What to Do When Stripe Closes Your Credit Card Processing

As a merchant, you’re extremely reliant on your payment processor to continue doing business. Unfortunately, there are a bunch of reasons why that payment processor might decide to cancel your account. Illegal activity is a big one, obviously, but even ending up with too many chargebacks and a high chargeback ratio can put your account in jeopardy.

So, what happens if you get the notice no merchant wants to see, and find your Stripe account has been closed? You have some work ahead of you, so you’re well advised to get to it ASAP.

Apply for a New Credit Card Processor

“Wait, shouldn’t I try to appeal and get my account back first?”

No, and here’s why.

When you apply for a new Stripe account, you’re approved pretty much instantly. You can start accepting payments by the end of the day, as long as you have the infrastructure set up on your site.

With most other credit card processors, you have to go through a longer application and underwriting process. That process can take 1-3 weeks, during which time you have no payment processor and you can’t accept sales (outside of non-credit card options like cryptocurrency or cash in person).

If you fail to get an appeal going and aren’t able to get your account back, any time you spent doing so is more of a delay before you can have a new payment processor set up.

Meanwhile, if you apply for a new payment processor and get approved, and your stripe account is reactivated, you just have a backup account and you’re good to go.

What payment processors should you consider?

Some of the most comparable are PayPal and Square. Shopify Pay is also decent if you use Shopify. Regional payment processors like Mollie and DataTrans may be useful. There are dozens of options depending on your revenue and your region.

Tip: Consider applying for more than one option. As you’re finding out from having Stripe close you suddenly, having one point of failure is dangerous. If you have a couple of backup accounts ready to go, you can insulate yourself from future risk in case another processor decides to close you again.

My #1 recommendation, though, is Authorize.net. They’re solid, they’re flexible, they work with high-risk merchants without being too capricious, and their anti-fraud tools are quite good.

You can also look into any banks you have good relationships with already. If you have an established business relationship with a bank, they’ll be more likely to approve you for an account, and less likely to close your account without warning. It’s generally the best option, but not universally available, which is why I recommend Authorize.

Understand the Scenario

Once the initial panic passes, it’s worth looking into some of the details of the situation. Most of the time, you’ll have been closed due to too-high a chargeback ratio.

But, there are actually several reasons why Stripe closes accounts, and it’s worth knowing which one they’ve used to close yours, so you know how to appeal.

• Excessive Volume Spikes. A strong surge in transaction volume and value can trip flags making Stripe thinking you may be processing fraudulent transactions. Going from $20,000 a month to $25,000 a month won’t do it, but going from $20,000 a month to $100,000 a month just might. That kind of surge isn’t common outside of fraud.
• Regulatory Changes. Sometimes, a product you’ve been selling is reclassified, and the new class makes it regulated or illegal to sell. There are a lot of industries, like nutraceuticals, gambling/gaming, crypto, and CBD that can change at a moment’s notice and cause an account flag.
• High Chargeback Rates. The industry-standard 1% chargeback rateis your warning sign to change things or have your account closed on you. It’s one of the most common causes, but not the only one.
• MATCH flags. The MATCH list is essentially an industry denylist payment processors use to flag known bad merchants so other payment processors don’t do business with them. If you’re put on the list by one processor, Stripe can see it and might cancel your account because of it.
• Suspicious Behavior. Just like you monitor transactions for signs of fraud, Stripe will monitor your behavior. If they see any evidence or patterns of behavior that makes them think you’re committing crimes or fraud, they’ll cancel your account over it.
• Stripe shuts down accounts that have been inactive for 6+ months. Though, you’re probably not here panicking about an appeal if you weren’t even using the account.
• Policy violations. Stripe has their own terms of service, privacy policy, and other legal agreements; if you violate any of them, they can cancel your account because of it.

When Stripe closes your account, they’ll tell you why, and you can use that to help you understand what might have cause the problem and how you can appeal.

What About Your Money?

When your account is closed, what happens to the money Stripe was holding for you?

Stripe will put a hold on those funds for 180 days, about half a year. This is the timeline for any disputes or refunds that come in. If chargebacks happen during that time, it’s deducted from the money Stripe has. If that money runs out, they pull from attached accounts.

Even after your account is closed on you, you can still try to fight chargebacks to keep claim on at least some of the money. If any is left once your 180 days is passed, it will be released to you. Don’t abandon the account because it’s closed, take action to save what you can.

Appealing a Stripe Account Closure

It’s always a good idea to appeal your account being closed. Will you win? Maybe, maybe not. It depends on why your account was closed, what kind of evidence or proof you can offer, and even who you contact.

First of all: yes, you can appeal, and yes, sometimes Stripe does reactivate accounts.

When you send your appeal through the channels given to you in your closure email, there’s a good chance all you’re going to get is an automated email claiming they reviewed your business and decided to keep your account closed. It’s frustrating, but it’s not the end of the line.

Who to contact at Stripe to appeal

The key here is to contact them the right way.

The “intended” course of action is to file a support request at the Stripe official support email, heretohelp@stripe.com. You will also have an appeal form you can fill out from your Stripe dashboard, though you only have five days from the date of closure to do so.

For a dash of public pressure, you can take to social media. Stripe’s X account, their LinkedIn account, and their Instagram accounts can all be worth trying.

For added chances of success, you should consider reaching out to someone at Stripe with the power to take a look. The CEO probably won’t see your email, but someone like the head of comms, a lead for client services, or any point of contact you’ve worked with before can help. Note that I’m not giving names here; the org chart changes and I don’t want you chasing down someone who has since left the company.

Tools like hunter.io and platforms like LinkedIn can help you find who to contact and how to reach them.

Do’s and Don’ts of Contacting Stripe

You have where to reach out, but what do you say?

DO: Politely explain the situation. If you have any evidence to support the idea that Stripe made a mistake, present it. For example, if your account was cancelled for having a high chargeback rate, but you can prove that some of those chargebacks were invalid, you can show that proof.

DON’T: Spam the emails or contact channels. You really just need to get through once, and after that, it’s all in the hands of whoever is investigating. If you keep emailing, they’ll probably find you annoying and might be less inclined to let you back in.

DO: Discuss any steps you could take to solve the problem that got your account cancelled in the first place. Talk about using tighter anti-fraud tools or being more proactive with fighting disputes, and son on.

DON’T: Threaten legal action. If you ever send them words like “I will be speaking with my lawyer” or anything like that, your case will immediately be suspended pending legal action. Companies like Stripe aren’t going to fold to pressure like that, their legal department is primed and ready.

DO: Expect failure. While Stripe does occasionally make mistakes, and sometimes if you’re right on the edge you can convince them to give you another chance, there are many reasons why they might choose not to reverse course. Don’t count on a successful appeal, just shoot your shot.

What are the chances of getting your Stripe account back? I’ll be honest: pretty low. Even people who are successful often find their accounts closed again within six months, since Stripe will be paying a lot closer attention and will use any justification they have. Many of the closure reasons are simply not things you can fight, though.

Build a Contingency Plan

Next up, you want to build a contingency plan so you’re insulated from similar problems with other merchants in the future.

The key step here is to use a payment gateway like NMI. Gateways sit between you and your payment processor, and provide an extra layer of filtering. They can check for signs of fraudulent transactions you missed, they can redirect higher-risk customers to different MIDs, and a bunch of other features.

Best of all, they can essentially emulate Stripe for you, so customers can still pay “through Stripe” even if your Stripe account has been closed. Gateways like this are commonly used in industries like gaming, adult content, and nutraceuticals where high-risk payment processors are few and far between.

Ideally, you’ll have your shiny new high-risk merchant account with a different payment processor ready to go and can link it to the gateway, and then you’re back in business. Then, if Stripe reactivates your account, you can put it in the system too and you have backup and insulation against problems like these in the future.

Address the Underlying Issue

Stripe doesn’t arbitrarily close accounts. They have reasons why they do what they do. Do those reasons fit every scenario? No. Can they make mistakes? Of course. Was your account closure also a mistake? Maybe, maybe not.

As a payment processor, Stripe takes on a lot of risk handling potential fraud and fielding chargebacks. They will routinely close accounts they deem as too high-risk for their tastes, and there’s not much you can do about it after the fact.

IF you do win your appeal, definitely take actions as much as you can to address the problem. If you don’t win the appeal, definitely take actions as much as you can to prevent the problem from happening again with your new payment processor.

What kinds of actions can you take?

For clarity and information, change your credit descriptor to ensure it matches your business name and provides clarity on who you are, so customers don’t dispute charges because they don’t recognize you.

If you’re a digital subscription business, make it easy to cancel and issue refunds if a user cancels within a few days after renewal. That’s the single biggest source of chargebacks for that kind of business.

You should also use anti-fraud tools to cancel customer orders when the signs of fraud are too great. Make liberal use of IP blocking and other tools, as relevant to your business. At this point, losing a few legitimate transactions is better than letting more high-risk transactions through.

Finally, set up dispute alerts with FightDisputes.com. My service has a direct link to the credit card companies, so when a customer files a dispute, you’re alerted immediately. You can then refund the customer and have the dispute cancelled, before it is even processed into a chargeback.

With dispute alerts and proactive refunds, you can cut your chargebacks by 80%. If you’re skirting the line of high-risk, that can be the difference between ongoing operations and payment processors cancelling more accounts.