitz
I'm of two minds on this; I think maybe Jason could have understood how
chargebacks work a little better - but at the same time, I think Square could
probably streamline this process.

Most of all, this bit of one of the emails from Square kind of set off alarms
in my head as bad practice:

"It is our pleasure to inform you that this inquiry has been preliminarily
closed in your favor. While this is promising, it is also conditional. Your
funds are eligible for automated release on or around 30 April 2012 once
additional confirmation is secured."

I don't think "preliminary closure" of a chargeback even makes sense, does it?
Either it's closed or it's not closed. I understand that they might have
various steps in the inquiry, but letting the customer know ahead of time that
everything is _probably_ going to work out well for them, apparently in order
to soothe them, is setting the situation up very badly in cases where the
preliminary positive resolution doesn't actually get confirmation later on.
What's more, it's clear that this didn't even set the correct expectation in
the event of a positive finding. They named a date, and then promptly failed
to meet it.

If I were designing a system to do this, it seems like it would be best just
to let the customer know you're inquiring, that it may be a few weeks, and
that they must keep a certain amount of money in their account until the
inquiry is over.

(Obviously I haven't designed such a system, and I know it's difficult. This
approach just seems inevitably problematic to me, though.)

------
FuzzyDunlop
The problem here isn't necessarily with Square, but with Jason being very
quick to play the 'taking further action' card.

Being irate and confrontational gets you absolutely nowhere, and I would never
say Jason's exchange was an exemplary case of dealing with an unexpected
situation professionally, and with a cool head.

Having spent 7 years in customer service, I'd encounter such attitudes all the
time. It achieves _nothing_ , except to piss off the person you're mouthing
off to.

------
jseims
What surprises me is Square doesn't hold a rolling percentage of transactions
in reserve in case of charge backs. Seems like that would avoid this
situation.

------
benatkin
Glad Square isn't wasting money (or time, or attention) on people who are
misusing it so badly. Square is well-funded but that isn't what funding is
for.

~~~
bosch
Don't you think this is an awesome opportunity for Square to explain to the
author how charge backs work and why he should have money in his account?
Perhaps if they used something other than cryptic replies they could help him
understand the entire process and help make him even more of a Square advocate
than he was before? That would be a HUGE differentiator from PayPal.

I would definitely say funding is for increasing customer service and trying
to create as many advocates of your service as possible!

------
jakejake
We all love retailers who have very low friction in order to let us buy things
without hassles, one click, etc. And when you create your home business using
a convenient service like Square of course you also want to offer this no-
hassle payment service to your customers.

But what many people don't realize that these businesses also often are eating
chargebacks - considering them a necessary part of business in order - to
offer the low friction purchasing. When you're an individual and a $175
chargeback stings your checkbook (as it would for many of us) then it sucks to
have to learn this lesson the hard way.

I will say at least with standard merchant accounts when a chargeback occurs
the bank will often get you and the customer on the phone together to figure
out the problem. It usually reverses most chargebacks. Many times it's simply
a mistake because the customer didn't recognize the charge. If Square is not
doing something like this then you probably are taking on a lot more risk
using their service compared to a traditional merchant account.

------
leejw00t354
I think Square could have tried to be more understanding of this use case.

He did clearly explain that the linked account didn't keep a balance and that
he was willing to pay the negative balance in his Square account with other
sources.

I don't see this as shockingly poor customer service, but Square should have
just disabled the automatic debiting on his account as he was a long time
trust worthy customer.

~~~
eridius
Trustworthy? Jason _already_ demonstrated he is not trustworthy, since he
failed to keep the necessary amount of funds in his linked account to cover
any chargebacks that may occur. He screwed up, and he expected Square to pay
for it.

------
admg
It baffles me how any financial services company can afford to have such poor
customer service.

------
nwenzel
Seems like both sides just needed to understand that there's a person at the
other end of the email / support form. None of those emails really sounded
like a person talking to another person. Imagine those notes as a transcript
of an in person conversation rather than emails.

Sounds like Square can take care of their core business with decent
competency, but as with many young companies, they may not have all the kinks
worked out when something gets outside their normal decision tree.

------
gravitronic
Sounds like Square has generic customer service reps handling the incoming
queue of service requests item by item.

Would it have a better result in terms of responsiveness if each new case was
handled by a single CS rep until completed so that every response to an issue
does not have to pass the entire queue before being dealt with?

Or would that increase net response time?

~~~
sirclueless
It's a well-known fact that CS requests have a really high abandonment rate.
It saves a lot of money to hold off on answering requests for as long as
possible, because it weeds out the non-urgent requests, and makes people loath
to create more.

If every request takes at least 24 hours, then a sizeable segment of the
population will give up trying unless something really big comes up.
Responding quickly sends the wrong signal that CS reps are an effective way to
solve issues and your volume will probably shoot way up.

------
sumang
I really like Square, but I always have this feeling that this company is
going to be oe more paypal and with this story it´s confirmed.

Hope they solve this issue and improve their customer service .

~~~
mrsteveman1
As much as I like to hate on Paypal because they deserve it for a variety of
reasons, I'm considering lately that for financial services startups like
this, it's possible they CAN'T do certain things differently, though perhaps
customer service could make up for it and may not have in this case.

This phrase caught my eye in the story "Per the network regulations, the debit
process is automated and will continue to attempt to hold the funds associated
with the dispute until it is resolved.".

Network regulations like the contracts they have with banks? Credit card
processors? A relatively small startup may or may not be in a position to
negotiate their own terms on such things, they're dealing with established
players they have to do business with unlike a lot of other startups in other
fields. Perhaps Squares own terms have been influenced or dictated to them in
part by their own financial partners.

On the other hand, this persons own bank was able to reverse the automated
charge and the fees associated with it, which itself should give at least some
measure of comfort in the system as it exists, even if it's frustrating to
watch it all happen without much direct control.

It should probably be obvious that having a buffer of funds to handle things
like this is a good idea for any business, particularly if the terms of
service for the payment processor note that things like this may happen.

~~~
pm24601
Absolutely square could do things better. How about for starters picking up
the goddamn phone and making a call to talk to the customer in person?

It really shocks me that people are willing to entrust their business's
finances with a company they cannot contact immediately.

I do exactly what the OP poster did - have a account that receives the funds
and is immediately swept to an entirely different institution. I would not
have even funded the account when square tried to pull from it. I do not make
my main business account directly accessible via visa card, or direct
transfers. Two different financial institutions are involved.

I especially am troubled by the assumption that because the OP is following
this very good idea that square assumes that he is not viable.

~~~
delinquentme
Hate to break it to you but a pissy customer whos mad over $175 bucks only
_thinks_ hes a priority when it comes to square.

Seriously how much cash are they transacting ... and hes flipping out over (
as pointed out earlier ) $180 profit for square?

yeahh....

~~~
smackfu
If Square only cares about the big customers, why would small customers use
them?

~~~
delinquentme
welcome to automation. Its designed to work for the big guys. So there you go
free motivation. If you want to be able to complain and stomp around like old
ways of doing business you've got to get big.

Otherwise you use the service that is provided.

------
aneth
I have to land squarely on Square's side on this one. As far as I can tell,
Square has handled this matter exactly as I would expect and hope. They
communicated professionally and clearly with Jason. Jason responded with empty
threats and demands, and clearly does not understand or respect his
responsibilities in his business relationship. Getting money quickly from a
merchant account is a privilege, not a right. That privilege is afforded in
exchange for honoring the chargeback process, which for good reason initially
favors the consumer by provisionally reversing the transaction. When a
chargeback occurs - as clearly stated in Square's initial email - "The
respective financial institution notifies Square and debits the funds from
Square."

Chargebacks are not fun, but they are a fact of life. When a consumer
challenges are credit card charge, the consumer is entitled by law and
contract to have their case heard, and in the meantime the middlemen must make
sure they won't be left holding the empty moneybag.

It is entirely reasonable for the Square to make sure funds are available to
pay the consumer debt should the consumer prevail - Square will be out that
money regardless of whether Jason pays up.

To be frank, based on his attitude, Jason seems like the sort of guy who would
refuse to pay up if the dispute had been decided against him and he disagreed
with the determination. This is exactly the reason Square was and always will
be justified in freezing the amount associated with any chargebacks. There is
a process for handling chargebacks that you submit your self to in exchange
for the convenience of getting money quickly from the credit card system. That
money is only yours if the consumer does not challenge the charge - usually
they don't, but you are responsible to pay if they do, and you are responsible
for funding your account to cover whatever level of chargebacks your business
sustains.

It is entirely reasonable for: 1) Square to freeze funds associated with
chargeback attempts. At this point, Square is out those funds. 2) Square to
withdraw funds from a link account if the Square account is empty. It's the
responsibility of the merchant to keep funds available to handle chargebacks,
as I'm sure is clearly stated in their agreement. If the merchant has kept all
funds out of reach of Square, by withdrawing all their money from the account
and keeping the associated bank account empty, the merchant is indicating that
they do not intend on fulfilling their end of the bargain on having a merchant
account - namely honoring chargebacks and the determination process for
chargeback disputes. If this withdraw results in NSF fees, particularly for a
chargeback of such a small amount, that is the merchant's fault for not
funding their account. Furthermore, NSF fees are easily avoidable by
depositing funds the same day - why Jason did an electronic transfer is beyond
me.

Based on Jason's ignorance of his own responsibilities, his refusal to keep
money available to handle chargebacks, his empty and immature threats to "go
to the press" among other things, and his general disregard for his role in
the business relationship, I would expect Square probably wants to terminate
his account, but will decide against that as it would be more bad PR than it's
worth. They would be justified, however, holding funds for a longer period of
time, since it's clear he refuses to keep funds available to handle
chargebacks and to honor the largely fair chargeback process.

The only counter point I can think of is that, for a certain chargeback/total
charge ratio, it does seem Square could take the risk and absorb any funds
deficit. That is not traditionally how things work though, and since Square is
doing their best to get merchants paid as quickly as possible, it only seems
fair that merchants would do their best to ensure Square they intend to honor
their end of the bargain. If Square did take on this risk for small chargeback
amounts for merchants in good standing (say < 3% of total charges,) this would
delay someone like Jason's understanding of the chargeback process until a
real problem occurred - like a large number of customers demanding refunds.
That might ultimately hurt Square more than it helps, both financially and in
PR.

~~~
pbreit
Sort of. But I would have expected Square Support to be a bit more
sympathetic, especially if it is true that the customer had been a long time
Square user with a good amount of transaction volume.

Square defenders seem to think that Square was going to automatically lose the
money when the reality in a case like this where the customer has a good track
record is that 1) the chargeback may have been won and 2) Square may have been
able to collect from the merchant had the chargeback stuck.

~~~
drone
Generally speaking, the acquiring bank (working on behalf of Square, unless
Square is a bank proper, I would presume they are just an ISO) takes all risk
on a credit transaction, and then extends that risk back to the ISO, who then
extends it back to the customer of the ISO.

The author's experience strikes me as naive, (which we all are on our first
chargeback) but notably, yes, it is his requirement to have enough money in
the account to cover any chargebacks he may receive. Depending on his volume,
most ISOs and/or acquiring banks would require a healthy reserve as well,
should they come and find his bank account dry after he just charged a bunch
of people money and then went running to Mexico.

The fact that they contacted him -before- taking money out of his account is
striking. The normal process is to deduct the money from your account, notify
you, and then give you a period of time to respond. If you respond with
sufficient evidence, the chargeback protection service clears it, the money is
then re-desposited back to your account. The other party then has one more
opportunity to dispute and the chargeback handler may decide that you're not
going to provide any more viable of a defense, and simply give up - or may
push back again, effectively ending the dispute. If the dispute doesn't end in
your favor, the money is taken again. If you drained your bank account in the
mean-time, you may find your ability to continue to process cards through that
ISO, or that Acquirer has been terminated.

The truth is, for many years people have perfected scams on both sides of the
card handling process, and these responses have been developed to minimize
risk for the companies in the chain.

~~~
pbreit
Square is neither a bank nor an ISO bit a "Payment Service Provider" or
"Master Merchant" and is in fact likely on the hook for most or all losses.

------
jsavimbi
Man get all wacky about $175 transaction. IF you're playing that close to the
bone, my advice would be to stick to cash sales and forget about banks and
online escrow services like Square.

------
adgar
I get nauseous when I see companies with _200 some-odd employees_ respond to a
distressed individual with PR-drafted form letter ad libs.

I can't wait to see what they do when they have 2,000 employees.

------
RandallBrown
Here's what should have happened.

Square: There's a chargeback for 180 dollars. You can dispute it.

OP: I want to dispute it. Here's the information you need.

(no more than one day later) Square: Instead of just linking to our legal
agreement we'll explain why we're taking money from your account. We have to
withdraw the chargeback amount from your account because of regulations and
stuff. There is more information at this legal link.

OP: I keep that account empty to prevent fraud. The transaction will fail or
I'll end up being charged. Can I pay it from another account or can you wait?

(no more than one day later) Square: (if possible) Yes you can pay here (link
to payment site). We will automatically try your account in a few days. You
will here from us when we've decided on your dispute.

OP: Ok, here is my payment (or) funds will be in my bank account shortly.

(later on, after dispute is decided) Square:We ruled in your favor, the money
is being debited back to your account. It will be available for withdrawal in
a few business days.

~~~
jasonlotito
No. This screams of willing ignorance. You are dealing with money. Your
customers money. You should have just a bit of respect to understand the
agreements you are signing when dealing with your customers money.

Damn right you should understand the T&C BEFORE using the service like this.
Doing otherwise is damn right irresponsible and shoddy. The people running
into these problems have no idea what they are doing, they haven't dealt with
real processing, and are blaming everything everyone but themselves.

Hell, even your comment is ignorant of the system that the customer agreed to
use.

Guess what? Credit card users have certain rights, and if you want to accept
credit cards, you have to play within those rules. This means chargebacks
happen. This means _you_ don't get paid. There are ways to reduce it, but
_you_ are still on the hook for it. Hell, even if the chargeback gets
reversed, it's still held against you.

A shining example of this ignorant is right here:

> Square:We ruled in your favor,

That's not how chargebacks work. Square doesn't rule in any capacity. It's the
banks. It's the client bank. Not Square. Not the merchant.

Every time a story like this pops up, we get a whole bunch of fools
complaining and making reference to PayPal, and not a one of them has any clue
as to the realities and reasons why.

And yes, I've done this. I've read the documents, and handled this. And it's
always the same story. People whining about the company they deal with, when
the reality is, the policy is in place to protect their customer.

~~~
RandallBrown
"It is our pleasure to inform you that this inquiry has been preliminarily
closed in your favor"

Sorry I used the word "rule" instead. I was just quickly summarizing.

Yes you should understand the legal stuff BEFORE, but there's no reason that
square couldn't explain it when they were doing something too.

This guy was happily following all the rules. Square was breaking promises
(getting back to him in less than 24 hours).

