There are a number of reasons why some merchant accounts hold funds longer than others. One reason could simply be that particular institution’s practices are more efficient than others. Another reason could be that something has gone with that particular business account. When the delay is routine, there is no cause for concern.
Different financial institutions use different payment processing systems, and they are not uniform in their practices. For this reason, some transactions are significantly faster than others. Usually, this is no reason for concern.
However, when the account or a particular transaction is put on hold by the issuer of the account, there is reason to pay close attention. Sometimes such a delay in payment processing means something suspicious has occurred in the account’s use. In those cases, funds will be put on hold for that reason. The issuer may hold all funds or just the funds associated with a particular transaction.
Though there are other reasons funds get held, but the main reason for this occurrence is when suspicious activity takes place. Unusually large orders, or anything out of the ordinary could be the cause, or there may be some other reason. There are various scenarios, but when a hold has occurred it is important to ask why. Sometimes, those funds are held indefinitely pending an investigation.
When these types of holds take place on a merchant account, it is important that you find out which scenario is taking place when you have concerns about your business accounts. If it is a normal delay in processing, you have nothing to worry about. If there has been suspicious activity, your account, or a particular transaction, may become frozen completely until an investigation of the transaction or transactions in question have taken place. It is important to have this information as soon as possible if your business is depending on that particular merchant account, since you will need to secure another source of funding if they decide to put a complete freeze on process or if, in the worst case scenario, they terminate your business’ account.
The time differences in various holds reflect varying times it takes for the company to investigate the questionable transaction, and depending on what it takes to satisfy the requirements of such an investigation, and the results of such an investigation, the company will then make a decision about how to proceed.