Merchant Account Suspension

 

How To Prevent Suspension of Your Merchant Account

Implications of Merchant Account Suspension

What would you do if you suddenly get a notification from your merchant account provider that your merchant account is going to be suspended?  How would that affect you and your business?  What should you do?

Your merchant account is the reason that you can accept credit cards as the means of payment for the goods or the service that you sell.  If you are an online business, this would mean that you probably rely solely on your merchant account to actually acquire the proceeds of your sales.  As such, suspension of your merchant account can lead to disastrous events. 

Having it suspended would mean that you cannot carry out any transactions.  In the short term, you would think of losing sales and maybe not having enough cash in the bank to pay the bills and other costs associated with the business perhaps.  Worse, if you think about long term effects, the suspension of your merchant account might lead to the loss of customers.   Imagine your regular and potential customers finding something of value on your web site.  They get all excited and start the check out process only to find out that you cannot accept their credit card.  That might be a reason for them not to come back to your web site.

So what can you do?  I believe that prevention is the key and in order to be able to prevent the suspension of your merchant account, you need to know the different factors that contribute to this incident.

Factors That Contribute To Suspension

There are many factors that lead to the suspension of a merchant account, not all of them due to fraud. 

Recurring pattern of chargebacks

A chargeback is the instance wherein a credit card charge is disputed by the customer.  As a result of the dispute, the charge is reversed and the customer ends up paying nothing.  The merchant on the other hand ends up receiving nothing but has to pay a chargeback fee.  This is quite obviously not a positive incident for both merchant account provider and merchant.  As such, persistent chargebacks would be one reason for suspension of your merchant account.

Poor customer service

Just because you don’t have the resources like other big companies does it mean that you cannot provide good customer service.  If you have a history of customer complaints that are unresolved and a high amount of refused refunds, this may trigger the suspension of your merchant account.

Faulty goods or services

If you supply faulty goods or services and the flaws are not advertised or described in your product description, then you would likely be a candidate for merchant account suspension.  You can see that due to this kind of service you provide, you would probably get a lot of refund requests and chargebacks as well.

Entering credit cards which are not part of the merchant agreement

This could only be done by you.  If you do so, then your merchant provider would probably suspend your account.

Fraud

This covers a wide range of activities which you may or may not be aware of.  Fraudulent orders and the use of stolen credit cards are just some examples.

Preventive Measures

So how do you prevent the suspension of your merchant account?  Knowing some of the factors that lead to the suspension definitely helps in determining which path to take.  Merely avoid those factors and you will be on the right track.  However, other factors such as fraud are not as easy to deal with.  You should take certain steps in order to avoid fraudulent orders as much as possible.  Here are a few specific tips which can help you prevent fraudulent orders and the suspension of your account.

• Provide your full contact details so that customers can get in touch with you easily.  Make sure that you respond to any query at the soonest possible time.

• Avoid allowing different addresses to be used for shipping and credit card billing.  Normally this reeks of fraud.

• Do not deliver to high risk countries.  Provide a drop down list of countries that you deliver to.

• Think about setting a minimum value which customers can spend.  This would discourage trying to make purchases of small value but in huge quantities – a clear sign of fraud for stolen credit cards.

• Review your orders manually regularly.  This is the perhaps one of the best ways to prevent fraud.  Check if credit card numbers are being used in a suspicious pattern and report it yourself.

And in conclusion, if you process sales that are significantly above your historical sales history, you will be flagged. Your merchant processor calling to say they are reviewing your account sales because it does not match historical data. While they conduct this review all sales deposits are frozen and you may not see any money for 120 days. As well your account may be placed in suspension. Be proactive, call your processor when faced with an unusually large opportunity for sales revenue.

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