My Recent Experience With Square

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.

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?

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.

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?

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

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.

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.

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.

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.

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?

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 .

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.

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.