Not all merchants can use the card terminals from Square, SumUp or PayPal Point of Sale (previously Zettle/iZettle).
This may come as a surprise, but all payment companies have restrictions. The limitations protect providers from losing money on high-risk transactions or getting dragged into legal conundrums.
Most businesses are accepted by PayPal, Square and SumUp. Even then, some who are accepted may experience blocked payments later if it's suspected they're trading within a prohibited area.
In user reviews, it's sometimes hard to pick genuine service issues from merchants who should have been rejected at sign-up. For example, most won't have their transactions put on hold for "security reasons", but chances are that if you operate within a restricted business category, there's no guarantee your service provider will process sales to your account.
That's why it's important to check – before signing up for any new provider – whether your business falls under one of these prohibited areas.
PayPal, Square and SumUp restrict similar business types. Let's identify what these are and why it's harder to get approval for them.
Reasons for limitations
The payment industry is complex, to say the least. Banks, card schemes, acquirers and others each have their own rules to protect profits and balance out potential risks of processing payments.
As Zettle by PayPal has put it: you should not receive payments from goods or services that are prohibited by law or card networks or "doubtful from a risk, complaint or reputational perspective".
Card reader companies have a responsibility to reject industries that may be illegal, dubious, corrupt or outright hateful. But the boundaries between that and what's acceptable within the context of a country or sector can be very blurry.
What's clear is that every provider has to pass on the same country legislations and card network rules they operate under. Such rules may change frequently, so what's imposed now may not be the case tomorrow.
The blurry lines mean you won't necessarily be rejected by falling under a prohibited category. The only way to know for sure is to be upfront with your chosen provider and ask if you're in the clear.
Businesses with restrictions
We've identified seven main clusters of restrictions. In each area, we compare what PayPal, SumUp and Square say about those.
Their policy wordings are different, but even when one of them omits a point, it doesn't always mean they're okay accepting what the others haven't omitted. They are guidelines at best, and the overarching rule is to limit merchants associated with activities that are:
Our recommendation is always to be honest to your provider and ask whether anything in your business could be subject to restrictions.
Future business
Some card reader companies require you to sell only things that are provided immediately to the customer.
SumUp defines companies selling anything provided 7 or more days after the transaction as a "future business", and they don't allow that.
This includes anything like ticket sales for future concerts, prepaid phone cards or telecommunication services that are prepaid or recurring (although they do allow telecommunication franchises that sell hardware), travel/airlines, holiday bookings, etc. If these are used or take place within 7 days, they could be accepted.
PayPal Point of Sale restricts businesses related to travel agencies and airline tickets.
Selling tickets in advance of something? Your card reader company may not like that.
Square prohibits "unsolicited vendors that require immediate payment for the future provision of products or services (e.g. door-to-door salesmen)", implying solicited vendors may be able to sell future things. Like SumUp, they prohibit prepaid phone cards and services.
In terms of travel, Square's rules are more detailed: they restrict card rentals, construction equipment rentals, branded accommodation (so most likely hotels, B&Bs, and similar), steamships, air carriers and airlines – excluding "small charter airlines that (i) only use small propeller driven aircraft with fewer than 15 seats per aircraft and (ii) are not used in connection with corporate aviation programmes" and excluding on-board purchases.
Illegal or regulated goods and services
Anything that's illegal, questionable in terms of legality, against card network policies, deceptive or legally restricted in any way will be subject to restrictions by payment facilitators.
That said, some are trading legally in areas with, say, age restrictions, and may not be rejected despite falling under one of these categories.
Weapons, firearms and related accessories
All the payment facilitators restrict weapons, firearms and related services.
Square restricts age-restricted items over the internet, mail order and telephone, which would include sales of knives. They go as far as to restrict automated fuel dispensers, presumably because of their peripheral role in explosives.
Drugs, paraphernalia and pharmaceuticals
SumUp prohibits intoxicating substances and services related to this.
PayPal prohibits sales of steroids and narcotics, but allows sales of prescription drugs if the "seller has all applicable authorisations for the supply of such drugs and such supply is made in accordance with applicable laws and regulations." For card-not-present transactions, no sales relating to nutraceuticals, pharmaceuticals and pharmaceutical services including prescription and no-prescription drugs and chemicals are allowed.
Square is against "internet/mail order/telephone order pharmacies or pharmacy referral services, where fulfilment of medication is performed with an internet or telephone consultation, or a physical visit with a physician including re-importation of pharmaceuticals from foreign countries".
All the providers prohibit sales of drug paraphernalia that may be used for illegal activities.
Alcohol and tobacco
Alcohol and/or tobacco sales are restricted to some extent by all the providers. Specifically:
- SumUp restricts any intoxicating substances, which would include alcohol.
- Square only restricts alcohol and tobacco sales for internet, mail order and telephone merchants.
- PayPal restricts the illegal sale of tobacco/alcohol products. For card-not-present transactions, they restrict things containing tobacco, including e-cigarettes and vapes.
PayPal and Square allow you to sell alcohol face to face with customers, as long as you adhere to the UK age restriction rules.
File sharing, anonymity and copyright infringements
Copyright infringements are a general concern too. SumUp addresses it by prohibiting file sharing services.
PayPal restricts file hosting services including cyberlockers and "products or services which infringe upon copyright, trademarks and intellectual property rights". They also restrict circumvention devices and anonymity services with the purpose of covering someone's identity online.
Fraudulent, counterfeit or stolen products
PayPal restricts replica products and services providing counterfeit goods.
Things that encourage hate and crime
Square prohibits hate or harmful products.
PayPal similarly doesn't accept businesses that promote racism and hate or other extreme political views.
Every provider will need to pass on the same country legislations and card network rules they operate under. Such rules may change frequently, so what's imposed now may not be the case tomorrow.
Adult services and products
All payment facilitators prohibit this, but some have a more lenient tone in their policies.
- SumUp restricts adult dating, escort services and sexual encounter firms. They even go as far as to restrict employment agencies, temporary help services and talent organisations, which could be a precaution to avoid being involved in adult services pretending to act as generic "work agencies".
- PayPal restricts things relating to "live streams, dating (including sex dating), erotic dance or comparable services; relate to pornography, including child pornography, sex clubs, escort services, prostitution, magazines, videos or images with pornographic content and sex toys in cases where such products are the only products marketed".
- Square restricts escort services and "adult entertainment oriented products or services in any medium, including internet, telephone or printed material".
Misc illegal and dubious products and services
For card-not-present transactions, PayPal doesn't allow you to sell things that are "illegal according to laws and legislation in the country where you target your sales and/or marketing." Let's be honest: you can generally expect this to be the case for any card reader provider.
Moreover, PayPal Point of Sale restricts trades in human body parts, illegal electronic devices, and merchants involved in illegal wildlife trade.
Money, investments and financial services
Regardless of whether they are mentioned or not in some sections, PayPal and Square explicitly restrict "financial services" which could involve all of the below. SumUp, on the other hand, is more specific with their financial restrictions.
It's interesting to see how they describe the areas so you can get an idea of where you stand a chance with your own business.
Currency-related
All the providers restrict types of currency exchanges, but there are slight differences in what kind of exchanges they mean.
SumUp restricts currency exchanges, virtual currency services, money transfers and forex, while PayPal restricts businesses relating to virtual currency "which can be converted/exchanged to real money".
Square prohibits wire transfer money orders and sales of foreign currency by non-financial institutions.
Prepaid cards, vouchers, money orders and cheques
Similar to the "future business" restriction, the payment providers typically don't accept businesses dealing with prepaid currency of any type. That said, shop vouchers and gift cards you create for customers could be accepted, so do ask the providers if you're unsure.
Specifically: SumUp restricts prepaid services. PayPal restricts vouchers with a longer duration than 36 months. Square restricts sales of money orders, prepaid cards and cheques.
Debt-, credit- and loans-related
SumUp restricts "collection agencies, refinancing of debt/factoring, mortgage, brokers/reduction services/refinancing, payday loans" and "pawn shops (merchants that lend money in exchange for personal property such as jewellery etc.)".
Square restricts credit counselling, credit repair agencies, bankruptcy lawyers or collection agencies engaged in the collection of debt.
Under the card reader companies' critical microscope, pawnshops are seen as high-risk.
Payments subject to refunds
If you're involved in complicated payment workarounds that are not indicative of regular business trading, it represents a red flag for payment providers.
SumUp and Square address this by prohibiting payments that are subject to refunds, namely: SumUp restricts "deposits and any type of payment that is subject to refund, regulated by the merchant's terms and conditions", while Square prohibits rebate-based businesses.
Stocks, trading and similar
Accepting payments in the stock market (and similar) is too high-risk for most payment providers.
SumUp prohibits sales of stocks, securities, options and binary options. PayPal prohibits binary option trades.
Related to money processing and transmission
Square prohibits bill payment services and "financial institutions offering manual or automated cash disbursements". They also prohibit (rather vaguely) "financial merchandise", which could perhaps include card machines and POS equipment.
PayPal prohibits aggregators.
Investment-related
SumUp doesn't accept investor services, investment clubs or other investments, while Square doesn't accept "use of transaction proceeds as investment in the future maturity or value of goods".
Things considered investments
Certain expensive goods that people may use as investment pieces are also prohibited by some providers.
Most (businesses) won't have their transactions put on hold for "security reasons", but chances are that if you operate within a restricted business area, there is no guarantee your service provider will process sales to your account.
For SumUp, this includes property sales, wholesalers of precious jewellery, metals and watches, auction houses, used or new motorised and electrical vehicles, and coin and stamp stores.
PayPal doesn't allow time-sharing, i.e. scheduled ownership of a property during certain times of the year. Square does not mention restrictions in any of these areas.
High-risk sales practices
All businesses need to make money, but some sales methods are more aggressive or less trustworthy than others, or just more prone to payment disputes. Let's look at what types of selling the processors prohibit.
- SumUp restricts door-to-door sales, upselling and outbound telemarketers, "get rich quick" merchants and multi-level marketing/pyramid sales.
- PayPal prohibits Ponzi schemes, pyramid sales and any multi-level marketing programmes, and also businesses that are marketplaces.
- Square prohibits outbound and inbound telemarketers, unauthorised multi-level marketing businesses, upsell merchants, direct marketing or subscription offers or services, and high-risk products and services including telemarketing sales. Interestingly, they prohibit service stations merchants, perhaps because it's common for them to upsell.
Products and services with questionable outcomes
Certain business areas tend to be more dubious, deceptive or questionable in terms of efficacy. Payment companies identify those businesses as high-risk simply because they are more prone to customer complaints, lawsuits or payment disputes as a result of that.
Lottery, betting and gambling
SumUp, PayPal and Square prohibit lottery-, betting- and gambling-related sales, which could include bingo, Fantasy Football and casino services.
However, SumUp does allow lottery kiosks/clubs as an exception.
Fortune tellers and other mystical practices are often seen as scammers, so they're high-risk for card reader companies.
Counselling, occult- and medical products and services, and more
SumUp doesn't accept fortune telling, tarot card reading and mystics. PayPal similarly restricts clairvoyants and fortune tellers, while Square prohibits "occult materials".
Furthermore, SumUp restricts non-licensed counselling including marriage and family counselling, debt and financial counselling, drug or alcohol abuse counselling and other personal counselling. If you're a licensed counsellor with the proof to back it up, contact SumUp directly as you may be accepted. On the medical side, they restrict cosmetic surgery, male/female enhancers, weight loss or hair growth products, products to boost physical performance, and similar products.
Square also restricts infomercial sales, which have been associated with products that turn out to be too good to be true.
Security, insurance and other protective services
Businesses offering protection or certain underground services, or deal with security in some way, are more likely to be rejected by the payment facilitators.
For SumUp, this includes protective or detective agencies and security services with e.g. armoured cards and guard dogs. They prohibit protection services, registration providers and services against identity, fraud, credit card and internet theft or fraud.
Square prohibits identity theft protection services, insurance companies and businesses providing credit protection.
PayPal doesn't currently restrict insurance or other protection services.
Not-for-profits, clubs and organisations
It used to be the case that SumUp, PayPal and certain other providers accepted non-profits and private clubs, but rules have become stricter.
PayPal Point of Sale, Square and SumUp now all have some restrictions in this area, but they vary in nature. Again – they do make exceptions, so ask them to be sure. Their general rules are:
- SumUp restricts membership fees, political organisations, hunting clubs/activities and UK charities (they have started accepting overseas charities).
- PayPal restricts donations, though only for card-not-present transactions.
- Square restricts buyer or membership clubs and dues associated with those clubs.
What to do if you're a restricted business type
Just because your business is on this list, it doesn't mean you haven't got options.
If you're set on a provider, contact them to know if they would consider accepting your business, as you may just be in a grey zone allowing you to be accepted. It's likely you'll need to provide proof of what you do.
Alternatively, you can look for a merchant service provider that allows high-risk merchants, but expect to be charged premium rates if they do class you as high-risk. This is normal – they are only making up the for the potential losses or administrative dents you may incur with risky transactions.
