High-Risk Merchant Accounts and How to Get Off MATCH

If you have been labeled as a high-risk merchant, it can feel pretty close to being blacklisted when it comes to managing your merchant account. You may be denied, get higher fees than you used to, and essentially have a huge label on your back for processors to watch out for. There are many ways that businesses end up as high-risk, and it may not even be through any fault of your own. Keep reading to learn more about high-risk merchant accounts, how you may have become high-risk, and how to become low-risk by getting off the MATCH List.

What is a High-Risk Merchant Account?

According to Nerd Wallet, a high-risk merchant account is required if a business with a greater risk of fraud or chargebacks — or with certain other characteristics — wants to accept card payments.

How Did I Become High-Risk?

There are several ways a business can become high-risk. One of them is being in an industry that many processors consider to be inherently high-risk and generally avoid working with. Some of these industries include:

• Adult industry
• Debt collectors
• Electronics stores
• Firearms sales
• Furniture stores
• Gambling industry
• Multilevel marketing businesses
• Online dating
• Some e-commerce
• Tobacco sales
• Vacation planners

Another reason you may have been labeled high-risk is because your business has been placed on the MATCH List. There are 13 reasons you may have been placed on this industry blacklist, which warns processors about high-risk businesses. The 13 reasons include:

1. Account Data Compromise: An occurrence that results, directly or indirectly, in the unauthorized access to or disclosure of Account data.
2. Common Point of Purchase (CPP): Account data is stolen at the Merchant and then used for fraudulent purchases at other Merchant locations.
3. Laundering: The Merchant was engaged in laundering activity. Laundering means that a Merchant presented to its Acquirer Transaction records that were not valid Transactions for sales of goods or services between that Merchant and a bona fide Cardholder.
4. Excessive Chargebacks: With respect to a Merchant reported by a Mastercard Acquirer, the number of Mastercard chargebacks in any single month exceeded 1% of the number of Mastercard sales Transactions in that month, and those chargebacks totaled USD 5,000 or more.
   1. With respect to a merchant reported by an American Express acquirer (ICA numbers 102 through 125), the merchant exceeded the chargeback thresholds of American Express,as determined by American Express.
5. Excessive Fraud: The Merchant effected fraudulent Transactions of any type (counterfeit or otherwise) meeting or exceeding the following minimum reporting Standard: the Merchant’s fraud-to-sales dollar volume ratio was 8% or greater in a calendar month, and the Merchant effected 10 or more fraudulent Transactions totaling USD 5,000 or more in that calendar month.
6. Fraud Conviction: There was a criminal fraud conviction of a principal owner or partner of the Merchant.
7. Mastercard Questionable Merchant Audit Program: The Merchant was determined to be a Questionable Merchant as per the criteria set forth in the Mastercard Questionable Merchant Audit Program (refer to section 8.4 of this manual).
8. Bankruptcy/Liquidation/Insolvency: The Merchant was unable or is likely to become unable to discharge its financial obligations.
9. Violation of Standards: With respect to a Merchant reported by a Mastercard Acquirer, the Merchant was in violation of one or more Standards that describe procedures to be employed by the Merchant in Transactions in which Cards are used, including, by way of example and not Cardholders, minimum/maximum Transaction amount restrictions, and prohibited Transactions set forth in Chapter 5 of the Mastercard Rules manual.
   1. With respect to a merchant reported by an American Express acquirer (ICA numbers 102 through 125), the merchant was in violation of one or more American Express bylaws, rules, operating regulations, and policies that set forth procedures to be employed by the merchant in transactions in which American Express cards are used.
10. Merchant Collusion: The Merchant participated in fraudulent collusive activity.
11. PCI Data Security Standard Noncompliance: The Merchant failed to comply with Payment Card Industry (PCI) Data Security Standard requirements.
12. Illegal Transactions: The Merchant was engaged in illegal Transactions.
13. Identity Theft: The Acquirer has reason to believe that the identity of the listed Merchant or its principal owner(s) was unlawfully assumed for the purpose of unlawfully entering into a Merchant Agreement.

What is the MATCH List?

MATCH stands for Member Alert to Control High-Risk Merchants and is a merchant blacklist previously known as the Terminated Merchant File (TMF). According to BankCardUSA, it was created by MasterCard, and it’s a central resource for acquiring banks, also known as merchant service providers, to flag businesses who have had merchant accounts closed for a variety of reasons, including excessive chargebacks, excessive fraud, PCI non-compliance, closing an account with a negative balance, illegal activity, or otherwise violating credit card processing agreements.

When you have been placed on the MATCH List, you remain there for a period of five years until you are aged out. During this five-year period, you cannot use your low-risk merchant account. You will need to either find another way to accept payments (such as becoming cash-only), or sign up with a high-risk merchant processor who will accept you. The consequences of being on the MATCH list are devastating, and many businesses cannot survive the five-year waiting period. Luckily, you can get early removal with professional help from TFM Law.

What is the Difference Between High-Risk and Low-Risk?

If you have been labeled as a high-risk merchant, you are going to run into a host of issues that low-risk merchants do not face.

Some of the issues of being a high-risk merchant include:

• Higher fees. Not only do high-risk merchants pay almost double the processing fees for each transaction that low-risk merchants do, but they will also pay higher chargeback fees and higher annual fees that quickly can eat into profits.
• Longer contracts. It can be difficult to get out of a contract with a high-risk processor since their business model makes so much money on fees.
• Early termination issues. If you are able to get off of the MATCH List early and want to go back to a low-risk processor, you will be hit with hefty early termination fees and contract issues that you may not be able to get out of.

Why Do I Need a Merchant Account?

Wondering why you even need a merchant account in the first place? According to Forbes, a merchant account is a type of business bank account that allows businesses to process electronic payments such as debit and credit cards. The merchant account acts as the middleman between the swiping of the card and the deposit of the money into a business account. It allows businesses to receive the money for transactions immediately instead of waiting for the customer to pay their credit card bills.

If you want your business to accept credit and debit cards, you will need a merchant account. A merchant account is a necessary intermediary drawing funds between your customer’s bank accounts and depositing those funds into your business’s bank account.

Become Low-Risk and Get Off MATCH List with TFM Law

If you have found yourself on the Match List, we can help you. The Law Offices of Theodore Monroe focuses on litigation and counseling in the areas of payments, credit card processing, e-commerce, direct response marketing, and Federal Trade Commission enforcement. Last year the firm got 100% of the people who came to us off the MATCH list.

Theodore F. Monroe, Founder of TFM Law, has successfully:

• Represented merchants recovering funds from processors
• Structured processing relationships to comply with Card Brand requirements
• Drafted and negotiated contracts involving payment facilitators and ISOs
• Represented continuity merchants in compliance and litigation issues
• Fought for numerous companies in suits brought by the Federal Trade Commission and obtained excellent results for firms in the digital products, loan modification, government grant, and nutraceuticals industries

Before opening his firm, Mr. Monroe practiced law with Crosby, Heafey, Roach & May (now Reed Smith LLP) and Lewis, D’Amato, Brisbois & Bisgaard (now Lewis, Brisbois, Bisgaard & Smith), where he defended numerous accounting and law firms in professional liability actions, and insurance carriers in bad faith actions.

Before becoming a lawyer, Mr. Monroe worked as a forensic accountant at Coopers & Lybrand, which provided him a background in forensic accounting and financial analysis that is unique among litigators in Los Angeles. Mr. Monroe studied at Duke University Law School, achieved a BS with Honors, Accounting, University of Kentucky, and is a member of the California State Bar and the Kentucky State Bar.