Reasons why your High Risk Merchant account closed and what you can do

Credit Card merchant account Closed

It can be hard for High Risk merchants to find credit card processing provider in the first place, and when you find them, you need to make sure your account doesn’t get closed.

It’s important to understand that a Merchant Account is a line of credit. The cardholder has a line of credit from their personal credit card and the Merchant Processing Provider also extends credit to the merchant. The Provider deposits funds into the merchant account before the cardholder has actually made payment.

A line of credit always caries risk which could cause significant losses for the Processing Provider. This makes Providers very careful and willing to close accounts if something doesn’t look right. Cancelled merchant account is usually due to the following reasons:

  • Legal changes. Any law, rule, or regulatory changes that cause banks to elevate the risk level for certain industries.
  • Breach of contract. Merchants sign an agreement with the Provider and their respective Bank. Things like breaking exclusivity, or depositing transactions on behalf of another merchant are considered a breach of contract.
  • Suspicious Merchant Activity. Sudden deposits of large sums, change of ownership, product switching, and many others fall under suspicious activities
  • Fraud. When merchant is found to be committing fraud the account is terminated immediately. Examples of fraud include: misleading advertising, fraudulent transactions, not delivering merchandise, mishandling credit card information.
  • Chargeback. Credit card refunds requested by the customer. When customers aren’t satisfied with the merchandise, don’t receive it, or are victims of Credit card theft – they often chargeback the full amount. This poses a big liability risk for the Merchant Account Provider and when chargebacks are increasing above 1-2%, the account gets closed.

Often merchants receive a warning that merchant processing provider is perceiving elevated risk from your account in the form of implemented or increased reserve / hold on funds. When you see an unexpected revenue hold or don’t receive a regular deposit, take immediate action. Contact your merchant account provider to understand and remedy the issue. If chargebacks or a misunderstanding is the problem, you can often resolve it before your account is closed.

Feel free to contact AllRates for help with High Risk merchants.

Find more information in our High Risk Merchant Processing Guide

Choosing best merchant Credit Card processor, think about fraud management

Best Merchant Credit Card Providers and fraud

Loss of revenue due to Fraud has been staggering in the last few years.  mCommerce and international merchants are approaching losses equal to 2% of profits.

Merchants have 4 choices when deciding on how to fight fraud: manual, automated, outsource to 3rd parties, or find a merchant processor that offers fraud protection.

  • Option 1 –  Manual

Manually review transactions for potential fraud.  This option takes a lot of resources which for any business is hard to allocate.  Those that decide to proceed, quickly discover that error rate is very high.  Technologically savvy criminals know how to disguise fraud to even the most trained eye.  So when a business is trying to concentrate on surviving and growing, the constant uphill battle of manually fighting fraud proves too much.

  • Option 2 – Automate

Automated software is available off the shelf or some larger merchants try to develop the algorithms themselves.  This system tends to catch legitimate transactions as fraud (aka false positives).  This leads to combining the two systems: first catching transactions as possible fraud, then manually reviewing.  Unfortunately, this doubles the cost.  First you spend money on software, then you have to pay someone to manually review transactions.

  • Option 3 – Outsource

Depending on the company you choose, this can be the best or turn to be the most expensive option for fraud detection.  If your processing company doesn’t offer fraud detection services, outsourcing to companies like Chargebacks911, Ethoca or others can be the most effective choice.  Make sure you read the fine print and look at all the line item costs.

  • Option 4 – Processor fraud systems

Last but not least: talk to the processing company you are processing with, or about to start working with about their fraud systems.  Sometimes merchants have to pay extra but since merchant credit card providers offer it as an extra services the cost should be much lower than anything else on the market.

Remember that revenue loss for fraud doesn’t stand on its own.  Allowing fraudulent transactions through your business will inevitably lead to Chargebacks, and Card companies love shut down businesses with high Chargeback ratios.  Which means fraud has a compounding effect, not just its direct cost.

Contact AllRates for a ROI analysis on how to mitigate fraud and what are best solutions for your business.

Lower monthly credit card processing bills and Chargebacks

business processing credit cards

An easy way to lower your retail store’s credit card processing bill is to reduce keyed transactions.  Sounds simple but will make a huge difference.

By allowing your employees to key in the credit card information into your terminal you are making the system prone to human error.

Keyed Credit Card Transaction

When a CC reader is malfunctioning and the card isn’t reading properly, an employee may manually enter the numbers.    Except very often it’s exactly what fraudsters want and a stolen CC may just pass through.

So what should I do?
  • Train your employees to take an imprint of the Credit Card and have it signed & dated
  • Keep your register and CC terminal clean and functioning. Do not allow food/drinks near it
  • Train employees to swipe properly, do not allow swiping in different directions under different angles. It damages the machine
  • When Credit Card’s magnetic stripe can’t be read, instruct employees to pay extra attention to the customer.  Request a driver’s license, don’t forget to obtain a signature and a date.
Why this is important!

When a credit card is not being read by the CC terminal, probability of Chargebacks goes up exponentially.  If you don’t have a signed imprint of customer’s CC, it becomes impossible to fight Chargebacks.  And, as we mentioned previously, simple fact that something is wrong with the card increases chances that the Credit Card is fraudulent.

Credit card processors charge higher rates for keyed versus swiped credit card transactions.  These fees definitely add up at the end of the month.  Make sure you analyze your Credit Card statement regularly to see if there is a correlation between specific terminals or employees.  You should correct it immediately if you find more than 1% keyed transaction rate.

Keyed transaction definitely occur from time to time, just don’t let them become the norm.


High Risk Merchant account – 6 easy mistakes to avoid

High Risk Merchant account

It’s not easy for High Risk merchants to get payment processing in the first place, so when you get it make sure you don’t lose it.   Below we identified 6 mistakes to avoid and prevent major headaches for high risk merchant account owners.

The following industries are High Risk because of their proximity to illegal activities

  1. Policy Page
    Merchants need to have a clear and easy to follow Return Policy.  Customers should know what to expect, which will prevent a lot of dissatisfaction.  This is also merchant’s best defense against chargebacks (Chargeback happens when customer disputes the transaction to the Credit Card issuer).  In High Risk merchant category, it’s very important to minimize chargebacks.  Arguing a chargeback once it was filed is much easier when you have a solid Return Policy.
  2. Contact Information
    Make it easy for customers to reach you.  Ensure that the contact page, phone number, email and your address are prominently displayed on your website.  Merchants need a good customer service department, answer the phone and respond to inquiries within 24 hours.    Keep this in mind: if it’s easier for your customer to contact their credit card and file a chargeback, they will do that, which creates a big problem for you.
  3. Delivery Tracking
    Customers sometimes claim that they never received the merchandise.  Whether it’s a fraudulent or genuine claim, a merchant should be able to prove one way or another.  For higher margin products consider requiring signature on delivery.
  4. Use Fraud Tools
    Merchants have access to automatic fraud prevention tools.  Services like Address Verification (AVS), Credit Card security codes, 3D Secure (triple verification), will catch fraudulent transactions before they are shipped.   Payment account providers and gateways provide a lot of free tools to help merchants in this category.
  5. Product Description
    Merchants can avoid a lot of headaches when the product information and description is clear and honest.   When customers receive the product and it’s not what they expected, they feel duped.  This is when they are likely to call their credit card instead of contacting the merchant.If there is a product disclaimer, ensure customers don’t miss it.   Things like: color, material, fabric, quality, accessories and all other details about your product should be understood by the customer before they placed an order.
  6. Fight Chargebacks
    High risk merchant account owners should always respond to a chargeback.  The premise here is that a merchant has done all the right things for the customer: didn’t overpromise, delivered on time and the correct product, responded to problems.  While ensuring that the systems are secure, can catch identity theft and wrong orders.  If this is the case, merchant should always have a reason to fight the chargeback and should do it either through the Payment service provider, gateway, 3rd party services like Midigator, Ethoca, etc, or fight it on your own.  If you don’t fight, you will lose a 100%.

AllRates is happy to work with any merchant in eliminating costly mistakes.  We will help finding the right Payment Provider, Gateway service or Chargeback company.  Check your current merchant credit card rates or Contact Us.

Merchant Account Placed on MATCH / TMF list

When merchants are searching for the term MATCH or TMF as it relates to credit card processing, it’s already a bad sign.  Let’s look at what is it and how to deal with it.


Member Alert to Control High Risk Merchant (MATCH) is a blacklist created by MasterCard to keep track of merchants and owners that committed an offence and have been terminated.  Terminated Merchant File (TMF) is essentially an older version of the same list.   Card Brands (Visa, MC, AmEx, Discover), Acquiring banks and Payment Providers are using this list to automatically decline merchants.  You can find full MasterCard merchant account rules HERE.

Why have I been placed on MATCH?

There are 14 reasons why a merchant can be blacklisted, they are shown below.  A Payment Provider, Acquiring Bank, or Card Brands (AmEx, MasterCard, etc) can add a merchant to MATCH.  Merchant usually receives a letter with an explanation of why they were added to MATCH.  We see a lot of merchants complaining that they didn’t receive any communication, usually it’s because thy missed an email or the letter.

MATCH List Reason CodeTitleExplanation
01Account Data CompromiseAccount data is stolen from the card-present merchant and used with other merchants
02Common Point of PurchaseAccount data is stolen from the card-present merchant and used with other merchants
03LaunderingMerchant processed transactions that did not involve a bona fide cardholder
04Excessive ChargebacksMerchant breached predetermined chargeback thresholds
05Excessive FraudMerchant breached predetermined fraud-to-sales dollar volume thresholds
07Fraud ConvictionOne of the business's owners was convicted of criminal fraud
08Mastercard Questionable Merchant Audit ProgramMerchant is labeled a “Questionable Merchant,” as determined by MastercCard guidelines
09Bankruptcy, Liquidation, InsolvencyMerchant is unable to discharge all financial obligations
10Violation of StandardsMerchant was in violation of one or more of the card network’s regulations
11Merchant CollusionMerchant participated in fraudulent collusive activities
12PCI-DSS NoncomplianceMerchant wasn’t compliant with PCI-DSS requirements
13Illegal TransactionsMerchant processed illegal transactions
14Identity TheftMusiness owner’s identity is in question

How long is a merchant on MATCH/TMF list?

MATCH period lasts for 5 years, after which the merchant is automatically removed.

What merchants can do once they are on MATCH/TMF?

Merchant can contest the decision to be placed on MATCH by writing a letter and stating valid reasons.  Providers will usually review their decision again, this is especially useful when one of the Card Brands placed you on MATCH.  For example MasterCard has been known to place merchants on MATCH for ‘violating MC standards’.  If a Payment Provider finds that it doesn’t pose liability to them, they can accept the merchant for payment processing even though they are on MATCH.

Feel free to contact us and let us help you look through your MATCH case.  Contact HERE

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