Many merchants don’t even think about the fact that there can be serious consequences for careless management of your merchant account. You may be thinking, “What do you mean? After all, don’t I just take the customer’s credit card and do the transaction? And doesn’t the credit card processor make more money the more I do transactions and for higher amounts?”
The answer to that question is yes, but if you are a bigger risk than they accounted for and something goes wrong, they are left holding the bag. In fact they are responsible for each transaction you make for up to 6 months. But let me tell you, I see it happen all the time. Here are a few examples of what will get a merchant in trouble with their processor…
1. Excessive monthly sales volume
2. Going significantly over the agreed average ticket size
3. Excepting a transaction for a product that would be listed under a different business type or (SIC) code
4. Getting an excessive number of chargebacks
5. Breaking apart a transaction for a single purchase over a period of days or weeks.
The above scenarios can all be managed and should be in order to prevent your funds from being held up to six months or worse yet, having your account shut down and being placed on a TMF list (like a black list that prevents you from applying with any processor until your situation is resolved to the satisfaction of your first processor).
For numbers 1,2 and 5 above, simply stay within your agreed to limits and require your customers to pay by cash or check for amounts that exceed those limits. If you have a good record in this regard, I would suggest applying for a limit increase every 6 months.
For number 3, if you want to sell items from a completely different business type, fine. Open up another merchant account specifically for those items.
For number 4, you can avoid chargebacks by always having a clear return and or refund policy which does not include a “no refund policy.” Provide good support to your customers and always deal honestly with them. This wil help prevent excessive chargebacks.
Keeping your merchant account in good standing is essential for the success of your business. Make sure you treat it that way!
