The Proper Care And Feeding Of Your Merchant Account

Anyone who has every done a Google search for Merchant Accounts or something similar has discovered a plethora of websites with every available processing solution, coupled with promises of quick or instant approval, no upfront costs and “the lowest fees in the industry”. To the prospective merchant, it must seem that the industry is bowing down and begging for their business and will do anything to keep it. Nothing could be further from the truth.

The problem that prospective merchants face today is not obtaining a merchant account, it is KEEPING IT! As a bank card professional who has set up hundreds of merchants with accounts over the past 9 years I have seen many merchants lose their accounts simply because they did not pay attention to the requirements of their merchant agreement or didn’t think they meant what they said.

THE one biggest problem that I could point to, that causes merchant’s to lose their account or have their funds held, is processing outside the parameters of the account. In order to mitigate their risks, merchant service providers, specify a monthly processing limit, similar to the charge limit that is put on a credit card. There is also an average ticket size specified and sometimes a high ticket size. These parameters are designed to prevent the merchant from abusing his or her account, as well protecting both the merchant and the processor from losses due to chargebacks. Our company, Total Merchant Services, routinely reminds the merchant upon approval of the account of what the agreement specifies for their processing limitations and instructs them to contact the customer service department if they need to change the parameters. Sounds reasonable enough doesn’t it? Unfortunately some merchants either don’t pay attention or don’t think the words mean what they say.

It has been my experience that some merchant’s incorrectly think that if they put through a charge and it gets approved, that they are “good to go”. In fact a charge approval has no human interaction. The charge approval goes directly through a processing network, like Global Payments or Vital and is approved by the customer’s card issuing bank. If a customer has a $10,000 credit line and you put through a $7,000 charge you might well get an approval message back and settlement may likely occur, but if your merchant agreement was only approved for a high ticket of $1500 you can bet dollars to donuts that a red flag has gone off in the service provider’s Risk department and chances are your funding will be held. Do this on more than one occasion and you may find yourself without merchant services. Even worse you may be put on the Terminated Merchants File (TMF). If this occurs you will not be able to obtain a new merchant account elsewhere from any other provider.

If you are a merchant or prospective merchant do yourself a big favor, understand what your processing limitations are and stick within them. If you have a need to go behold your limits contact your merchant provider’s customer service or risk management department and let them know what you need. If you account is in good shape and shows few or no chargebacks or NSFs you will probably get approved for what you need. Remember that while merchant service providers make money off of you and other merchants, the industry as a whole looses hundreds of millions of dollars a year due to chargebacks, NSFs and other abuses. You merchant provider needs to protect itself from these losses as much as possible. Play it straight and prosper. Good selling to all!