Why Was My Merchant Account Shut Down? What Should I Do Next?

Getting you set up to process credit cards is likely a top priority following the shutdown of your merchant account. You certainly can’t conduct business without accepting payments! Fortunately, helping merchants who have been recently terminated is our specialty. Depending on the reason for termination, getting your merchant account approved with another processor can be tricky and require professional help! 

Here are a few suggestions for things you should do if your merchant account gets shut down to better your chances of getting approved elsewhere ASAP! 

business women worries about merchant account being shutdown

Know The Warning Signs Before It’s Too Late 

We may be preaching to the choir, but there are several red flags before your account gets shut down that you can look out for to avoid a complete shutdown of your account. These signs include processing freezes, high numbers of declined transactions, high numbers of chargebacks or merchant account audits. If your account is facing one of these issues we recommend contacting your processor immediately. They should be able to give you tools and ideas to combat some of the issues before they become more serious problems. 

Chances are though, if you’re reading this article, it’s too late! Read on for our top tips if your account has already been shut down.

Possible Reasons Your Merchant Account Was Closed

So your credit card processor terminated your merchant account? Now what? The only way to know for sure why your account was closed is to reach out to your processor directly. Most processors will send you a written notice via mail or email explaining the reason for your account closure. Here are a few of the reasons processors and banks terminate merchant accounts:

Violated Terms Of Agreement

When you were approved for a merchant account, you submitted specific guidelines that you agreed to process within. These guidelines include a volume limit, high ticket item amount, certain industry requirements, etc. It is your responsibility as the merchant to notify your processor prior to processing above the agreed upon limits. Essentially a merchant account is a line of credit. Banks need to know how much risk they are taking on before hand. 

Chargebacks

Too many chargebacks is likely the most common reason for account closure. You should always aim to keep your chargeback rate below 1 percent if possible. We have many blog posts about chargebacks, what they are and how to avoid them, but if you are struggling with chargebacks, we invite you to contact us. We have several tools that can help you mitigate the amount of chargebacks you get and the damage they do. 

Read and learn more…
Common Reasons For Chargebacks
8 Ways To Prevent and Manage Chargbacks 
Visa & Mastercard’s Chargeback Protection
Fraud Protection Options

Suspected Fraud

Since banks are always trying to mitigate risk, they consider many different things as potential fraud including a high number of keyed in or forced transactions.  Since fraudsters can steal credit card numbers easier than they can steal the card itself, keyed in transactions like the ones used for most online businesses carry more risk that in person transactions. If you anticipate a high number of keyed transactions, it helps to let your processor know ahead of time.

Also, make sure you are always delivering the goods or services that you put on your original merchant account application. Selling items that are different then what was originally advertised can not only get your account shut down, but also get your account blacklisted in the future.

Industry Risk

You Could Now Be Considered A High Risk Merchant 

There are many reasons you may need a high risk merchant account from the start of your business including personal financial history, or industry reputational risk. However, now that your account has been shut down, you are almost certainly in the high risk category. Banks take financial and business history into account when approving accounts. They will be able to see your prior termination reasons. For that reason, you will want to specifically seek out a high risk processor that can anticipate your needs and help you navigate the tricky application process. 

There’s good news! A high risk merchant account comes with many benefits once approved. These benefits include less risk of account termination, more fraud and chargeback protection and a more thorough set up process. Once approved for a high risk merchant account, there’s much less chance you have trouble in the future.

Steps to Take After Your Merchant Account Is Terminated

1. Call your processor and ask why your account was closed.

Be kind and professional, but you’ll want to get as much information as possible. If possible, get a written statement listing the termination reason as this will aid in getting placed with a processor elsewhere. Clarify if your business has been put on the Match List as well.

2. Log into your merchant account portal and save at least six months of processing statements.

Banks and processors like to see a history of honest transactions with a good record of delivery, no chargebacks, no refunds, etc. Your next processor will be able to take a look at these statements to estimate your odds of getting approved elsewhere. These will also come in handy when demonstrating reliability to your next processor.

3. Be honest, professional and compliant.

We’ve worked with hundreds of high risk merchants around the world. Many of them we have been able to place with reliable processors and fair rates. However, we (or any other potential processor you decide to work with) will need to know honestly why your account was terminated in order to help you. At this point, there is no reason to lie to us or any future processing banks regarding your termination reason. In fact, giving false information could lead to more distrust from processors and a worse rate or contract in the long run. Again, lying about whether you have been placed on the TMF Match list is a waste of everyone’s time as the processing bank will find out in the long run.

Prompt responses and complete paperwork shows potential processors that you’re professional and serious about your business and your account. State and federal regulations can make the process seem slow and arduous, but working with a trained high-risk payment professional can help expedite the process. Plus, once you’re approved, it’s important that you operate under the guidelines of your merchant account including your approved processing volume, ticket amount, etc.

 

It May Be Time To Get Professional Help 

Having your merchant account shut down unexpectedly can be overwhelming and stressful. 

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