In this day and age, businesses depend on credit card sales to stay afloat. If your company does business online, it needs to accept cards to ensure it’s paid for its services in a timely fashion. Your company typically needs a merchant account to accept credit cards, a line of credit that gives you access to the funds your payment processor receives from transactions.
Some businesses might have more difficulty than others getting access to a merchant account. In some cases, a payment processor might terminate a company’s merchant account. If a payment processor thinks your industry is high risk, it might hesitate to give you an account in the first place or shut it down at the first sign of trouble. Knowing why a processor might terminate an account can help you avoid it.
A payment processor might terminate a merchant account for a variety of reasons. You must adhere to your processor’s guidelines to keep your account stable and consistently processing payments. Some common reasons for merchant account shutdown include:
Keeping a healthy merchant account is imperative to your company’s ongoing success. When accounts are terminated, funds get frozen or held for 180 days — though that varies by provider. No matter how long your processor holds your funds, it affects your income. Choosing the right processor the first time is crucial to help you avoid account termination.
Having your merchant account terminated by your payment processor can disrupt your business. You can’t accept card payments without a merchant account, meaning it can be difficult to operate an online business without one. If your account gets shut down, you can take several steps to find out what happened and what you can do to reinstate your account.
After discovering that your account has been terminated, the first thing to do is to contact the payment processor to find out what happened. The payment processor might not explain the reason behind the termination unless you explicitly ask for one. Depending on the reason, you might be able to make a case for reinstating your account.
Even if the payment processor won’t agree to reinstate your account, ask it to provide you with a written statement explaining the termination. Also, verify that your information has been put on the Member Alert to Control High-Risk Merchants (MATCH) list. If a payment processor terminates your merchant account, it’s required to put your business on the MATCH list. Being on the list changes the process you go through when opening a new merchant account.
If you haven’t done so previously, it’s a good idea to log into your account portal and download your account statements for at least the past six months. Your account statements provide proof that your account was in relatively good standing until the shutdown. You can use them to demonstrate your business’s trustworthiness and reliability when applying for a new merchant account.
No matter why your merchant account was shut down, remember to be honest and professional during any interactions you have with your previous payment processor and any potential processors. If the termination occurred because of an issue with your business, own up to it and explain to any potential partners how you’ll avoid a similar situation moving forward.
Being professional means responding to any inquiries from potential payment processors promptly and providing the correct information when asked. It’s better to be upfront about your situation when you’re looking for a new account, as a payment processor can quickly discover what happened with your previous account.
As you look for a payment processor to work with, consider companies that specialize in partnering with high-risk businesses. High-risk merchant accounts provide stability to companies that would otherwise be at risk of having their accounts terminated.
When selecting a merchant account, you need to make sure you find a payment processor that knows your industry. If a company is processing payments for a retail clothing store, its risks will be different from those that process online firearms sales. Understanding the risks of your industry will play a pivotal role in selecting a provider because many payment processors will only work with certain levels of “risk.”
Your industry plays a significant role in determining your company’s risk. Any highly regulated industry with a high number of chargebacks or that frequently causes the bank to take on more challenges is considered high risk. If you find your business fitting within that classification, find a merchant account provider that can support your business.
Examples of high-risk industries include:
In some cases, whether a company is deemed high risk or not has little to do with its industry. A company with a poor credit history or high sales volume can also fall into the high-risk category, no matter what type of product or service it sells.
The best way to avoid being shut down is to make sure you choose the correct payment processor the first time. Understanding the risks of your industry will be a critical factor in determining where to place your merchant account.
If you’re in the travel industry, one of the primary risks you face is high ticket prices, which can push you over your transaction limits. If you’re in a highly regulated industry, such as CBD, firearms or vaping, violating local and federal laws can put you at risk. To keep your merchant account from getting shut down, look for a payment processor that knows the ins and outs of your industry.
Communication is the key to avoiding account shutdown. When you first sign up for your merchant account, provide the payment processor with an estimate of your monthly transaction volume and the average value of each transaction. If you anticipate hundreds of sales worth $500 or more per month, the processor needs to know that. If you tell the payment processor your sales average will be under $50, then you have a series of $500 or higher transactions, alarm bells will go off for the payment processor.
When you open a new merchant account, a proper payment processor will enroll you in “chargeback protection.” Chargeback protection can alert you to any chargebacks in process and allow you to respond to them. It can also help detect fraudulent chargebacks and reduce their occurrence.
Your payment processor should also underwrite your account correctly. The correct underwriting helps mitigate risk on your end, as well as for the banks. Processing banks love good merchants, and here at Zen Payments, we help you find the best solution for your processing needs.
When someone thinks of credit card processing, they think of Stripe, PayPal and Square. The issue many people find is that these companies only service low-risk verticals. The payment processors often have an “Instant Approval Process,” which overlooks risk. A high-risk merchant can open an account with one of the big three payment processors, start accepting payments, and a month later find out that their account has been terminated. The merchant is often left in the dark, with no understanding of why their account was shut down.
When most payment processors discover that a company is accepting payments in a high-risk space, they are going to shut you down, hold your funds and leave you without a payment solution.
The key to high-risk payment processing is finding a bank that understands your needs. High-risk banks will underwrite every account before they approve it. A high-risk payment processor investigates the merchant’s website to ensure it complies with every rule and restriction in its industry. A thorough investigation allows high-risk payment processors to keep high-risk merchant accounts active.
Zen Payments works with a network of more than 15 banks and payment processors, making it more than likely that we’ll find the right partner for a high-risk merchant. We have an approval rating of 98% and are willing to work with companies that have been turned down by other processors or that have poor credit histories.
We understand that high risk often means “high cost” for the merchants involved. We don’t think that’s fair. Zen Payments aims to provide our merchants with the best rates possible, giving their business a chance to grow and thrive.
Whether your merchant account has been suspended by a payment processor or you want to avoid having an account shut down, Zen Payments can help. We specialize in high-risk industries and businesses and will work with you to connect you with a payment processor that understands your unique situation. We also work to protect you from common issues high-risk industries face.
Contact us today to learn more about how we can support your business.