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My Recent Experience With Square (jasongullickson.posterous.com)
160 points by DamagedProperty on May 10, 2012 | hide | past | web | favorite | 93 comments

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.

Agreed. Square's policy seems clear. Since Square pays out transactions very quickly, it's essential to be able to recover funds when there are questions. Merchants need to anticipate this. The alternative is Square holding the money for a long time, which nobody wants.

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...

A downside of being so easy to use is that many people who have no clue what they're doing are probably using Square. I don't know how to solve that, since adding education (hassle) up front would definitely drive away some fraction of customers.

Had Square told him in their FIRST email, things would have been fine. The problem wasn't so much that they took his money (he immediately transferred money into the account) the problem was that Square was accusatory and slow to respond.

They did tell him in he original email. " There will be a hold or debit (via your bank account) on this transaction until the dispute is resolved"

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

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.

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.

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”?

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?

Except it isn't a random outside party. It's his credit card processor and it wasn't a random amount, it was the specific amount under dispute.

Yes. A credit card processor that said they wouldn't act while he was disputing a charge --- but oops did. A credit card processor that makes it hard to contact them. A credit card processor that cannot be bothered to pick up the phone and call the customer.

Might as well be random.

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?

> They handled this as best as they possibly could?

I disagree. Square handled it in a manner similar to waht we've come to expect from, say, PayPal. But I think many of us were expecting Square to be better than that.

The tone of the support staff was unsympathetic, responses took too long, the reply about sending in multiple inquiries was obnoxious, there was an over-reliance on links to terms of service, funds recovery seemed over-aggressive considering the customer's legitimacy.

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.

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.

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.

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.

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?

The problem is that people (mostly people here, based on their status as "one of us" I guess) were led to believe that Square wasn't going to be like PayPal at all. Yet here they are with a story that could have come straight out of paypalsucks.com.

In context, having unclear policies and unresponsive customer service at the "still-somewhat-better-than-paypal" level isn't matching the expectations set by Square's marketing.

It's a billing goof. It's going to happen, and all parties are always going to hedge in their own favor to the extent practical. Pretending that Square (like Paypal) won't go after your bank account to cover a pending chargeback is just fantasy.

'PayPal' and 'customer service' should never be in the same sentence together.

Heh, I called up once for help with the sandbox and the CSR told me that I was mistaken- there is no sandbox or any way to test transactions on the site. They must have a very rigorous training program there.

I don't believe the customer service was polite. They shouldn't scold the person right up front about multiple emails; maybe it's just me, but the customer pays you, they can send as many emails as they want. Also, it's confusing that he is told to respond to the first email (and that it's time sensitive) and yet they do not respond to his prompt reply.

" maybe it's just me, but the customer pays you, they can send as many emails as they want"

It's just you. Emails for a company at this scale enter a ticket queue, not somebody's inbox. Adding more tickets for the same issue impedes the company's ability to help other customers and doesn't get you help any faster.

They didn't scold him. They told him facts-- that it didn't help anything and that the system (i.e. the software) might flag him as a spam if he hammered on it too hard.

Regarding the core issue-- they have a stated policy on chargebacks. It isn't "guilty until proven innocent", it's "Square gets to hold the money in question until it's sorted out-- and when you set up your account, you connect an account and authorize us to debit $ to cover a negative balance".

This is just how chargebacks work. It's somewhat dictated by the credit card companies-- I'm not sure Square has much flexibility to have a different policy even if it made sense to do so (IMO, their policy is perfectly reasonable).

A smart queue would bunch together tickets from the same email address, or at least classify them together. Treating each email as a completely separate contact is dumb.

I'm interested to hear whether people have found a good way to do this.

I've had a couple of jobs where support reported to me. In those cases, our end client had a help desk of some form that was escalating to us, so it wasn't unusual to get small laundry lists of whatever their admins couldn't deal with.

I greatly prefer to have those lists split out into individual tickets.

Granted, our systems provided the ability to pull up a view of all tickets associated with a specific POC or client, maybe that's all you are asking for. I just wanted to point out that i haven't seen any shops where it was obvious that what you're asking for was easy or correct.

If you have an example i'd love to hear about it!

Here's something ironic... I am just re-opening my paypal account after it was closed approx 8 years ago (oct 2004). There is a small sum outstanding on it due to an ebay sale that the buyer said "never got goods" and I said "but I sent them". As it was for a small sum, I didn't bother registered mail. I didn't bother trying to dispute the dispute but as my acct had zero in it, they "froze" it. Fast fwd to today, 2012. To re-open my account, I HAVE to send them in a cheque. No other form of payment is accepted. Can anybody tell me why this is ?? It seems crazy that paypal, of all people, insist on me posting a cheque ?!?!

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.

* 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.

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?

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

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

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

I just responded to someone else making the same claim up above (http://news.ycombinator.com/item?id=3956896), but no they didn't. They always responded the next day.

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

What do you mean?

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

They did? I must have missed that. All I see are statements of facts from Square. Maybe you're misinterpreting that given that Jason did in fact screw up.

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'


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.

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.

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.

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.

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.

When the author states something like "give me my money or I'm going to the press," he loses all good will I might have towards him.

He also didn't mention anything about hearing back on his inquiry to his customer company. Maybe only Square has to reply promptly?

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.

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.

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

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.)

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.

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.

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.

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!

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.

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.

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.

Square was out the funds immediately. Jason could have avoided fees by funding his account the same day, or by simply keeping some reasonable amount in the account for potential chargebacks.

Square should not be required to keep a person on call to handle special cases like this or to ask merchants nicely for funds for every chargeback to an unfunded Square account. Automated ECH transfer from a linked account is fair and efficient, and once it is initiated can't be stopped.

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

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.

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?

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.

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 .

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.

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.

Except it's not a very good idea. It's actually a very poor business practice.

Dude's got no one else but himself to blame. If he's taking credit card transactions, he should be holding a reserve in the relevant account for exactly this sort of situation. His lack of foresight is the root cause of the entire mess. As the saying goes, "Lack of planning on your part does not constitute an emergency on my part."

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?


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

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.

Low fees. High quality customer support. Pick one. You can't have it both ways.

@delinquentme - sure. Except how many people will look longer at square's competitors now?

I certainly am now reluctant to use them.

Tyler, that kind of lets all sort of bad behavior off the hook doesn't it?

I rather like the high quality, low cost support I get from https://www.techcu.com/ myself.

I agree, I created an account whenever Square had first come out and for whatever reason my identification could never be verified allowing me to not be able to use Square. After an email to customer service, I was told "If we believe we erred in our assessment, we will reach back out and contact you", to basically say that my ID couldn't be verified and it would be that way into the extended future unless Square changed their minds. I understand things need to be safe and secure but at least ask for some other form of verification for my ID before telling me that I just can't use your service.

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.

> Jason [...] does not understand or respect his responsibilities in his business relationship.

This is indisputably the most succinct account of what has transpired. I would have presumed there to be laws governing a minimal merchant balance -- placed on Square, then in turn passed on to its merchants -- to be maintained in good standing, good faith, and so as to be lawful.

Additionally, I find a poetic irony in his account with his own bank:

> At this point my bank has levied an insufficient funds fee on my account, however I was [surprisingly] able to [...] get the charges reversed.

To which I'm led to laugh: "So, Jason, you want it your way on both sides of the argument?"

It's all on him. He could have avoided the whole thing if he just had the foresight to keep a few hundred bucks in his account as a reserve against charge-backs.

It looks like Square adhered strictly to their end of the terms of service. They did exactly what they always said they would do. Jason is the one who screwed up and then demanded special treatment and then got huffy when they didn't give him special treatment.

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.

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.

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.

> Getting money quickly from a merchant account is a privilege, not a right.

What is this, a forum for dads of teenagers? "Getting money quickly from a merchant account" is a feature that services like Square can either try to provide insofar as the law allows, or not. I really don't see the point of making this a moral issue.

At the end of the day, square has to live within the existing system. The purchaser's bank deducts the money from square at the start of the chargeback. That is the system. They can't just foot the bill until things are resolved, so the choice is between holding the money until chargebacks aren't eligible or handing the money over with the agreement that you'll promptly pay them. Compared to having the money held, prompt transfers are a privilege.

If expecting people to understand and work within the established system for handling monetary transactions is paternalistic, then I suppose this is indeed a forum for dads of teenagers.

Sure, Square has to "live within the existing system"...in fact, from everything I've heard from them, their value-add is that while they live in it, they shield you from it.

They are very sympathetic with regard to how crappy banking technology is and try to shield you from that; however, it doesn't seem that this sympathy extends to the charge-back side of things.

They (Square) did shield him from as much of the hassle as possible. They provided pretty good support from an email perspective. And more importantly, they did NOT charge him the usual $25 fee any typical processor would charge him for the chargeback. Which I might add is charged to merchants regardless of them winning or losing a chargeback so again, Square "shielded" this guy from typical charges any business would always have in a chargeback situation.

The problem is this is "money" movement, not customer service "sympathy" issue. Square like any company moving money is as sympathetic as possible but when Square gets a chargeback notice, you are GUILTY until proven innocent. As stated multiple times elsewhere, in plain and simple language a chargeback means the card holder says they did NOT authorize the transaction which means they are saying "This is a fraudulent" transaction. If you ran square, just exactly how much sympathy will you have for any business when this happens? especially as stated, you'll have to cough up the money regardless of whether you get the money from the merchant or not. And, do all that work with no extra fee to offset the hassle and customer service for doing it. So, in the end, Square did a really good job overall from shielding this merchant from the situation.

This is a pretty fair point you make; I do commend them for going as far as they went with helping the customer.

That being said, I still don't believe that in this particular case (maybe they do in others) they live up to what they lead to expect of them.

So, agree to "slightly" disagree :)

>" Getting money quickly from a merchant account is a privilege, not a right."

No, it's a service, provided by Square, that you pay for.

Whether Jason is at fault or not, he's disgruntled and public. That's never good news, especially with companies who deal in something as sensitive as payments. Square built a great product, but they are in a very competitive space.

> No, it's a service, provided by Square, that you pay for.

Just because you pay a company doesn't mean you have an unconditional right to do anything you want with a company's resources. You do not pay for unconditional money from customers via Square. Part of what you pay for, in fact, are the resources Square requires to defend disputed charges on your behalf. Part of what you agree to when you join Square is to comply with chargeback procedures.

You pay for the service, yes. You also agree to operate within certain parameters, and don't have a right to demand anything you want just because you are a paying customer.

This seems to be a common fallacy on HN - that any paid customer is deserving of bend-over-backward support, even if the payment amount was less than $1 - Square's net revenue from this transaction.

I agree with you completely. I was reading through the posting waiting for the "they did what!?" moment. I was ready to cast scorn on Square like I do regularly with PayPal. I got to the end was and think Square did a good job.

I didn't find any of the responses unprofessional. Not sure where the spammer accusation came from, they were just explaining how their ticketing system works.

The only thing to sort out is the response time. I would say any request for support on a payment issue is urgent. Even if it is a trivial issue like this. 6 hours would be far more acceptable than 24 though I guess there would be far higher cost to provide this service.

His first move should have been to pull out a personal card and charge himself $200.

That would be clever way to quickly fund his Square account, although it wouldn't avoid the overdraft fee after the ECH was initiated.

While you're post is indeed lengthy, it twists the facts a little bit.

1.) They did not reply in a timely manor. They did not honor their self imposed SLA of 24 hours response time. 2.) They threatened him that more mails from him would get him marked as a spammer so he should shut up. 3.) Although they told him repeatedly that he needs not do do anything to get his money back, they did not give the money back into his bank account in the end.

> "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."

Would attract fraudsters if they took this approach. The law of unintended consequences unfortunately.

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.

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.

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.

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.

"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).

Verification of a new account would take up to 5 business days, so it would be no faster than sending an ACH for the money.

What are you referring to?

When you link your bank account with Square, they have to send test deposits first to verify that it is indeed yours. These take up to 5 days, plus the time after that to actually transfer the overdrawn money.

Asking Square to take the money from another account would be no faster than moving it yourself to your primary one, because of this verification stage. Even if you had the foresight to link it ahead of time, Square only supports being associated with one account at a time.

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