It can be so devastating to suffer a merchant account shutdown especially during a high-sales season when you’ve put every other thing in place. Any merchant knows that minus the ability to process credit card payments, sales are bound to drop drastically.
But what could push a processor into shutting down a merchant account?
Too many chargebacks
This is the most common reason for shutdowns. If you have many refunded or disputed transactions a processor may categorize you as high risk. Generally, always fight to keep chargebacks at 1% or even less your total charges.
If possible, try to cut down the number of chargebacks by joining chargeback management programs with Verifi or any other service providers.
Too many “forced” transactions
You could also have your merchant account closed if it has a large number of forced transactions. These are transactions that merchants manually key into the system incase the data in the card is invalid. Such transactions don’t usually capture some electronic info on the card and often result to fraudulent transactions. Tricksters can easily steal Credit card numbers without getting their hands on the actual card.
Any business that accepts online payments has a given number of manually keyed in transactions. Therefore to avoid getting flagged for too many keyed in transactions, always be as frank as possible on what percentage of your sales can be forced in the system. You should inform your processor of the types of transactions to expect. This way, you can agree on a percentage of permissible keyed in transactions.
Wrong Use of your Merchant Account
This happens when you apply for an account to sell a certain product or render a given service then instead use it to sell high risk services or merchandise. Not only can you have your merchant account terminated but major card brands like MasterCard and Visa could also have you blacklisted. Which means you may not be allowed to operate any merchant accounts in future.
Bottom line; be sure to sell the exact good or service you identified during your application. Any other suspicious activity may lead to heavy penalties.
So, what if you’ve hit the wall and your merchant account has been terminated. How do you fix things and get back to business?
- Find out the reason for the shutdown. It’s good to know and most importantly, you’ll need this info when seeking for a new merchant account.
- Confirm if the merchant account was “MATCHed.” meaning Member Alert to Control High Risk Merchants—a database that records data on canceled merchant accounts’
- Begin searching for a new account provider keeping in mind that you’ll most likely need one that handles high-risk merchants. Also, be honest about the fact you previous merchant account was terminated. Note that the provider can easily learn about it and lying may worsen things for you.