Founded in 2009 in the US, Square is a fintech company that provides businesses with electronic POS software and hardware solutions for payment processing. In 2023, the company processed over 4 billion payment transactions.
Square’s services are available to businesses in the hospitality, retail, and beauty industries in Canada, the United States, Australia, the United Kingdom, Japan, Ireland, Spain, and France.
Although the company caters to different types of companies, it defines some business activities as high-risk. These activities are restricted, and Square can permanently ban your merchant account if you engage in any of them.
In this article, we’ll learn more about what businesses are not allowed to use Square and why. Let’s dive right into it.
What Businesses Are Not Allowed To Use Square & Why
Square doesn’t allow specific high-risk businesses to use their platform. These are the main reasons why some businesses and activities are prohibited from using Square:
- Increased number of chargebacks by customers
- Operating in a secure and regulated environment that does not allow high-risk business activities
- Potential fraudulent behaviour
- Risk to brand reputation
- Restrictions by specific banks to process payments by high-risk merchant accounts
Here are the business activities prohibited by Square.
Illegal exportation of goods and services: Exporting items or services prohibited by the Export Administration Regulations in the United States.
High-risk activities: Any activity banned or deemed illegal by the country’s authorities in which the business is registered.
Activities in specific countries and areas: High-risk activities in Syria, Crimea (and its region in Ukraine), Cuba, Iran, and North Korea.
Automated tools: Using automated tools such as scrapers or robots to track or access data available in the Square software.
Illegal decoding: Disassembling or decoding software codes owned by them or circumventing the software’s limitations that might lead to software disablement. Businesses are also prohibited from conducting activities that would prevent other subscribers from using Square’s software.
Illegal items and services: Producing or selling illegal items and services, such as counterfeit items, cannabis and cannabis-derived goods, narcotic paraphernalia, pharmaceuticals, and medicine that can be obtained only with a doctor’s prescription.
Intellectual property infringement: Conducting copyright or trademark infringement, i.e. reproducing, modifying, displaying, transmitting, distributing, posting, selling, or reselling Square’s or third-party data materials without previously obtaining a license. You can find out more about the rules on IP infringement in Square’s Intellectual Property Policy.
Age-restricted items and services: Selling products requiring age verification (e.g., tobacco, e-cigarettes) without in-person ID checks.
Specific payment transfers: Square doesn’t allow merchants to enable specific payments, such as person-to-person, payments between close relatives, or company-to-company transfers where the owner of both companies is the same individual who lends money to third parties in advance.
Therefore, merchant subscribers cannot use debit cards to receive or send payments via their account unless they allow a test with a $1 fee. This test allows Square to confirm that its card reader is functioning properly and to check if the Square users are processing prohibited self-money transfers.
Software timesharing: Profiting from Square’s software by allowing timesharing, rental, lease, etc.
Selling weapons and accessories: Selling or producing weapons and equipment, including firearms and specific weapon parts, pepper spray, ammunition, and other items that can harm third parties by inflicting physical pain and harm.
Harmful acts: Acting in a dangerous, harmful, or discriminatory way towards third parties, endangering and violating their rights, etc.
Clubs with membership fee: Club activities that require users to pay for membership.
Credit repair counsel: Counselling for credit requests and management; agencies that offer credit repair.
Subscriptions: Services that require users to pay subscription fees.
Specific marketing campaigns: Direct online marketing campaigns and infomercials.
Pharmaceuticals: Pharmaceuticals that are sold online (via mail or an eCommerce platform) or by telephone or medicines that are imported and have a foreign origin.
Ponzi and pyramid schemes: Multi-layered marketing schemes, such as Ponzi or pyramid schemes; rebate and up-sell companies.
Bill payment: Activities that allow subscribers to pay bills via their Square merchant account.
Gambling: Betting activities, such as Fantasy Football, lottery, casino, racing, or remote wagering.
Money disbursements: Automated or manual money disbursements.
Selling FX currencies: Foreign exchange (FX) currency sold by institutions that do not have the necessary license to process such operations and wire cash transfers.
Travel agencies: Bookings and reservations by travel agencies.
Adult services: Prostitution, escort, dating, or similar adult services.
Occult-related goods and services: Selling, sharing, or producing occult-related items and services.
Legal advice: Legal advice lawyer representation for bankruptcy cases and debt recovery or credit collection companies or agencies.
Why Square Does Not Support Specific Industries
Square must adhere to domestic and international laws, regulations, and policies while partnering with card networks and banks. Compliance is crucial to maintain these partnerships, as many financial institutions prohibit high-risk business activities.
If Square suspects you are conducting high-risk activities from your account, they have the right to share any data necessary to assess your case with the law enforcement authorities.
What Happens If Square Restricts Access to Your Merchant Account
Square tracks all incoming and outgoing money transfers via their subscribers’ accounts to prevent third-party breaches and fraud. They will instantly contact the merchant account holder if they notice unusual money transfers that are not compliant with their regulations, terms, and conditions.
The company’s Account Services department handles the monitoring process. The timeframe of their assessment can vary depending on the issue with your account. In most cases, the company can ask for signed and processed receipts, reports and statements from your bank, and additional documents showing proof of your money transfers.
If there’s unexpected activity on your account, you’ll receive an email in which Square will ask you to confirm specific details about your business and payment activities. During this period, they will hold all of your money transfers, and you will be temporarily restricted from using Square to process payments, but you’ll be able to log in to your account. They will also place an online banner on your merchant account on the dashboard under the Support Center category.
According to Square, any payment details relevant to your situation can be useful for their staff while working on your case. Your money transfers will be temporarily suspended while Square reviews the case, verifies your transactions, and checks whether you’re compliant with their policies and domestic and international regulations.
Their assessment usually takes approximately 24 hours. You can find out more about money transfers and reasons for suspension here.
If you believe that Square terminated your account without any reason, you can contact customer support on the website to request more details. You can also call Square’s UK number, 08000988008, on workdays from 9:00 until 17:00 (GMT).
Premium subscribers to the Retail or Restaurants Plus plans can get in touch with customer support anytime, 24/7.
To contact Square’s community and ask questions regarding high-risk business activities, go to this page and log in to your merchant account to submit enquiries.