Your business relies on merchant processing services to conduct credit and debit card transactions. Losing your account could mean the end of your business, especially if you make most of your sales online.
How can you ensure your account stays active and viable? Avoid these four common issues, all of which can lead merchant providers to terminate relationships with businesses.
Your Industry Counts as “High Risk”
Your company may count as a high-risk operation if you deal in:
- Gaming or gambling
- Life coaching
- Long-term memberships
- Real estate
- Travel services
- Vitamins and supplements
Certain online stores, such as those operating through Amazon or eBay, are also classified as high-risk businesses. Some providers won’t take on any company with a high level of risk, so you have to find a service willing to give you an account. Some providers, such as Humboldt Merchant Services, specialize in credit card processing for high-risk merchants.
While being in a high-risk industry isn’t something you can control, you can take steps to ensure your business doesn’t attract unwanted attention from your merchant provider.
You Have a High Chargeback Ratio
A chargeback occurs when a customer requests a refund in response to a fraudulent charge. This may occur after unauthorized use of a card or when an unintentional payment is made, such as a teenager using his or her parent’s card without permission. The acceptable maximum ratio for chargebacks in the industry is generally considered to be 1 percent. Too high of a ratio may indicate suspicious activity or poor attention to customer satisfaction. Work to avoid chargebacks by providing ample alternate means for customers to request refunds or settle disputes.
Your Customers Are Victims of Fraud
If you log a high number of fraudulent transactions, your merchant account provider will take notice. The shift to EMV or “chip” cards, the upsurge in use of electronic payment methods, and the continuing popularity of online shopping have all increased the likelihood of credit card fraud, and merchant services providers expect businesses to take every possible precaution against the theft of customer information.
You’re Engaged in Questionable Activities
It’s important to read the terms of service before signing up for a merchant account so that you understand what activities the provider considers to be “suspicious.” For example, most providers don’t want their clients using multiple merchant accounts at the same time or using a single account for multiple businesses. Committing deliberate fraud by misusing customer information, using deceptive advertising, overcharging customers or not making good on sales will also put your account in jeopardy
The closure of your merchant account could land your business in the Terminated Merchant File (TMF), also known as the MATCH list. This makes it next to impossible to open a new merchant account with another provider, so being diligent about activities on your current account is critical.
Take steps to improve security and minimize fraud, and focus on excellent customer service to reduce the number of chargebacks. By maintaining a good track record and keeping lines of communication open between your business and your customers, you can ensure a positive relationship with your merchant account provider.