We cant swipe a card with our OWN name on it?

[Locksupply]

Did anyone have to sign a statement attesting to the fact that we wont swipe a card with our name on it? WHAT!!!!

I own several different businesses with several different partners. Sometimes one company of mine sells equipment to another company that I am an a partner in. How do I pay that invoice (from one company to another) through SQUARE with a ‘company credit card’?

ExampLe: “Company A” which I am a managing partner and buys supplies from “company B”. I am a partner in "Company B” as well. That bill is $7512. That bill needs to be paid obviously. Why cant I take my company credit card (company A) with my name on it, and pay that bill thru square (to company B which I am ALSO a partner) by swiping it thru SQUARE? Why in the world would THEY suddenly NOT allow this?

I signed what I needed to because of the threatening email. But is this really correct? I have to tell my partners in my other ventures that I can no longer pay bills with the company credit card, because I own the company that is selling it (my partners are fine with this) and my processing company wont allow this, so now we have to switch processors?

Thoughts?

[TheRealChipA · Accepted solution]

Hey @Locksupply.  Switching processors will not help you here.  This is not a Square restriction.  It is a national banking restriction.  Here’s why.

Mastercard, Visa, etc, make lots of money off of cash advances because the interest rate on those can be jacked up.  When we use our own cards in our own businesses, the card processors (Visa, for example, NOT Square) consider this to be something that should have been processed as a cash advance.  You can not use cards with your name on them in businesses with your name attached to them.  Period.   If you do it enough, then there is the real possibility of legal charges up to, and including, accusations of money laundering.  No, I understand that is not what you are doing.  But these are the facts.  Use a check to pay invoices.  Use ACH to pay invoices.  Use anything to pay invoices EXCEPT a card with your name on it if you are purchasing from a company that you also have ownership stake in.

Also, this is not sudden.  It is in the list of prohibited transactions, etc — ie, this fine print that we have all “signed” when we signed up for Square.  Trust me, it is not new.  It has been around forever.  I’ve answered questions on this subject many times in the past years I’ve been in the Community.

[Locksupply]

Hi Chip. I have some more information. I just thought I would reply to your thoughtful answer to my question. I have a friend that's a lawyer and I asked him and basically this is how he understands it. In full disclosure he's a very good attorney, but he's not a finance attorney. He's a copyright attorney.  

So he has said this... Nothing about it is illegal per se. The only thing they can make it truly illegal is if you are money, laundering or cheating on your taxes.

money laundering questions could arise, impropriety questions could arise and of course you would have to defend yourself. Should the federal government or any other agency or even the credit card company or the processing company comes after you. But there is nothing expressly illegal. It is, however, against every single merchant credit card processing companies terms of service. So it's more of a violation against the policies of an individual company than anything truly illegal… Unless you were doing it for purely nefarious purposes. 

But paying a bill to one company from another, even if you are a partner or owner in both of those companies is not nefarious. Either is swiping your own credit card just to get yourself some quick cash.  It doesn't matter matter I won't be doing any of this. I was just curious as to the policy and how ridiculous it was. I hope this helps.