What To Do If PayPal Drops Your High Risk Account

This article was published on April 20, 2020 and last updated on May 13, 2023.

Summary:

PayPal may suspend high-risk accounts as part of their risk management policies. Recovering an account involves contacting PayPal, reviewing account activity, compiling supporting evidence, and submitting an appeal. While reinstatement is possible, it’s not guaranteed, and creating a new account may lead to further complications. 

What If PayPal Drops My Business?

Modern entrepreneurs have taken to selling online. E-commerce websites have vastly replaced brick-and-mortar stores because they can reach more people, thereby increasing income potential.

Managing these e-commerce sites require a handful of different tools so that they can run smoothly. There’s software for managing inventory and shipping orders, a plugin for real-time chat support, and a payment processor.

Why Has PayPal Suspended My Account?

So Paypal dropped your high risk merchant account…

It’s a big blow for sure. Logically it would make sense to reach out and ask why this has happened. If the email notification has spelled it out pretty clearly, the next step would be to see if there’s anything that can be done to reverse this.

If negotiation doesn’t do the trick, it may be time to look elsewhere. Remember, it’s not just companies that offer aggregate merchant accounts who are out there. There are those that specialize in dedicated merchant accounts.

Look into this option and see how a dedicated merchant account could be the better solution for that high risk business.

• A customer or partner has filed a complaint against your account.
• You are suspected of selling or displaying questionable content (which is an issue for many high risk merchants).
• There is suspicious activity on your account (large withdrawlas or deposits, or string login locations, or fraud).
• PayPal has discovered you are a high risk customer which was not disclosed before (credit score and/or products sold).
• You are breaking the law (selling illegal products).
• Your account information is not up to date or your account is not fully verified.
• A series of chargebacks have been placed against your account.

High-risk businesses, typically industries like gambling, adult services, or firearms sales, inherently possess elevated risk levels due to regulatory constraints, high chargeback ratios, or legal complications. PayPal’s stringent risk management system monitors for such potential threats and occasionally opts for account closures to mitigate risks.

To understand the high-risk landscape better, it’s useful to navigate resources such as First Card Payments and their offerings geared towards high-risk merchant accounts.

What To Do Now?

The possibility of reinstatement hinges heavily on PayPal’s discretion and the specific circumstances surrounding your case. PayPal may choose to reinstate your account if they are satisfied that the risk parameters triggering the closure no longer exist or were erroneously flagged.

However, reinstatement remains uncertain in many cases, especially for businesses in high-risk industries. Here, merchants might need to explore alternative solutions to maintain smooth business operations.

Navigating Uncertainty: Will PayPal Reinstate My Account?

 

#1: Find An Alternative Account to Accept Payment

Before you appeal the account suspension of termination, you must find an alternative means to accept payment now. You have to keep your cash flow consistent. If you were suspend for any of the reasons related to being a high risk businesses, then it’s within your best interest to find a permanent, alternative solution like a high risk merchant processor.

If not, open another account on Square, Shopify, AmazonPay, or Braintree.

DO NOT wait for the issue to resolve. Some PayPal suspensions can last months or worse, never resolve. Do not wait for this to resolve. Work on an alternative immediately.

 

#2: Figure Out Why You Were Dropped By PayPal

Be sure you narrow down the cause of the suspension. If you were suspended because, utlimately, you are high risk, then we highly recommend you opt to switch to a high risk merchant account instead of using mainstream processors Like PayPal. SOme high risk merchant accounts will also build you custom payment portals, so you will never have to rely on third parties again.

A high risk merchant account is used by businesses with intangible products.

Selling digital products like software or mobile apps online can be perceived as high risk because it lacks the following:

• A tracking number for shipping
• An easy confirmation of delivery

Payment processing companies have been known to drop merchants with high risk accounts.

Why is that?

In an article written for Entrepreneur, author James Parsons cites chargebacks and disputes as primary reasons.

“It’s a matter of maintaining a good relationship with credit card companies and banks. Stripe doesn’t want to jeopardize their relationship with financial institutions, so they carefully prune out their own clients. If a business is issuing an unusually large number of chargebacks or disputes, Stripe flags them for review and terminates their account. PayPal does the same thing,” he explains.

 

#3: Appeal The Suspension/Termination 

First, ensure you go to the PayPal Account Appeal Portal.

You can follow the directions there to launch an appeal.

You can also follow the steps through the Better Business Burea to receive a response within 2 days as the company usually responds to all complaints and comments:

1. Visit this link: https://www.bbb.org/us/ca/san-jose/p…nc-1216-210387
2. Click “File a Complaint”, then “Start your complaint”.
3. Where it says “Your complaint involves a:”, select “business’s product or service”
4. On the next page, you’ll have to search for the business; just type “PayPal” and hit ‘Search’. Clicking ‘Select’ on the first search result will prompt you to specify which of PayPal’s offices to file the complaint.
5. Explain your matter to PayPal.
6. Wait for your response.

Living in the digital age has allowed many people to do more for less time. It has given rise to new jobs, offered more conveniences, and redefined how we do business.

Both big companies and SMEs are using technology to streamline business processes. Accounting software and CRMs have allowed entrepreneurs to perform essential tasks with a few mouse clicks.

But that’s just one side of the coin. The other reveals something more complex and creates hazards that would never exist while running traditional mom-and-pop shops.

How To Prevent Further Suspensions

Note: if you are a high risk merchant, your credit score fell below PayPal’s accepted standards or you received too many chargebacks, you will likely not have your PayPal account reinstated. It may be best to find an alternatives option like a high risk merchant accout processor. You can also read acted against PayPal’s policy for more information. 

• Ensure that large deposits and withdrawals are cleared before hand. Contact PayPal to notify then in advance. 
• Make sure all your business information matches EXACTLY the information you have provided PayPal including names, addresses, FEIN numbers, credit cards etc. 
• Be sure you manage the number of chargebacks you are receiving. You can maintain a lower level of chargebacks by ensuring your return policy is clear to customers. 
• Ensure you credit score remains above PayPal’s accepted threshold.

Companies like Paypal and Stripe usually facilitate transactions that come in through cashless channels like credit and debit cards. However, Paypal has gone one step further in that it can process customer-to-business payments within its platform.

Payment processors offer business owners with access to normal and high risk accounts (more on this later).

Merchant accounts can either be aggregate or dedicated. An aggregate merchant account

is a payment processing solution utilized by multiple companies or merchants. Paypal offers aggregate merchant accounts.

On the other hand, a dedicated merchant account is like having an internet-based bank account that’s solely for an online business.

In Paypal’s case, there are two account types that will work well for business owners. There’s the standard business account for someone who wants to sell stuff online under the name of a company or organization. And then there’s the Premium account, which is ideal for those who want to sell stuff online as a one-person operation, whether in a hobby or professional capacity.

What’s the Bottom Line?

Encountering a PayPal account cancellation can be an overwhelming experience, especially for high-risk businesses. However, remember that it does not spell the end of your online venture.

By understanding PayPal’s risk management procedures, communicating effectively, and exploring alternative solutions, businesses can bounce back from account cancellations. Indeed, it could be an opportunity to discover more flexible and tailored payment solutions that cater specifically to high-risk industries.

Navigating these uncharted waters requires patience and a willingness to adapt. By shedding light on the possible course of action after a PayPal account cancellation, this guide aims to be the compass that helps businesses find their way.

In the end, the resilience and adaptability of a business, especially within high-risk industries, are often put to the test in such situations. With informed decision-making and strategic planning, it’s entirely possible to turn the tide and set sail towards success once again, even after a PayPal account cancellation.

By utilizing services like First Card Payments, businesses can continue their voyage in the e-commerce sea, irrespective of the challenges that come their way. Thus, the journey of online commerce continues, not ending at a PayPal account suspension, but merely changing its course.