Could your business survive if your merchant account was cancelled?  What are your contingency plans to guard against the real risk of losing merchant account processing?

Merchants in any business must have multiple merchant accounts to protect business operations.   Establishing merchant accounts in more than one jurisdiction is crucial to assuring the continuing operation of your business.   Diversification of merchant account credit card processing is vital for all high risk merchants.

There have been many sad stories about businesses losing merchant account processing.  Merchants complain about unjust and unfair treatment by the banks.  The merchant account provider, once so eager for business, no longer return phone calls. 

Money that is vitally needed to run the business is being held by the bank.  The bank will hold money up to 180 days, as a protection against possible chargebacks.  The money will be even if the merchant has never had a chargeback.

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Merchants Held Hostage By Banks

Merchants with good acquiring bank relationships may think a bank will continue processing as long as the merchant account is in good standing.  The merchant is surprised and dismayed when the bank suddenly decides to stop payment processing. 

The most obvious reason for cancellation of a merchant account is when the account is poorly managed by the merchant.  The merchant may have an unusually high number of chargebacks, refunds or consumer dissatisfaction.  The bank will either cancel the account outright or put processing restrictions or reserves on the account. 

Even if the merchant has no chargebacks, an account may be cancelled.  For instance, it is not uncommon for a merchant that experiences rapid growth in processing volumes to be told the account is going to be cancelled.  

Common sense indicates banks would be happy with fast growth.  More money for the bank, right?  Astoundingly, the opposite is true.  High volume merchant accounts with rapid expansion are classified as high risk accounts.  High volume processing can actually contribute to merchant account cancellation or imposition of large reserves.

Merchants frequently have little warning that the merchant account is going to be cancelled.   If a merchant is lucky, the bank will give 30 day notice.  More commonly, a merchant realizes that settlements are not happening on time.  The reality is that the bank is attempting to hold as much money as possible from the merchant in anticipation of closing the account. 

Another common scenario is if the bank changes underwriting policies and no longer accepts particular merchant types.  A bank can be sold or merged with another financial institution.  Merchants can be put on notice that merchant account processing will cease within 30 days. 

Do not risk being held hostage by a single merchant account provider.  Minimize risk by establishing international merchant account processing today.

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