The eCommerce marketplace continues to grow in leaps and bounds. With the recent change in the business climate, entrepreneurs are busy launching new types of products and services to accommodate these new online business opportunities like never before. Occasionally, merchant accounts are terminated and are put on a match list. A merchant account for terminated merchants allows businesses continuity even if they were previously put on a TMF by a credit card processor.
In 2020, U.S. eCommerce sales totaled $759.4 billion. This was a 31.7% increase from $576.5 billion in 2019.
According to reports, this is the highest growth rate in a decade and is nearly two times more than the second-highest rate of 17.8% in 2011.
This shows that in just 9 years, yearly eCommerce sales multiplied four times.
These record numbers come down to more people choosing to sell their products on the Internet. eCommerce business owners need solid merchant accounts to easily accept card payments online.
Unfortunately, if merchants fall short of their contractual agreements, process fraudulent transactions, or have too many chargeback ratios due to their type of business, their accounts could be terminated.
If this happens all hope is not lost because it is still possible to open a merchant account for terminated merchants.
Terminated Merchant Account File
Merchant accounts that have been terminated by acquiring banks for any violation of standards end up in a Terminated Merchant File (TMF), also known as a Match File.
When an acquirer adds a merchant to the TMF, it portrays the business as a risky venture and cautions other acquirers about doing any kind of business with that merchant.
When this happens, it becomes difficult for a merchant to open another account with an acquiring bank.
How Does a Merchant End Up in a Match File?
Excessive chargebacks are a common reason for getting listed in a Match File, but there are other reasons why this can happen.
The Terminated Merchant File is a compilation of lists and acts as an alert to control high-risk merchants. Acquiring banks and other financial institutions will initially scrub this list before deciding if a merchant is qualified to open an account.
These other reasons include:
- Merchant is engaged in money laundering activities
- Recurring charges even when customers have canceled subscriptions
- Merchant collusion with fraudulent activity
- Refusal to comply with PCI data security standards or demands
- Compromised account data
- Too many bogus sales
- Merchant identity theft
- Merchant account holder and merchant agreement violations
- Liquidation/bankruptcy or insolvency
- Illegal transactions and payment card industry violations
When you are added to a match-list, your business information is made public and reasons are given as to why your merchant account was terminated.
Merchants are given reason codes like 01- Account Data Compromise and 03- Money Laundering to know this.
With these codes, merchants can ask acquiring banks specific questions about their terminated accounts. It is up to the banks to decide whether they want to respond or not.
How Does a Merchant Get Out of TMF?
There are only 3 ways that the privileges of a merchant account for terminated merchants can be restored.
1. 5 Years: When a merchant is added to a Terminated Merchant File, the information remains there for the next 5 years.
Acquiring banks and credit card processors can access this file at any time and based on the reasons given for termination decide if they are going to deal with the merchant or not. It is only after 5 years that the merchant is allowed to start on a clean slate.
2. Error: A business owner can be omitted from a Match File if it was done in error.
If this is the case, the acquiring bank responsible for including the merchant in the list is required to get in touch with all relevant parties and correct the mistake.
The merchant should be able to back this up by providing rock-solid evidence.
3. Issue Resolved: A merchant can be removed from the Match List if the problem can be fixed. For example, if a business owner is blacklisted for failing to comply with PCI DSS requirements, he can be removed from the list upon compliance.
To get off the blacklist, the merchant needs a certificate of validation from a payment card certified forensic examiner.
For a speedy approval, the following details are also required:
- Merchant ID number
- Business address (including country)
- Principal business owners information, (first name, last name, and resident country)
- Acquirer ID Number
- Merchant name
- Merchant DBA name
- Dismissal or Termination Letter
Opening an Account for Terminated Merchants
It is possible to open another merchant account with a credit card processor for terminated merchants. Finding yourself in a Match File is not always the end of the world.
The solution is simply to find a high-risk payment processing provider willing to do this for you.
You need to be upfront with TMF merchant account solution providers to improve your chances of opening another account.
Give precise reasons why your merchant account was terminated and do not, beat around the bush.
However, research has shown that most success stories have been attributed to the fact that the merchant account for terminated merchants mistakenly ended up on the MATCH list.
Experienced high-risk merchant account providers can also help you solve high chargeback ratios.
These merchant account processors understand the impact that chargebacks can have on your business.
If this is the case, they have what it takes to defend your processing rights and help you open another merchant account if the initial one is closed.
Merchant Accounts & Chargeback Ratios
Merchant accounts can still be terminated when minimum chargeback-to transaction ratios are not met.
Many traditional acquirers do this as a precaution before chargeback boundaries are breached.
Transaction Volume is Another Worry
Most credit card processors limit chargebacks to under the 1% range. This means that sellers with high ticket transactions have the greatest risk.
For example, jewelers making just a few thousand high-ticket transactions every month can have their merchant accounts terminated with just 3 or 4 chargebacks.
Finding reputable account providers with experience in providing merchant accounts for terminated merchants is crucial to the longevity of your business.
These processors have unique TMF merchant account solutions that can help you overcome the challenges of getting blacklisted by acquiring banks.
However, it is always better to stay on the right side of the law and prevent authorities from putting you on the Match List.
Acquiring banks have been known to hastily add merchants to Terminated Merchant Files without proper verification.
When going through the application process, make sure to disclose any previous terminations as this will only increase your chances of approval. Knowingly not doing so changes the situation entirely.