Why Was My Merchant Account Shut Down?
In 2019 it was reported that people in the U.S. used their credit and debit cards to spend roughly $6.7 trillion. Many of these payments were made from merchant accounts that are now closed, the question is why did these merchant accounts get closed?
When merchant accounts are closed it can come as a surprise. It often leaves people wondering ‘what do I do if my merchant account is shut down?’
While it’s easy to start panicking, you should try to stay calm. There is normally a straightforward explanation as to why your account is shut down.
So if you’d like to learn what a merchant account is and what you should do if your merchant account gets shut down then read on.
Why Was My Merchant Account Shut Down?
It’s good to know about merchant account shutdowns in case something happens to your account. This way you can get merchant account shutdown advice.
So let’s cover some of the top reasons accounts get closed.
Suspicious Fraudulent Activity
One of the top reasons for a shutdown is because of suspicious fraudulent activity on your account. There are two ways that this can occur.
One is if you committed some sort of fraudulent activity.
Another is if there is fraudulent activity on your account that you did not commit.
Unfortunately, there are instances when your account may have been hacked or someone has got your details. An example of this is several unauthorized forced transactions or keyed transactions with a stolen credit card. In this case, your account will be shut down for the protection of the account holder until the issues are resolved.
Terms of Agreement Violated
Aside from suspicious fraudulent activity, your account can be shut down because the terms of your agreement were violated. This can be a negative thing because more than likely the processor will put you on a Blacklist called the match list. Future processors always check this list as part of the application process and if you show up on this list because of a violation of terms they will be much less likely to give you another account.
However, genuine mistakes are made, and you may have the option to get a proper investigation into your situation.
Example reasons for a violation of terms can be because an unauthorized high ticket was run through the account, your volume limit was exceeded, a merchant runs a sale for an unrelated product not approved for the account, or for several other reasons. Either way, this is something you should avoid at all costs.
Too Many Chargebacks
Another reason your account may get shut down is if you have too many chargebacks. This is probably the most common reason why accounts get shut down. Processors are required by Visa and Mastercard to make sure their merchants stay below an average of 1% chargebacks. This can be very difficult for some merchants. There are many tools you can implement to help with this. Ask your account manager at Durango for the many different tools we offer.
What Do I Do if My Merchant Account Is Shut Down?
Find Out Why It Happened
One of the first things you should do is find out why it has been shut down. This may sound simple, but knowing the reason why your account is no longer active is important.
Knowing this will allow you to proceed in trying to get your account back. To find out why your account was closed you must contact your processor and ask them about it.
Get Proof of Statements
Next, you should log in and attempt to retrieve at least six months of your credit card processing statements. You can do this by logging in to your credit card processor’s online portal and downloading them.
The main thing you are looking to present is evidence that you have a history of honest transactions including a good record of delivery, chargebacks below 1%, and refunds below 5% (compared to sales).
This will strengthen your case when you are applying for another account particularly if you have a high-risk merchant account or one that was hard to acquire.
After this, you should simply work with a processor like Durango Merchant Services to ensure that we can resolve your case. The key here is to be honest with exactly what happened so that we can get a full understanding.
If you fail to be transparent it can make things more complicated and chances are we won’t be able to help you with a new merchant account.
How to Keep Your Merchant Account from Shutting Down?
We would love to say that there is a guaranteed way that you can prevent your account from ever being terminated. Unfortunately, we can’t because there is no guarantee it won’t happen.
Many people have their accounts shut down without ever doing anything wrong. It’s quite common for people to say “I want to switch from Stripe because Stripe deactivated my account with no notice.”
The reality is that processors can close your account for anything they deem suspicious activity.
However, there are still things you can do to reduce the chances of your account being closed.
Increase Your Security
One of the first things we recommend is to be careful about who has access to your account details.
While we recommend that you don’t give it to anyone, sometimes business partners may have access to your account. For example, this can be common in the e-commerce industry. Hackers are always on the lookout for access to merchants’ accounts so the more people you give access the less security there is. You will also need to have a strong password for online accounts.
Use a captcha system on your check out page.
Criminals often will find a website without captcha and write a program to test stolen credit card numbers using your website and merchant account to determine which of the card numbers they have are valid. These programs are designed to run hundreds of credit cards through your site to see which ones they can get an approval on then use that card to buy products they can sell on other websites. Using Captcha makes it impossible for the computer programs they write to work on your site as human input is required.
Get Advice from an Expert
Getting your account closed can be a stressful experience. However, instead of wondering ‘what do I do if my merchant account is shut down?’ you can use this merchant account shut down guide.
Also, if you would like a professional to give you expert advice on your merchant account, then contact us today.