Merchant Account Shut Down— What Could Be the Cause? And How Can You Fix the Problem?

Sep 22, 2017

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.

Let us help you get a high risk merchant account today!

Get Started

Award winning.

  • 2012
  • 2013
  • 2014
  • 2015
  • 2016

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.

Live Chat