Payment professional for over 15 years here.

The problem comes it with credit cards and debit cards. The card networks have a very strong chargeback program in place, and the entire chargeback process is 100% manages by the customers bank. The customer initiates a dispute with their bank, and their bank decided at the end of the day if they believe your story and evidence or the cardholders. They often side with the cardholder to keep the relationship going, even with strong evidence to contradict their claim.

Under the hood, all merchants need to maintain various compliances with merchant agreements, card brand policies, PCI, etc. The biggest issue that pops up is the chargeback ratio your allowed to have. Frankly the card brands want you to have a ratio of less than 1%. A processor may be more strict on this too. This means you had 1 chargeback per 100 successful orders. Friendly fraud, where somebody does a chargeback just to try and get the item for free is on that rampant, but merchants are still held to that 1% standard.

Square and Stripe comes in a lot here because of thow they are designed. They are not a traditional merchant account, all underwriting is done after you started to take payments, so now you took your first transactions and they are going to decided if your both your personal and business information matches their credit criteria to approve you for the account. This is where many fall short, they did not read the TOS and have a prohibited business, they were not elgible for an account for some reason, identity documents were wrong, maybe expired, etc. It is all automated and there is not much human insight into we have seen.

Once someone gets that account approval, we come back to chargeback ratio. Website owners fail to implement security measures like captcha before orders can be supported and payments charged. So they get used for card testing, and then get terminated became stripe/square instantly classifies you as high-risk and now they do not want the business, they don’t even want to stick around for you to fix things. Just wants you gone because frankly your business is now costing them too mulch and breaking the very detailed and thin profit model they have

Chargebacks come along, and while at other providers that allow that max 1% per card brand … square and stripe tends to get ansty way before that. They can get antsy on just one charge back. It comes down to again that the risk tolerance for these providers is extremely low because of how they underwrite accounts. They simply want no merchants that can cause them any sort of financial trouble.

moral of the point, if you want a real relationship, get a real merchant account with your name. The merchant account providers, especially smaller ones are super friendly and eager to help clients.

The stripe/square model as i see it is simple. they want small businesses, that are completely void of unusual risk. They want to through tools at you so you do not need to call, which allows them to deeply cut spending on customer service, and use canned responses for inquiries.

The merchant account provider is the opposite. They are flexible, they have often US based customer service reps to help you. If you go through an agent versus direct you will then basically have a dedicated account rep to go to for all issues that will help fit battles for you. Your account goes through underwriting upfront so you automatically know if your business is acceptable … not a month on your grand opening day.