We have started a shopify store using shopify payments as our provider of payment. We have been going and growing nicely and out of the blue we have received an email from Shopify requesting documents off us.
This is how it starts:
Your account came up for a standard review based on your sales volume and we are required to gather some additional information at this time
We are being asked for additional identification, which isn't a problem to send, however we are trying to find out why the request - we have been asking the shopify help team and we don't seem to be getting clear answers.
Our question is, does this constitute to a personal guarantee from a Director on shopify payments? We are a UK Limited company and things are being lost in translation I think with speaking with North America. The Limited company aspect meaning that the company is separate legal entity to us rather than us working as sole traders.
Has anyone else had this? Is this standard practice?
Any help would be greatly received - we only have a few more days and then Shopify freeze the gateway. If we do have to provide a guarantee then we will have to connect a different external gateway as would feel uncomfortable to do.
Thank you very much
Happy to help provide some clarity to this question! Every store that uses Shopify payments is subject to on-going reviews to ensure that their store is adhering to the policies set forth by Shopify and our banking partners. Based on the information you've provided, our banking partners have seen a rise in your revenue which would initiate a review to ensure the validity of the sales. This in no way is saying that your business isn't valid, nor is this specifically targeting your business, however, we would require that the documents be uploaded and reviewed to determine whether your account can still use Shopify Payments moving forward.
These documents are needed from the store owner in order to receive payouts and protects the store and Shopify from fraudulent activity. Even if it is a company account, someone will need to submit Government Issued Photo ID. It is important that the ID is submitted for underwriting purposes as we are sending funds to accounts. This is used for Know Your Customer (KYC), which is the process of identifying and verifying the identity of our merchants. The objective of KYC is to prevent Shopify's platform from being used by criminal elements for fraudulent or money laundering activities.
That all said, we will need someone on the account to act as the account representative for Shopify Payments, even if your company is an LLC. It's important to note that this wouldn't legally bind the representative to the account for tax purposes, which I feel may be your concern based on your "guarantor" question.
I hope that helps provide some clarity around the situation, however, if you have any other questions let me know!
Thank you very much for the detailed and informative answer. It is now clearer for us to understand.
We have no problem with the ID or someone being the account representative.
Just want to clarify the guarantor point - the representative wouldn't be personally liable for anything to do with the payouts, from tax purposes to chargebacks?
Whoever chooses to be the account representative would be liable for the payouts and chargebacks for the account, however, the funds would still be processed through the bank account added to the account (assuming that you've added the company's account to Shopify Payments). That said, you can also change the account representative at a later date if needed as well.
We have more than 1 director and we are still not clear on liability, so one director would become solely responsible for the payments?
Also, are you guys asking for a personal guarantee from us? To do this normally it would be a clear legal document that we would sign that states along the lines that if our company ceased to trade we would be personally liable?
Your help is very much appreciated, we have a deadline on 8th Feb to do something about this else we won't be able to use the gateway. We wouldn't be comfortable signing a personal guarantee if that is what it all means, but if not then we can happily send in the documents to use?
Digging into this further, I've had a chance to speak with a few different teams who have informed me that you would want to upload the documents for the person who is legally responsible for the company. As per our Terms of Service, the person responsible for the business is responsible for the chargebacks, which means that should anything arise, we would reach out to the Account Owner first, then the person listed as the contact for Shopify Payments.
As it stands, we wouldn't require a personal guarantee, that is, we wouldn't require a legal document for adding the name to the account, however, the person you choose to go with would be contacted should there be any issues with chargebacks or money owing. If you need further help with deciding who that should be, then it would be best that you reach out to a lawyer to help you decide.
Let me know if that helps!
I think things might be getting lost in translation here.
We are a UK limited company, with a board of Directors, there are 4 people legally responsible for the business - but this doesn't mean that any potential debts become the directors debts personally.
Surely the liability is with the Ltd. company and not any one person? Clearly we can have a representative for shopify payments which is no problem, but legally any amounts owing are with the limited company.
Can you please clarify as if the payment gateway became a personal liability for someone then no one would ever sign up to it who is a actual formed company? Sole traders who haven't got any legal protection then fine, but not Limited companies?
Legal matters are outside the scope of what we can support, which is why I was consulting with some other teams here at Shopify on this for you to see what we could advise. What they have recommended is that you would select one of your directors (typically the CFO) to put their name as the representative. This is required so that if an issue were to arise, then we would have a contact within the business that can rectify the issue.
When it comes to questions regarding personal liability and Shopify Payments, we suggest consulting with a legal professional in your area and referring to our Terms of Service.
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