Your Business Credit

How long can a payment processor hold funds from my business?


If payment processors are holding on to funds to investigate transactions, there are some best practices to make the system smoother

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

QuestionDear Your Business Credit,
Are there laws – state or federal – that govern how long a payment processor like eBay, PayPal, Amazon, Stripe or can hold on to your funds (from customer payments) without disbursement to your bank?  – Lucia

AnswerDear Lucia,
This is a great question – and it is one that many small merchants wonder about. It can wreak havoc on your cash flow if money a customer has sent you is tied up by the payment processor. That’s especially true if the payment in question is for a big-ticket item.

I ran your question past Fenella Kim, founder, president and CEO of Reliance Star Payment Services in Great Neck, New York.

“How long the processor can hold the funds is determined by the card brand association (Visa, Mastercard, Discover and American Express), not state or federal law,” she said in an email. “Typically if it is related to a risk and security issue, the payment processor can hold the funds up to 180 days.”

Avoid suspicious transactions

You might not like to hear that answer, but it does offer some clues as to how you can prevent payments from being tied up in the future.

First, make sure you are not skipping over any of the basics of processing transactions correctly. It’s easy, especially during the holiday season, to rush and make mistakes, so create a checklist for yourself to be sure you are not missing any steps. Any mistakes you are making could lead to delays in payments being processed.

Second, make sure you are following the guidelines from credit card issuers and your merchant processor on screening risky and fraudulent payments. I’ve covered this topic in previous columns such as “How to know when a credit card charge is a scam,” but given that crooks are constantly coming up with new ways to defraud merchants, it’s good to keep up on the latest information both card issuers and payment processors are issuing on this front. The more you can do to avoid suspicious transactions, the less likely your payments will be held up.

For some merchants, selling a particular product in a category processors deem “high-risk” is what leads them to transactions that get delayed. For instance, products related to adult entertainment and cigarette and e-cigarette businesses are considered high risk.

Consider changing payment options

If you find that one product is especially problematic for you, I’d carefully consider how important it is to your overall revenue and profits and make an executive decision on whether you should keep selling it. Your time is worth money, and if you are spending hours sorting through payment hassles, then you could actually be losing money on selling it. That time might be better devoted to marketing a product that sails through the payment process smoothly every time.

I’d also consider the payment options you are offering customers carefully. There are many ways merchants can get paid today. If you are having trouble with one particular type of payment processing and your customers use it very infrequently, then it might be worth discontinuing it and suggesting another payment option to customers.

If you need to rely on that type of payment processing and keep running into problems, try contacting merchant services for the processor and ask for advice. They might be able to point out best practices that will help you stop your payments from being delayed. Cash flow is the lifeblood of every small business, so it’s worth devoting some time to getting this right.

 See related: How to verify a customer transaction made by phone

Meet’s reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday,’s Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.




Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Your Business Credit

How to reverse unauthorized charge on my debit card

If you have a debit card on file with a merchant and see an unauthorized charge, it’s important to take action immediately.

See more stories
Credit Card Rate Report
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more