Suspending Merchant Accounts

Before setting up a credit card payment processing account, processors closely scrutinize the financial situation of every business that is applying and its principals' credit worthiness (yes, we do that too). The check-up process includes evaluation of the business financial statements and the owners' tax returns and credit files. The goal is to make certain that the merchant account will be used responsibly and that consumers will be treated fairly. Yet, there are still possibilities that, even after the stringent application procedures have led to a favorable decision, at some point the relationship between a credit card merchant processor and a merchant will deteriorate to a point where the only alternative will be suspension of the account. There are several reasons why credit card processing companies suspend small business merchant accounts.

The first, and most obvious reason that will automatically lead to a suspension is fraud committed by the merchant. Fraudulent activities can take many shapes and forms. Misusing personal information like credit card numbers and details, overcharging, not delivering products and services as advertised are just a few examples.

Secondly, non-compliance with the Payment Card Industry (PCI) Data Security Standards (DSS) can also lead to a suspension. PCI DSS is a joint effort by Visa and MasterCard and lays down the groundwork for data management in the credit card processing industry. We have developed our Payment Card Acceptance Best Practices Guide to help merchants reach compliance and have made it available to everyone.

Another reason your processor will shut down your merchant account processing service is a consistently high level of chargebacks. The importance of keeping them under control cannot be overestimated. As previously described, chargebacks result from customer disputes, often ones that have not been addressed in a timely manner. If your chargebacks stay at or above 1% of your total credit card processing volume, your credit card processing account will be suspended. There are a number of best practices that should be employed in order to avoid customer disputes and we have addressed the issue elsewhere. The most important thing that you need to keep in mind is to make information easily accessible to your customers. Contact phone numbers, return policies, terms and conditions should all be easily located on your website or printed receipt and, for eCommerce merchant account users, emailed to your customers.

Keep in mind that your merchant services provider does not want to suspend your account. The only way they can make money is to have you as a customer. Work with them whenever there is an issue and provide all information that is required.