What To Do When Your Merchant Account Is Suspended

Dec 11, 2017

Payment processing is a crucial aspect of virtually any business. Fewer customers are carrying hard cash every day, which means that as a merchant, it is in your best interest to implement solutions that cater to cashless payments.

A merchant account provider can, therefore, be your most valued business partner. But what happens when they decide cut ties with you? Will that mark the end of your business?

Why A Payment Processor Can Suspend Your Account

Processors go to great lengths to ensure that every merchant they bring onboard can stick to their terms and conditions.

After approving the merchant account, the processor will monitor all activities for suspicious or risky behavior, and if any, contact the merchant for clarification. For instance, if you had stated in your application that your average transaction amount would be $100 and then your average spikes to $500, your processor will be concerned. Similarly, reaching the annual processing volume in just a few months would raise a red flag.

Such issues usually go away if you respond quickly and accurately. In some circumstances, however, a red flag can result in the suspension of payment processing services. More often than not, one of these three factors will be the reason.

  1. Fraud

Any fraudulent activity detected will automatically lead to suspension. Fraud can take many forms, such as misusing personal customer information, overcharging, not delivering products as advertised or not delivering at all.

  1. Excessive Chargebacks

A chargeback is a transaction that is disputed by a customer after a sale. Visa and Mastercard require merchants to keep chargebacks below one percent of all transactions they process. In reality, however, your processor will suspend your account long before you get to one percent to avoid losing any more money in processing costs and being fined by the credit card associations.

  1. Multiple Merchant Accounts

It is common for businesses to partner with more than one processor as a precaution against possible account termination, but most processors won’t knowingly allow you to open another merchant account with a different firm.

Has your account been suspended? Don’t panic

If your processor decides to let you go, you still have several stones to turn before you call it quits.

The first step is to find another processor as soon as possible. Remember, every card-holding customer you turn away hurts your bottom line. Mainstream payment processors will be reluctant to deal with you if a previous firm has suspended you, so, your best option will be to get a merchant account for high-risk business. High-risk accounts are typically costlier than regular ones, but at least you’ll be back in business.

Once you find a new processor, streamline your activities and deal with anything that could have gotten your account suspended the first time. A good merchant account provider will probably lend you a hand in managing fraud and chargebacks.

Lastly make it a habit to respond promptly to your processor’s requests. Most of the time, the concerns raised will be easy to explain. Cooperate with the processor, so that you can resolve issues before they become cause for suspension.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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