Thanks for posting this question. Please note that Square merchants are responsible for any payment disputes associated with their account, as noted in our Merchant Seller Agreement, which means it is expected that your linked bank account have funds available at all times to cover your largest transaction amount.
When a dispute is initiated the credit card networks require the merchant that accepted the payment to return the disputed funds to the cardholder’s bank. Funds are held from your available Square balance, but if it the amount available is less than the disputed amount, Square will debit the disputed amount from your linked bank account. After three failed attempts to debit your linked bank account, Square will cease communicate with your bank both ways in the attempt to prevent further failed debits from occurring.
I hope this information is helpful. If you have any questions about your Square account or about a specific dispute please call us directly so our Disputes Team can help.
