Merchant Services Industry Topics

May 14, 2010 at 06:48 o\clock

How To Keep Your Merchant Account

Those who have completed a Google lookup for Merchant Accounts or something similar has discovered a plethora of website pages with every available processing system, coupled with promises of swift or immediate approval, no upfront payments and "the lowest rates in the industry". To the potential merchant, it must appear that the industry is bowing down and pleading for their business and will do anything to keep it. Nothing could be further from the truth.

The challenge that potential merchants face at present just isn't securing merchant account, it is KEEPING IT! As a bank card specialist who has underwritten many hundreds of merchants with accounts over the past 12 years I've witnessed many merchants lose their accounts just because they didn't give thought to the requirements of the merchant contract or didn't think they meant what they stated.

THE one biggest issue which I could point to, that causes merchant's to forfeit his or her account or have their money held, is processing outside the parameters of the account. So that they can control their risks, merchant service providers, establish a per month processing limitation, similar to the charge limit that is place on a credit card. There is also an average ticket size specified and often a high ticket size. These parameters are meant to stop the merchant from violating his or her account, at the same time shielding both the merchant as well as the processor from losses because of chargebacks. Our company, Total Merchant Services, normally reminds the merchant upon approval of the account of what the agreement specifies with regards to processing constraints and instructs them to call the customer service department if they must alter the parameters. Sound's reasonable enough doesn't it? Regretably a few merchants either do not pay attention or do not think the words mean what they state.

It has been my past experiences that some merchant's erroneously believe that when they put through a charge and it gets authorised, that they are "good to go". The fact is a charge approval has no human connection. The charge authorization will go directly through a processing network, like Global Payments or Vital and is authorized by the customer's card issuing bank. If a customer has a $10,000 line of credit and you submit a $7,000 charge you might well receive an approval message back and settlement may very well take place, but but if the merchant agreement was only approved for a max ticket of $1500 you can bet dollars to donuts that a warning sign went off within the service provider's Risk unit and it’s likely that your funding will be held. Do this on more than one occasion and you will find yourself without merchant services. Even worse you may well be put on the Terminated Merchants File (TMF). If this occurs you may not be able to get yourself a new merchant account elsewhere through any other service provider.

If you're a merchant or prospective merchant do yourself a huge favor, know what your processing limitations are and stick inside of them. If you have a requirement to go beyond your limitations contact your merchant provider's customer support or risk management department and inform them what you will need. If your account is in good condition and indicates few or no chargebacks or NSFs you will probably get accepted for whatever you need. Remember that even though merchant service providers generate profits from you as well as other merchants, the industry in general looses hundreds of millions of money per year as a result of chargebacks, NSFs along with other violations. You merchant provider must guard itself from all of these losses as much as they can. Play it straight and be successful. Good selling to every one!