Processing Problems
The System is Down
Credit card acceptance relies heavily on computer technology. Computer systems can malfunction or "crash." The result is either a short or long term inability to process card transactions. Computer crashes are an inevitable fact of business life. Proper contingency planning can reduce the side effects of this problem and minimize resulting damage to a merchant's business.
Incompatible Processing Structure
Suppose a business sells specialty juicers via telephone orders. The owner then begins to drive sales by implementing a vigorous advertising campaign. When the owner runs the advertisements every two or three weeks the merchant's credit card sales skyrocket!
If the merchant's bank and processor are unfamiliar with this type of business, they may see the periodic, large sales increases as a "red flag" for risky behavior. To reduce their risk of losing money, the bank or processor could hold some or all of the merchant’s sales income in "reserve." Some banks and processors will immediately de-activate the merchant's card terminal and terminate the merchant account.
Changes in Acquiring Bank Policies
The acquiring bank that maintains merchant accounts may change its policies. The change in policy can be for any number of reasons. Perhaps the acquirer has decided it can no longer retain certain types of merchants (i.e. high-risk merchants). The acquirer may sell all or part of its merchant portfolio. Indeed, mergers and acquisitions occur frequently in the bankcard industry and often result in policy changes.
Descriptor Problems- an Identity Crisis
When the cardholder receives the monthly statement, each listed charge identifies the merchant using a descriptor and the merchant's customer service phone number. A flaw in this routine billing procedure can have a profound effect on one’s merchant account. If a customer does not recognize a descriptor on his or her statement, he or she may file a dispute and chargeback the transaction, resulting in a chargeback fee to the merchant of $15. Therefore, it is important when filling out the merchant application to always make sure that the DBA of the business is one that will be recognizable to the customer. Excessive chargebacks can lead to the termination of a merchant account.