I received an email from Shopify as below:
We are constantly reviewing the businesses on Shopify Payments and recently, your account has been assessed as having an increased risk of customer inquiries and chargebacks. For this reason, we have placed a partial reserve on your account.
You will note that a 25% reserve of all sales transacted on your store through the Shopify Payments gateway is being held for 120 days in order to mitigate this chargeback risk. The remaining 75% of funds collected will be deposited into your bank account on file according to your regular payout schedule. When the 120 day period has elapsed, Jul 02, 2020, your account and chargeback percentage will be re-evaluated. Based on the evaluation, two situations may occur:
If your chargeback percentage is under the acceptable 1% threshold, the reserve will be released and scheduled to be paid. Your Shopify Payments account would then proceed to operate without any future reserves.
If the chargeback percentage is elevated and presents over the 1% threshold, we reserve the right to extend the payment reserve for an additional 120 days after which time we will re-evaluate the account once again.
Did that happen to you before?
1.How is chargeback rate evaluated?
This is really unfortunate that Shopify has decided to take this step, essentially punishing merchants for their own lack of fraud prevention in their own platform.
But this is why I made Real ID. You can verify the identity of your customers on suspicious orders. Pairing their government issued ID with their billing credit card is the only way to truly stop chargebacks.
Other fraud apps use at an arm's length metadata like IP address, shipping & billing addresses, but that doesn't even stop "friendly fraud". Which is when the customer purchases your products but files a chargeback anyway. You just don't have the evidence to fight these chargebacks without the customer's real ID.
I'm sorry you're being put in this position by them, I hope they turn these policies around.