Payment systems have become an active participant in the market of personal and corporate accounts. They offer a similar service to banking. In some cases, the quality of service is higher, processes are faster and cost less.
But still, accounts are sometimes closed. Why does this happen and how to avoid it?
This material will include:
Complaints about freezing/closing accounts come constantly, almost always without explanation. It is extremely difficult to obtain an explanation, as well as a refund. The wait may drag on for several months.
A recent case from our client: the account was closed, without explanation. There were funds in the account, including in cryptocurrency. The latter turned out to be the worst: the payment system sent all assets back to the cryptocurrency exchange.
In other words, she used other people’s funds at her own discretion, without asking the owner’s opinion.
Latvian banks acted similarly in 2018, when clients from Russia, Ukraine, Kazakhstan and others “suddenly” became unreliable. Investors even filed a lawsuit in connection with violation of the contract and notice periods.
In this case, it is still not clear with the payment system how to return the blocked and sent funds, but the person is already opening an account in a new location.
Opening an account turned out to be really simple: fill out forms, provide documents online, identify yourself and go ahead. For a week or even two, everything was smooth and easy: transactions went through, clients paid, employees’ salaries were accrued.
And then the account was abruptly frozen. Why? It took almost the whole day to figure it out because support was slow to respond. It turned out that an automatic system was activated, which suspected an atypical transaction and raised the so-called red flag. Payment system managers sorted it out and activated the account again.
The situation improved for three days, and then another failure and freezing occurred. For several weeks, the account was constantly blocked along with all funds. Deals were stuck and nerves were wasted.
The payment system, despite an active advertising campaign and assurances of openness to everyone, worked completely unpredictably with risky businesses.
As a result, business owners got tired of all this and went in search of adequate solutions. They contacted us and were able to open an account first in a payment system that is focused on working not only with risky clients in Europe, but also with offshore companies. And after a while they prepared the documents, passed a meticulous check and opened a bank account.
For six months everything went great, modest amounts were credited to the payment system account and withdrawn to a bank account without any questions.
In the sixth month, the owner selected a suitable product, launched a serious advertising campaign and attracted several times more customers to a relatively expensive product. Income to the payment system account has increased approximately 20 times.
A week later, the account was frozen for withdrawal and a notification was sent: suspicious activity. They demanded to provide documents, explain the type of activity, and show other company accounts. The owner decided to act independently, provided documents and explanations of the business as he saw it.
He turned out to be wrong: the payment system considered his activities risky, froze his account, and prohibited accepting payments. The only good news was that the funds were promised to be sent to a bank account within 120 days if there were no demands for a refund from customers. In this case, the period will be extended for another 90 days.
As a result, the money was returned, but the account had to be opened in a new place and after consultation with specialists.
The worst thing is when accounts are not just closed, but when funds are frozen for an indefinite period, when technical support does not give answers or generally disposes of funds at their own discretion. This is an arbitrariness that you have to come to terms with at a particular moment - there is often no time and resources for an “ordinary” person or company in popular mass payment systems.
However, there is no need to put up with the whole thing! Let's figure out how and what needs to be done so that the account is saved and allowed to work in peace.
What should you pay attention to?
Where to look for alternatives? You can use search engines, but they won't show everyone. Some very interesting platforms are not promoted at all through standard marketing channels and accept clients, for example, only by invitation.
Besides, if you find an interesting solution, it’s not a fact that you will learn all the nuances. For example, a message about the opportunity to work with offshore companies is almost never placed on the main page and is communicated only in a personal conversation. Of course, sending out emails asking about hidden features will be a long process.
The solution to the problem is to use the services of professionals and choose a payment system together with them. In many cases, the selection service is free.
How it's done? You answer a list of questions, including about the type of business, main partners, country of registration of the company and country of residence of clients, planned turnover, and so on. Based on this information, the expert will offer a list of payment systems that are most suitable for you.
If desired, he will introduce you, help you prepare documents and open an account.
It is very pleasant that payment systems almost always open accounts remotely without the need for a personal visit. Although an interview via instant messengers may be required.
Next, you prepare documents, send them for verification, and wait for a decision. With proper preparation and the help of a professional, the chance of failure is minimal. If it does happen, it is most often due to the fact that the client has hidden some information about himself or the company. However, it is always worth remembering that the final decision on opening an account is always made by the payment system or bank.
A few recommendations to help you work long and fruitfully:
And one more piece of advice that is useful for any modern business: don’t stop at one account. Unfortunately, even an ideal payment system can close, change the rules, and become less convenient. If you depend on one account, then any changes are a shock or a disaster for you.
Having a second and third reserve account is a diversification of risks.
Accounts can be opened in payment systems, banks, neobanks, in different countries and different currencies. As they say, don't put all your eggs in one basket - it's too expensive.
We hope the material was useful to you. Share in the comments, what were your most unpleasant situations with payment systems? How was it closed, for what reasons and how did you get out of the situation?
Share your experience!
But still, accounts are sometimes closed. Why does this happen and how to avoid it?
This material will include:
- Several real cases to understand the situation as a whole;
- Reasons for closing accounts in payment systems;
- The principle of working with payment systems, which reduces the risk of freezing and closing an account.
How and why accounts in payment systems are closed
Let's look at three cases from our practice that will show how easily some payment systems can close accounts. For security reasons, we will not write the names of these payment systems, but most likely you can guess which of them we are talking about - most often it is the popular payment systems that are heard.Case No. 1: they closed the account and sent all the cryptocurrency
A well-known payment system or even a neobank. Registered in Europe. Allows you to open personal and corporate accounts, convert currency without commission, withdraw money from a card, trade cryptocurrency and even buy shares.Complaints about freezing/closing accounts come constantly, almost always without explanation. It is extremely difficult to obtain an explanation, as well as a refund. The wait may drag on for several months.
A recent case from our client: the account was closed, without explanation. There were funds in the account, including in cryptocurrency. The latter turned out to be the worst: the payment system sent all assets back to the cryptocurrency exchange.
In other words, she used other people’s funds at her own discretion, without asking the owner’s opinion.
Latvian banks acted similarly in 2018, when clients from Russia, Ukraine, Kazakhstan and others “suddenly” became unreliable. Investors even filed a lawsuit in connection with violation of the contract and notice periods.
In this case, it is still not clear with the payment system how to return the blocked and sent funds, but the person is already opening an account in a new location.
Case No. 2: freezing an account once a week
Another payment system, Lithuania, is popular among entrepreneurs from all over the world, including from Russia. The client company operates in the EU, but the business is considered risky.Opening an account turned out to be really simple: fill out forms, provide documents online, identify yourself and go ahead. For a week or even two, everything was smooth and easy: transactions went through, clients paid, employees’ salaries were accrued.
And then the account was abruptly frozen. Why? It took almost the whole day to figure it out because support was slow to respond. It turned out that an automatic system was activated, which suspected an atypical transaction and raised the so-called red flag. Payment system managers sorted it out and activated the account again.
The situation improved for three days, and then another failure and freezing occurred. For several weeks, the account was constantly blocked along with all funds. Deals were stuck and nerves were wasted.
The payment system, despite an active advertising campaign and assurances of openness to everyone, worked completely unpredictably with risky businesses.
As a result, business owners got tired of all this and went in search of adequate solutions. They contacted us and were able to open an account first in a payment system that is focused on working not only with risky clients in Europe, but also with offshore companies. And after a while they prepared the documents, passed a meticulous check and opened a bank account.
Case No. 3: sales growth as a reason for closing an account
The following example: a small Internet business, selling video courses. The owner tested niches for some time and the turnover was very low. Connected a popular Western payment system with the ability to process cards.For six months everything went great, modest amounts were credited to the payment system account and withdrawn to a bank account without any questions.
In the sixth month, the owner selected a suitable product, launched a serious advertising campaign and attracted several times more customers to a relatively expensive product. Income to the payment system account has increased approximately 20 times.
A week later, the account was frozen for withdrawal and a notification was sent: suspicious activity. They demanded to provide documents, explain the type of activity, and show other company accounts. The owner decided to act independently, provided documents and explanations of the business as he saw it.
He turned out to be wrong: the payment system considered his activities risky, froze his account, and prohibited accepting payments. The only good news was that the funds were promised to be sent to a bank account within 120 days if there were no demands for a refund from customers. In this case, the period will be extended for another 90 days.
As a result, the money was returned, but the account had to be opened in a new place and after consultation with specialists.
Why are accounts in payment systems closed?
We highlight several global reasons why popular payment systems close customer accounts:- Orientation to a wide market - in practice, this means that only very simple and understandable businesses can operate more or less without problems. Moreover, again based on practice, we are talking about relatively small companies or giants with whom individual managers work. If you deviate even slightly from the image of the “ideal client,” then the account can be closed at any time without much explanation. In such payment systems, the “quickly opened, quickly closed” principle often works.
- Inconsistency with the type of activity - even if you have not chosen the most well-known payment system, you need to clearly understand: what type of clients does it work with? For example, there are payment systems that are happy to accept IT companies and even fintech startups and are ready to deal with them. There is experience and understanding. And there are those payment systems that will see some innocent “VPN” in the purpose of the payment and block the transfer.
- Risk level. The lower the risk in your business, the greater the choice of payment systems. But risky companies also open accounts. However, you need to be very careful here. At a minimum, because some banks and payment systems can dramatically change their attitude towards this or that type of activity: today cryptocurrency is “of course, come”, and tomorrow – “no” or even “we never offered this!”
- Evaluation after the fact. In banks, a company and its activities are assessed before being accepted as a client. In serious “exclusive” payment systems – too. This is necessary precisely in order to understand where the business will go and what to expect from it. Otherwise, it suddenly turns out that the company’s profits are growing, the payment system did not foresee this, which means something illegal happened. The solution is blocking! But business definitely doesn’t need this - it needs predictability in the long term, or at least the medium term.
The worst thing is when accounts are not just closed, but when funds are frozen for an indefinite period, when technical support does not give answers or generally disposes of funds at their own discretion. This is an arbitrariness that you have to come to terms with at a particular moment - there is often no time and resources for an “ordinary” person or company in popular mass payment systems.
However, there is no need to put up with the whole thing! Let's figure out how and what needs to be done so that the account is saved and allowed to work in peace.
How to work with the payment system so that the account is not closed
The process can be divided into two stages: selection of a suitable payment system and daily work with it.Selection of payment system
Many problems faced by entrepreneurs who have opened an account in a payment system are primarily associated with the incorrect selection of an instrument.What should you pay attention to?
- On the types of activities that the system works with and whether you qualify for them - for example, you supply medicines, but such a business is not serviced;
- Types and conditions of transactions that the system allows: purchase of cryptocurrency, transfer to a bank account, transfer to a specific country, transfer amount, and so on;
- Preliminary check: it’s better to study you and your company at the start, rather than torment you later with constant checks and blocks during the process;
- Fees: A popular payment system may be very popular, but if it offers terrible rates for currency conversion (for example, look at PayPal rates), high withdrawal fees, then it may be worth looking for alternatives.
Where to look for alternatives? You can use search engines, but they won't show everyone. Some very interesting platforms are not promoted at all through standard marketing channels and accept clients, for example, only by invitation.
Besides, if you find an interesting solution, it’s not a fact that you will learn all the nuances. For example, a message about the opportunity to work with offshore companies is almost never placed on the main page and is communicated only in a personal conversation. Of course, sending out emails asking about hidden features will be a long process.
The solution to the problem is to use the services of professionals and choose a payment system together with them. In many cases, the selection service is free.
How it's done? You answer a list of questions, including about the type of business, main partners, country of registration of the company and country of residence of clients, planned turnover, and so on. Based on this information, the expert will offer a list of payment systems that are most suitable for you.
If desired, he will introduce you, help you prepare documents and open an account.
It is very pleasant that payment systems almost always open accounts remotely without the need for a personal visit. Although an interview via instant messengers may be required.
Next, you prepare documents, send them for verification, and wait for a decision. With proper preparation and the help of a professional, the chance of failure is minimal. If it does happen, it is most often due to the fact that the client has hidden some information about himself or the company. However, it is always worth remembering that the final decision on opening an account is always made by the payment system or bank.
Daily work with the payment system
When the payment system is selected and the account is opened, it would seem that life becomes simpler. This is true if you have opened an account with a suitable payment system. But this does not eliminate the need for some safety net in order to maintain the account in the future.A few recommendations to help you work long and fruitfully:
- For each transaction, you must have documents: even if the security system is triggered, you will quickly provide the necessary documents and continue working;
- Warn about all changes: a new partner, a large atypical transfer, changes in the company structure or a new director - all this should be indicated in advance;
- Respond quickly to requests: if you have chosen the right payment system, they will communicate with you and ask questions. Try to answer as quickly and thoroughly as possible. Better - within 24 hours. This advice also applies to working with banks.
And one more piece of advice that is useful for any modern business: don’t stop at one account. Unfortunately, even an ideal payment system can close, change the rules, and become less convenient. If you depend on one account, then any changes are a shock or a disaster for you.
Having a second and third reserve account is a diversification of risks.
Accounts can be opened in payment systems, banks, neobanks, in different countries and different currencies. As they say, don't put all your eggs in one basket - it's too expensive.
We hope the material was useful to you. Share in the comments, what were your most unpleasant situations with payment systems? How was it closed, for what reasons and how did you get out of the situation?
Share your experience!
