This small business almost went out of business because of a mistake by Squarespace. Thanks to thousands of comments, Squarespace fixed it.
TikTok creator Dan McLaughlin is a small business owner struggling with rising prices and increased risk as he runs his Cleveland-based coffee company, Golden Triangle Coffee. But recently, he said, Squarespace Payments has been putting him out of business.
In a video with over 1.5 million viewer, McLaughlin explained how signing up for the payment middleman has shaven off a percentage of every sale he’s made for the last 10 months.
“ [I] made a mistake a while back that is just the nail in the coffin for our business,” he said. “And it’s probably gonna force us to close. I trusted Squarespace, which… has proven to be a mistake for me in the past.”
Will Squarespace Be the ‘Nail in the Coffin’ for this Small Business?
“A while back, I signed up for something called Squarespace Payments where Squarespace will act as a middle man between me and Stripe, my current credit card processor, except with lower service fees,” McLaughlin said. This was supposed to save McLaughlin’s business about .05 per transaction.
Except, McLaughlin quickly realized that the platform was withholding a percentage of each of his coffee bag sales for a “reserve” fund. He tried to deactivate the service, but Squarespace continued to collect money from the transaction. To make matters worse, Squarespace held the funds for six months to account for refunds and disputes.
“But the amount that they are holding, refuse to release, and continue to collect even though its not active on our account is so high that it cuts into our margins so deeply that it now costs us money to send a bag off coffee out of this building,” McLaughlin said. “We are now making negative money because of Squarespace.”
Viewers React to Small Business Owner’s Squarespace Complaint
In the comments section, viewers expressed outrage over the situation. Many urged McLaughlin to escalate this via an attorney.
“Hire an attorney ASAP,” advised one viewer claiming to be an attorney.
“Six months of holding funds is insane!” a second viewer said.
“I am a Squarespace circle developer and have access to forums only meant for us. I’ll be posting this and tagging veteran developers. My hope is it gets some attention,” said another person.
It appears McLaughlin’s video worked. In a follow up video, he said that he heard back from someone at Squarespace after tons of failed interactions with customer service. Fortunately, the Squarespace employee was able to solve the issue.
“I told them thanks for reaching out and fixing my issue but I shouldn’t have had to have a million followers in order to get that resolution,” McLaughlin said.
How Do Squarespace Payments Work?
Squarespace Payments is an addition to Squarespace that “allows you to accept payments and manage your transactions within your website.” The service allows website owners to receive payments from credit cards, debit cards, Apple Pay, and other methods, acting as a middle man between the purchaser and your banking institution.
By signing up for Squarespace Payments, though, you’re agreeing to the terms of service outlined by Squarespace Payments LLC (in the United States) or Squarespace Ireland Limited (outside the U.S.). By enabling Squarespace Payments, a user essentially entitles the platform to handle any settlements of funds.
Squarespace Payments LLC, through its terms and conditions, reserves the right to impose holding periods for funds if there’s suspicious activity, excessive chargebacks, or a requirement from a third party bank. They also reserve the right to maintain a reserve account, which buffers losses, refunds, disputes, or negative balances.
As McLaughlin noticed, Squarespace can continue withholding his income for buffer funds, even after a user cancels Squarespace Payments. The holding schedule for buffer funds still exists regardless of cancellation as per its terms and conditions. So, basically, the company will continue withholding funds until “the risk is deemed cleared” with the account.
All Hip Hop reached out to McLaughlin for comment via email and TikTok message and to Squarespace via media contact form.
This article includes additional reporting from Mars Ramos.
@softpourn @Squarespace ♬ original sound – Dan
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