Reasons Why High-Risk Merchant Accounts Are Terminated

The majority of consumers pay for goods and services with credit cards. Businesses must maintain a merchant account in order to have the capability to accept credit card payments. It sounds simple. For the most part it is. However, there are occasions when high-risk merchant accounts are terminated by the companies that issue them. When this happens, it puts the business into a critical financial situation. They are no longer able to accept credit card payments from their customer base until a solution is put in place.

The timing can make the difference of success and failure. Payment processors have a variety of reasons why they cancel accounts. It typically takes place with little or no warning. At that point, most banks and lenders become unwilling to issue the business another merchant account because they are now considered a high-risk merchant. The good news is that all is not lost. There is a payment processing partner willing and able to work with companies in this critical situation. Payment Savvy is an industry leader in high-risk merchant accounts.

Excessive Chargebacks

Payment Savvy has the resources to help restore full business operations quickly and effectively in a high-risk processing situation. When merchant accounts are terminated, the first questions that business owners and operators ask is why did it happen. One of the major reasons is due to an excessive number of chargebacks. The definition is as follows. A chargeback is the reversal of a credit card transaction that is intended to protect the consumer from fraudulent activity. The fraudulent activity can be committed by a criminal or the consumer.

The following example shows how a chargeback works. A criminal uses a stolen credit card to make an unauthorized purchase. The credit card holder realizes what has occurred after the fact. He or she disputes the charges and the chargeback is issued. The stolen goods or services are now considered a loss. The question that remains is who is taking that loss? It is definitely not the credit card holder. The merchant is held responsible, however they often lack the funds to cover the losses. If that is the case the payment processing partner is left holding the bag.

Chargebacks also occur when the credit card holder commits fraud due to buyers’ remorse. Some consumers feel guilt, regret, or embarrassment after the purchase is made. They claim that their credit card was stolen, dispute the transaction, and the chargeback is issued. Once again, the vendor is held responsible for the loss. However, if the vendor lacks the funds to cover the charge off then the payment processing partner becomes responsible. When a business loses their merchant account, due to an excessive amount of charge-offs, Payment Savvy can help through the use of a high-risk merchant account.

Health of Business

There are other reasons why a merchant account may be terminated. The business may not have enough funds in their bank account to cover the credit card transaction fees. The bank will question the feasibility of the business if this happens on a consistent basis. They have the right to terminate the merchant account at this point. Credit card processing accounts are often terminated due to lack of processing volume. If the business is not processing the minimum amount of credit card transactions, they could very well lose their account.

Payment Savvy specializes in providing businesses with the ability to accept credit and debit card payments. Please contact Payment Savvy today to review your options, apply for a high-risk merchant account, and to obtain answers to your questions. We look forward to hearing from you and working with your company.

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