Dropped By Your Payment Processor? What Now?

By: Latoya Irby

The livelihood of your business depends heavily on your ability to receive payments from your customers. So, if your payment processor terminates your merchant account, your business is pretty much on hold until you can find another solution. And if you don’t, it could mean the end for your company.

Why does this happen?

Your payment processor may drop you for something you specifically did – or didn’t do – or you could be dropped for circumstances outside your control. For example, your merchant account could be terminated because:

  • You violated the terms of service in some way

  • You had transactions for products or services outside what you originally stated in your application

  • You attempted to use the same merchant account for multiple types of businesses

  • You had a high level of fraud activity

  • The payment processor decided to no longer work with businesses in your industry

  • High chargeback rates

How can you avoid being dropped?

In some cases, you get fair warning before your payment processor terminates your merchant account. This gives you the opportunity to save your merchant account.

Make sure you understand your terms of service

It seems like every website and service these days comes with a lengthy terms of service agreement. We’re used to simply scanning the lengthy legalese, scrolling to the bottom, and agreeing without reading a single word the agreement. This may work for your smartphone apps, but the terms of your merchant account deserve a concentrated read.

Notify your processor before selling products or services drastically different than the ones you put in the application.

Otherwise, your payment processor may suspect that you’re trying to commit fraud and freeze or cancel your account.

If you have multiple businesses, you may need more than one merchant account. Don’t assume you can launch a new business and use your existing merchant account for it. Talk to your payment processor about whether a single merchant account will handle all your business needs.

Put in measures to reduce fraudulent transactions.

At a minimum, your account may be put on hold if you have a high number of fraudulent transactions. If not corrected, your account may be terminated altogether. Make sure you have measures in place to detect and prevent fraudulent transactions.

Reduce your chargeback rates by making it easier for customers to get a refund.

Consumers often go straight to the credit card issuer with transaction disputes because it’s easier than going through the merchant. Make your refund policy very clear to your customers.

Some merchants even include their phone number in the billing descriptor that appears on customer credit or debit card statements, which makes it easier for consumers to contact you.

Even if you don’t include your phone number in the billing descriptor, at least make sure your description is recognizable by consumers.

What if it’s not your fault?

Your payment processor can also terminate your merchant account for reasons that are not your fault. For example, the processor may make a business decision to no longer provide services to businesses in your industry. This recently happened when the Consumer Financial Protection Bureau sued Global Payments for processing payments from phony debt collectors. Not only did Global Payments drop the collection agency that committed the violation, the payment processor dropped all debt collectors, including attorneys who collect on behalf of their clients.

Once you’ve been dropped, finding a new payment processor can be tough, especially if you end up on the industry list terminated merchant list.

Contact HealPay if you’re looking for a payment processor who understands the risky nature of the Accounts Receivable industry. Whether you collect payments for your own company or on behalf of clients, our SettlementApp and HealPay IVR can put you back in control of your cash flow!!!

HealPay, LaToya Irby.