Thursday, August 21, 2014

Difficulty Getting a Merchant Account...Why all the Trouble?

So, maybe you have not been denied a merchant account.  Maybe you have not had a merchant account terminated in the past...but, maybe you have.  You likely know someone who has had a merchant account closed by the merchant service provider's security department.  Why does this happen?

Most merchants do not realize that the companies processing their credit card transactions are banks.   Banks do NOT like to lose money...EVER!  It is just not in the best interest of a bank to lose money.  these processors spend BILLIONS of dollars to prevent theft/loss.  Their security departments work around the clock scouring every transaction being processed, looking for fraudulent activity or behavior.  What triggers them to go after a merchant?  Wouldn't you like to know.  You won't!  Processors keep this information proprietary.  The processes involved are ever evolving as technology changes.  While much of the fraud comes from outside the U.S., millions of dollars in fraudulent activity occurs virtually on a daily basis.  While some of this is being done via transactions, more happens from bad guys hacking into databases to steal credit card and other personal information, stored in servers. 

There is no doubt that the bad guys have made it worst for those of you who are good and legitimate business people.  We receive notices almost every day from the security department of some of our processors notifying us as to who's accounts are being reviewed or terminated.  Sometimes it doesn't even appear to be malicious behavior that causes an acct to be closed. 

Here are some things that trigger a merchant acct being closed.

1.  Merchant's changing their bank account (DDA).
Companies do change bank accounts from time to time and there is nothing wrong with that.  However, if you change your banking information, specifically the account to which merchant funds are debited/credited, without notifying the merchant account provider FIRST...OR, if the account is closed so that funds cannot be debited/credited, this may trigger an account being closed.

2.  Splitting Transactions.
So, you have a customer who owes you $500.  You tried running $500 on their credit card and the card declined.  So you tried running it for $250.  Then again for $250.  While you mean no harm, VISA/MC don't see it that way.  Fraudulent operators operate in a similar behavior.  While you may be just trying to get the money from your customer, there is a high likelihood that this will trigger a flag at the security department.  You may be contacted, or have your acct closed.

3.  Excessive Declines.
"Hmm, this credit card should work.  Let me keep trying it."   Seems like it should be no big deal, right?  It is!   Visa/MC sees EVERY transaction run, and they are very sophisticated.  When transactions are continually run on a specific card, it can trigger the security department to wake up and take notice. 

4.  Lot's of International Cards.
We are not saying that merchants should not do business with cardholders outside the U.S., as there are many companies that primarily target consumers located in other countries.  However, it is important to understand that by doing so, the risk of fraud is increased dramatically...when the risk is increased, so is the chance of the Security Dept getting involved.

5.  Previous Account Closure.
Once you have had a merchant account closed, every processor to which you apply in the future, is going to know this.  Processors share information.  You could be approved for an account using an instant application, and then have the acct terminated within a couple of days, once the processor receives word that this has happened. 

6.  Applying for Multiple Accounts.
Yep, every time you apply for a merchant account, not only does the new company know every account you have had or lost in the past...but your existing merchant acct provider is also notified that you are "shopping" for a new acct.  That can trigger you getting a call or email from your existing provider/agent.  It can also result in closure of your acct, should your existing provider become concerned with your plans.

7.  False information on a Merchant Account Application.
Happens all the time.  Merchant account applications have a LOT of questions.  Have you ever been terminated?  Do you store data?  What do you sell?  Merchants who do not answer honestly risk having their application declined, or account closed.  This happens all the time. 

So, be truthful!  Be honest and best of luck preserving that very valuable commodity...your MERCHANT ACCOUNT!

#merchant account #AcceptCreditCards. #MerchantAccounts

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