Some payment providers like Square have been in the news recently for the increases in withholdings during the crisis; Square says the majority of sellers do not have to hold reserves in case of chargebacks; the practice could open an opportunity for banks to win back some customers; “There’s a lot in the media in terms of what’s happening, but we’re not withholding funds,” said Doug Mearkle, Head of U.S. Merchant Services Sales at TD Bank, to American Banker; banks typically have a larger relationship with customers, including lending and other services, which allow them to avoid the practice of holding reserves; online transactions do have higher rates of fraud, card-not-present fraud rates are 3.1% versus 1.2% for brick-and-mortar purchases; small businesses have been feeling the pain more than most during the pandemic and reserves remove much needed capital at times of stress; banks could have the ability to win back some customers lost in recent years by being more customer friendly. American Banker.
