Avoiding Costly Mistake with Your Merchant Account

There are several things that can occur that can cause a credit card processor to shut down the merchant account of a small business. By understanding how to avoid these mistakes, your business can avert the disaster of your merchant account being closed unexpectedly. Then your business will be able to maintain its merchant account with few problems.

The number one reason that a processor might decide to close the merchant account of your business is due to any type of unusual processing activity. If your business was processing credit cards from a mobile location and your processor was not aware that your business had started doing this, then it may cause the account to become closed due to the processor believing that someone may be fraudulently using your account. Another might be if you started processing an unusually high number of credit cards over what you originally thought your business would process, then the processor may suspect fraudulent activity and close the account. Generally speaking, it is a good idea to be very cautious and keep your credit card processing company in the loop of what your business may be doing in order to avoid this problem. Therefore it is a good idea to speak to your credit card processing company on a regular basis in order to let them know about the changes your business may be going through.

Another issue to avoid is getting too many chargebacks. Whether you win or lose the chargebacks, many credit card processors count these against your business. If your business happens to rack up a large number of chargebacks in a relatively short time then it may lead a processor to decide to close your merchant account. Therefore it is a good idea to take the necessary steps needed to limit the chargebacks on your account. As you do this, review the policies and procedures of your business and try to remedy any situations that may have caused previous chargebacks to have occurred.

A third major reason that can cause a processor to close your merchant account is if your business starts selling products and services that are substantially different from those that you stated you would be selling on your merchant service agreement. Usually a processor will close an account if they find that a business is selling services or products that are significantly different from what they started with. This is a leading indicator to many processors of possible fraud and will result in your merchant account being closed. As stated earlier, it is highly recommended that you keep your credit card processor informed of any changes in your business in order to prevent them from terminating your merchant account.

One other mistake that some small businesses make that can lead to a merchant account being closed is a mistake called factoring. This is where a business processes a credit card transaction for another individual or business. When a processor uncovers that an account has been used for this type of transaction, they will immediately close the merchant account. On top of this, the owner of the account may be facing stiff penalties and possible charges of criminal activity. Therefore, it is advised that you never process the transactions of another business or individual through your merchant account.

In addition to these mistakes, it is recommended that you never change banks without first informing your merchant account processor of what you are doing. Failure to do this is another mistake that can lead to an account being closed. If you respond quickly to any requests for information and to chargebacks from your processor, then the chances are greatly reduced that your merchant account holder will choose to close your account.

Another piece of advice is to always overstate your estimated highest transaction amount that you anticipate processing when you open your account. A credit card processor will often close a merchant account if they encounter a situation where a transaction is significantly higher than the estimated highest transaction amount. An example of this would be that if you stated that your highest transaction amount would be $1,500 and someone made a purchase of $3,000, then the credit card processor may think that there is something amiss and require proof before processing the transaction.

A final thing to avoid is to avoid entering the wrong amounts into your credit processing system when you close out your business for the day. A business that consistently enters the wrong amounts when closing out their credit processing system for the business day will find themselves paying fees for the wrong amounts and may also find the merchant account closed by the processor because of this. In order to avoid this costly mistake, it is a good idea to double check your credit card transactions list before closing out for the business day and being certain that all of the amounts were entered correctly. This will help you to keep your merchant account out of any headaches that can result from wrong amounts being processed on your transactions.

It is an unfortunate fact that credit card processors are forced to shut down merchant accounts every day because the account owner made a mistake. The problem facing the credit card processors is that it is almost impossible for them to know who is making an innocent mistake and who is trying to scam the credit card company. By following the advice given in this article, you can avoid many of these costly mistakes and keep your merchant account open and in good standing.

If for some reason, your merchant account was terminated due to a mistake by your business, then learn from the situation and try to remedy it so that it doesn’t occur again the next time you open a new account. If funds were held when your account was shut down or if your business has been placed on the MATCH file list, then it may be necessary to enlist the assistance of a lawyer to find a solution to the problem. Once you do this and solve the situation, then use the tips from this article to help you keep your business merchant account open with few problems.

About author

SMB Reviews
SMB Reviews 473 posts

SMBReviews is committed to providing small and mid-sized business owners with the information and resources they need to select the best service or product for their company.

You might also like


Should You Hire Millennials?

Your business is scaling up and you’ve managed to land that big new contract or client that promises to put your outfit on the map, finally. All of a sudden


Write Your Own Business Contracts Save Time, Money and Aggravation

By John Pounders You don’t have to be a lawyer to reap the benefits of writing your own contracts. A little common sense goes a long way and a good


[Streaming] Atomic Blonde (2017) Movie HD

Atomic Blonde (2017) Director David Leitch. Producer Charlize Theron, A.J. Dix, Eric Gitter, Beth Kono, Kelly McCormick, Peter Schwerin. Production Company Denver and Delilah Productions, Film i Väst, Focus Features,


No Comments Yet!

You can be first to comment this post!