Account blocks at Straddle

Account blocks are a safety mechanism Straddle uses when a funding-related ACH transaction returns. A block does notstop your platform from creating charges. It does stop Straddle from sending or funding certain money movements until the issue is reviewed and resolved.

This article explains:

• What gets blocked (and what does not)

• What triggers a block

• How to get unblocked

• The difference between merchant account blocks and end-customer PayKey blocks

Key terms

• Client account: Your Straddle merchant account (your business).

• End-customer: Your customer who is paying you or receiving a payout.

• Charge: Money you collect from an end-customer.

• Payout: Money you send to an end-customer.

• Funding event: The underlying movement of funds that makes settlements and payouts actually happen. This is what gets blocked.

• ACH return: When a bank rejects or returns an ACH debit or credit (for example, R29). In Straddle’s current setup, any ACH return can trigger a funding block.

What triggers a merchant account block

A client account block is triggered by any ACH return tied to a funding event, including (but not limited to) R29.

Common situations:

1. Failed prefund for a payout

   You instruct Straddle to send a payout. Straddle attempts to debit your linked bank account to prefund it. If that debit returns, a block is applied.

2. Returned funding related to settlements

   A funding movement tied to settlement activity returns.

Important detail: it is not only “insufficient funds” type returns. Any return code on these transaction types will trigger the block.

What a merchant account block does

A merchant account block blocks funding events only.

What gets blocked

• Funding Events are paused

  You can still create charges, but you will not receive settlement funding while the block is active.

• Payouts cannot be funded

  Payouts may be created, but they will remain pending because the prefunding or funding step cannot complete.

What does not get blocked

• Charges can still be created and processed

  Your platform can continue to submit charges. The side effect is that settlement funds will not be released to you until the block is removed.

What you might see in the dashboard

Depending on your integration and workflow, you may see symptoms like:

• Settlements not arriving when expected

• Payouts stuck in a pending state

• A notice that your account is blocked from funding

How merchant account blocks are resolved

Merchant account blocks are currently a manual resolution process and typically require engineering involvement to remove the block once the situation is reconciled.

Step 1: Determine what happened and who is owed money

Resolution depends on whether the returned transaction means:

• You owe Straddle money (most common when a payout already went out), or

• Straddle owes you money (possible when a charge settlement is owed to you but cannot be funded)

A key nuance for payouts is the hold window:

• If the payout never went out because prefunding failed in time, then no money left Straddle and the payout simply remains unfunded.

• If the payout did go out and then the related debit returned, Straddle is “out the door” on funds and needs to be repaid before re-enabling funding.

Step 2: If you owe Straddle, repay Straddle

If an ACH return happened after funds were already disbursed (or otherwise leaves Straddle owed), Straddle will require repayment before the block can be removed. We can initiate a debit to your account to settle the balance due and once that is received we will remove the block

Typical approaches include a manual repayment flow (for example, wire or a manually initiated debit), depending on what Support confirms is available for your account.

Step 3: If Straddle owes you, Straddle pays you manually

If the return prevents Straddle from completing funding that results in money owed to you (for example, settlement funding), Straddle may need to pay you manually while the account is blocked.

Step 4: Straddle removes the block

Once balances are reconciled and any required repayment is confirmed, Straddle will remove the funding block and funding activity can resume.

End-customer blocks are different

Your end-customers can encounter a different kind of block, typically referred to as a PayKey block (token-related).

PayKey block basics

• Applies to an end-customer token/PayKey, not your merchant funding.

• Can be resolved in the straddle dashboard by unblocking the payday

FAQs

Does a merchant account block stop us from processing charges?

No. Charges can still be created and processed. The impact is that settlement funding is paused until the block is removed.

Why are payouts pending when we are blocked?

Payouts require a funding step. When funding events are blocked, payouts cannot be funded, so they remain pending until unblocked.

Is this only caused by R29?

No. Straddle’s current behavior is that any ACH return tied to the funding movement can trigger a merchant funding block.

Will everything automatically settle once we are unblocked?

Your pending settlements and pending payouts can resume once the block is removed and balances are reconciled. However, the original triggering transaction is not automatically resubmitted.