Share your insights or perspective on the financial matter presented in the input.

Why do card processing companies discourage “cash advance” activities
Square does not care if you run a $10 transaction to test the system. They are concerned with its use to move meaningful amounts of money.    The only people who do this will be the Dunning-Kruger gang, who only think they are clever.  Because of course Square will hunt them down, sue, garnish and/or prosecute them!  But the expense of doing so is all on Square, making it a total lose.  The cheapest resolution is to not let it happen in the first place.   The ~3% cash advance fees, lack of rewards points, and the higher interest rate are not just for profiteering.  They reflect, and pay for, the higher risk of loaning money via cash advance: to put it indelicately, the risk of default.   Cash advance credit limits are often much lower than purchase limits.   If a merchant is selling himself phantom merchandise to get easy cash advances, it means he is not using regular ways of borrowing money.  Perhaps because he can't, because he has exhausted his other opportunities to borrow, risk managers have cut him off.  Square has no reason to care either way; but the issuing bank does, and through Visa etc., they will disallow this behavior.   **  PayPal Here's rate used here instead of Square's, to simplify math.