Jack Dorsey-Founded Payment Processor Square Accused Of Withholding Funds From Retail Merchants
The companies complained to the New York Times that Square was restricting up to 30% of its customers' payments. Mobile payment processing company Square, founded by Bitcoin fanatic and Twitter CEO Jack Dorsey, is coming under fire from some of its customers for withholding customer payments.
An article in the New York Times reported that thousands of retailers using Square's service had complained that the company was withholding up to 30% of the funds paid by its customers. Square, Inc. is an American financial services, business services aggregation, and mobile payments company headquartered in San Francisco, California. The company markets payment software and hardware products and has expanded into services for small businesses.
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Some companies also claimed that Square was jeopardizing their livelihoods by withholding payments for up to four months. An online petition calling on Square to end the practice has garnered over 1,600 signatures. In response to the allegations, Square issued a statement explaining that the restrictions, imposed last year, applied to only 0.3 percent of its customer base and only affected "high-risk" sellers.
Square said it had expanded the practice to protect both retailers and consumers from losses during the pandemic. But, according to Times journalist Nathaniel Popper, some retailers provided evidence that their business activities hadn't raised any red flags. In response to merchants who said they hadn't been able to challenge the company's policy, Square said it planned to provide more information about why they were facing restrictions on what it calls its " mobile booking ."
The Times reports that Square has been hit harder by the pandemic-induced recession than other tech-focused payment companies, such as PayPal. The San Francisco-based firm reported a loss of $106 million last month. Much of its business relies on brick-and-mortar stores, which have had to close during lockdowns, forcing the company to increase its reserves by 290 percent to protect itself against future losses.
