Information on Merchant Accounts,
Ecommerce and Credit Card Processing

March 5th, 2013 by Jamie Estep

Square gets shut down in Illinois

Filed in: 3rd Party Processors, Industry News |

The state of Illinois has issued a cease and desist against Square Inc. (pdf) for violating a money transmitter act and is requiring them to cease all money transferring activities with any resident of the state.

stop_signWhat this basically means is that Square is not operating within money transfer regulations by Illinois’s interpretation of Square’s practices. Much of this is directly focused on anti money laundering regulations. It is extremely easy to setup an account with Square and there are numerous reports and even instructions on how to use Square for illicit businesses, it’s not surprising that this has come to a head.

It will be interesting to see how this plays out and if other states take the same interpretation of Square’s business practices.

I know that the traditional processing industry has been less than thrilled at how Square is allowed to conduct business and solicit customers.  Much of this may be a natural reaction to a fierce competitor. However the reality is also the observation of Square’s apparent rejection of the rigorous standards that are required by existing credit card processors. While regulations are often a burden and a barrier to progress, many of these standards are in place to prevent fraud and combat money laundering. To be blunt, Square came across as completely ignoring many of standards just to reduce their own barrier in getting a customers processing account setup.

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