Mistakes Merchants Make

• Unauthorized Cash Advances: Making cash advances to themselves or someone else by entering credit card sales into their merchant accounts or running their personal credit cards through their MA.
• Incomplete Sales Drafts: Failure to fully complete all sales drafts submitted to their merchant bank. Those particular sales can later become chargebacks and the merchant will not get paid.
• Duplicate Transactions: Running the same card transaction through the terminal twice can lead to chargebacks.
• Accepting Expired Cards: Failing to examine the credit card expiration date could mean the merchant won't get paid even if the sale gets authorized.
• Draft Laundering or Factoring: Accepting credit card sales from another merchant can lead to MA termination.
• Minimum or Maximum Purchase Requirements: Requiring minimum or maximum fees for credit card use is a violation of the merchant agreement. A merchant can be fined for doing so and the MA may be terminated.
• Surcharge for Accepting Credit Cards: No matter what transaction fees or percentages an acquiring bank or processor charges a merchant, that merchant can not pass on those fees to the cardholder. A merchant may be fined for doing so, and the MA may be terminated.
• Split Sales Drafts: Avoiding authorization limits ("floor limits") by using two or more sales drafts for the purchase of a single item is a violation of card association rules and merchant agreements.
• Using a credit card to guarantee a check: Requesting to use a credit card to guarantee payment on a check is a violation.
• Failure to Truncate Account Numbers on Receipts: To prevent identity theft and protect cardholder privacy, card associations, and consumer protection laws generally require you to truncate (cover with xxxxx…) all but the last 4 or 5 digits of the card number on sales receipts.
• Failure to Authorize Transactions: There's no reason to complete a transaction without getting authorization from the issuing bank.
• Failure to Authenticate Transactions (Cardholder & the Card): Failing to verify the cardholder identity and to make sure the credit card and card transaction are valid.
• Not Reading Merchant Agreement: The Merchant Agreement is a legal binding contract and should be understood fully.
• Inadequate Customer Service: This opens the door to customer disapproval which can lead to returns and chargebacks.
• Unclear Merchant Descriptor on Cardholder Statement: If customers don't recognize the business descriptor appearing next to a charge on their monthly credit card statement, then there will be a higher likelihood for chargebacks.
• Little or No Use of Fraud Reduction: Assuming that a merchant account comes with automatic fraud detection services is a mistake.
• Belief that Authorization Equals Guaranteed Payement: The issuing bank's authorization of a credit card transaction does not guarantee that you will receive payment or prevent chargebacks. An authorization simply means that the card-issuing bank approves a card purchase. It does guarantee: that the card is not stolen (and unreported); that the card is not being used by an unauthorized person; or that the cardholder will not charge back the sale claiming the merchandise is not as described.
• Unreported Changes in Business: The merchant account terms are based on the information supplied in the merchant application and agreement. If a merchant opens an account for the stated purpose of card-present furniture sales, and then decides to expand and include internet based adult entertainment, the merchant must first notify the acquiring bank.
• Undisclosed Account Switching: After using merchant account "A" for a while, a merchant decides to use merchant account "B", which has lower fees. Rather than close merchant account "A", the merchant decides to run 5 sales per month through it. When merchant account "A" receives just one chargeback, the merchant then has an excessive 20% chargeback ratio. Merchant Account "A" is terminated and the business gets listed in MATCH. When the acquirer for Merchant Account "B" discovers the MATCH listing, the merchant loses Account "B" as well.
• No Due Diligence: One should investigate the business that is being purchased and any potential partners. The business may have a MATCH listed merchant account. The partner(s) coming on board may be MATCH listed and unable to open a merchant account.