Computerized Point Of Sale (POS) systems are one of the major ways businesses like restaurants process credit card payments and track receipts and purchases, and Square is one of the major players in that industry. Now, as business owners face a daily onslaught of existential crises, some are saying that Square simply will not give them all of the money that they’ve earned.
As reported by The New York Times, a multitude of businesses that use Square are saying that the company is holding on to 20-30% of their money, which won’t be returned to them for up to 120 days. Square is referring to this relatively new policy as “reserves” and writes, “We apply reserves on more ‘risky’ sellers.” The thing is, some businesses assert that Square is targeting them even though they have no history of risky transactions or returns.
The problem here isn’t necessarily the policy itself—which is universally used in the industry—but rather the timing and method of its implementation. Per the Times, Square recently announced a quarterly loss of $106 million and said it was increasing cash reserves to protect against future losses, and some Square customers are saying it sure looks like that cash reserve is coming from their own pockets. While Square says it began withholding money late last year, businesses only began reporting the withholdings in late May, at the height of the first wave of the pandemic, and that Square provided little to no notice that their money wouldn’t be fully disbursed.
Piling on, Square is also blocking some impacted customers on Twitter, a platform also helmed by Square’s CEO Jack Dorsey. Altogether it’s a bad look, and yet another hurdle for business owners to have to deal with as they struggle to survive.