Square can freeze the money owed to you from sales for up to 90 days, or potentially longer, if it suspects fraud, elevated risk, or a policy violation. This decision is made at Square's discretion.
This analysis describes what Square's agreement states, permits, or reserves. It does not constitute a legal determination about enforceability. Regulatory applicability and practical outcomes may vary by jurisdiction, enforcement context, and individual circumstances. Read our methodology
The clause establishes Square's authority to restrict access to account funds based on internal risk assessments, creating a mechanism through which Square can withhold payments pending its fraud or compliance review. The operational significance lies in Square's unilateral discretion to determine the triggering conditions and duration of holds.
Interpretive note: The phrase 'or longer in some circumstances' is not further defined in the document, leaving the maximum hold duration ambiguous and subject to Square's discretion.
Merchants may find their sales proceeds frozen for up to 90 days without advance notice if Square determines there is a risk concern or policy issue with their account, which can directly disrupt business operations.
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"Square may, in its sole discretion, place a hold on any or all funds otherwise payable to you. We may hold funds where we believe there may be a risk of loss, fraud, or if we determine that your account is in violation of these terms. Holds may remain in place for up to 90 days or longer in some circumstances.— Excerpt from Square's Square Terms of Service
REGULATORY LANDSCAPE: Fund-hold practices by payment facilitators are subject to oversight by the CFPB, particularly where merchants qualify as consumers under applicable law, and by state money transmission regulators. The FTC may also have interest in whether fund-hold disclosures are sufficiently transparent to constitute fair dealing under Section 5 of the FTC Act. Payment Card Industry standards and card network rules may also interact with how holds are implemented and disclosed. GOVERNANCE EXPOSURE: High. The agreement states that holds may last 90 days or longer in some circumstances, and that the determination is made in Square's sole discretion. This breadth of discretion, combined with the potential duration, creates meaningful financial exposure for merchants and may attract regulatory scrutiny regarding whether the practice is adequately disclosed at the point of onboarding. JURISDICTION FLAGS: Merchants in California and other states with strong consumer and small-business protection statutes may have additional remedies if fund holds are implemented in ways that are deemed arbitrary or insufficiently disclosed. Financial services regulations in the EU and UK impose stricter requirements on payment service providers regarding fund availability and disclosure of hold conditions. CONTRACT AND VENDOR IMPLICATIONS: Merchants integrating Square into their operations should account for potential fund holds in their cash flow planning and contractual commitments to suppliers or employees. The agreement's reservation of sole discretion to Square means there is limited contractual recourse for merchants who believe a hold was unjustified, outside of the arbitration process. COMPLIANCE CONSIDERATIONS: Compliance teams advising merchants should flag the fund-hold provision during onboarding due diligence and assess whether the merchant's business type or transaction volume places it in a category that Square's risk models may flag. Legal teams should review whether the hold duration provisions align with applicable state payment law requirements and card network rules.
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The clause establishes Square's authority to restrict access to account funds based on internal risk assessments, creating a mechanism through which Square can withhold payments pending its fraud or compliance review. The operational significance lies in Square's unilateral discretion to determine the triggering conditions and duration of holds.
Merchants may find their sales proceeds frozen for up to 90 days without advance notice if Square determines there is a risk concern or policy issue with their account, which can directly disrupt business operations.
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