Jack Dorsey’s Square crypto payments app was accused of the crypto users that the platform unfairly withheld 30% of their funds as many businesses have a hard time staying afloat during the ongoing pandemic as we are reading further in the Bitcoin news today.
The company led by the Bitcoin supporter Jack Dorsey said in an announcement that the move is an effort to protect the users from risky transactions and customers that demand refunds after payments:
“We apply reserves on more ‘risky’ sellers, such as those that take prepayment for goods or services delivered at a future date, sell goods or services more prone to disputes, or operate in an industry that historically receives higher chargeback rates than others.”
The San Francisco-based company and payments app described the program as a rolling reserve policy that will hold back between 20 and 30% of the clients’ money as it told the customers that they will release the withheld portion on a rolling basis which will last up to four months. Jack Dorsey’s Square app claimed they already introduced the initiative in late 2019 but extended it once the economy started facing hard times due to the pandemic. The company claimed that only 0.3% of all of the millions of customers are affected by the practice but the retailers are still not happy and complained about the move.
Withholding funds at a time when businesses struggle is surely a source of frustration. Some startups were forced to downsize their workforce and to take out loans in order to survive. Jesse Larsen, the owner of PennyWise Contracting, a construction company explained that Square started holding 30% of all transactions he made on the platform since May. He explained further that he has thousands of dollars locked with the company which affected his business operations:
“It may not be the coronavirus that puts us out of business but actually the greed of Square that breaks the camel’s back.”
According to reports, the documents provided by some of the affected retailers about the new trading activity had no red flags on risky transactions. Merchants believe that the company is trying to fill the losses since it suffered a lot thanks to the pandemic and the lockdown. The New York Times wrote:
“Square was unfairly keeping money from them at an economically vulnerable time to protect its own bottom line.”
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