Monday, November 4, 2013

Are You Aware of Risks in Merchant Accounts ?

Most merchants are not aware of the risk and liability involved in accepting credit cards as a form of payment. Oh….not the risk and liability on the part of the MERCHANT, but the risk and liability on the part of the processor and underwriting banks. A business owner can’t understand why a specific transaction can suddenly be suspended and/or not funded within normal processing times. Most of the time funding is held because a specific transaction is outside of the normal processing guidelines set by the processor, outside of the usual processing habits of a specific merchant, outside the usual practices of a specific cardholder, and/or not within the processing guidelines of a card issuing bank. Now THIS is when, who you process with, makes a HUGE difference. If you’ve obtained your own merchant account through normal application processes, AND you know who your agent and processor are, you will be contacted about the transaction in question. With a legitimate processor, you will have a human being to speak to via a phone or many times in person. You will have an advocate to work on your behalf to answer all of the questions the underwriters or banks may have; to get any required backup documentation, and get the funds released as timely as possible. This process could take 1 -14 days to resolve. Merchants who are gravitating to the large conglomerates who have decided to call themselves processors, will find it very easy to sign up for the ability to process; often without any application or cost involved. Sounds great doesn’t it? Well, it possibly is until the first time your equipment doesn’t work or your funds are held because of a possible risk to the processor, underwriting bank, or issuing bank. First, the merchant will usually NOT be notified of the fund holding. A merchant will eventually realize their funding is too low and can’t figure out why. They have no manager or agent on their account so they can only try to contact the processor. If you’re processing with a company such as The Square, you will find they have no customer service department so you can’t call to find out what happened to your money. You can email or Tweet, but your wait time for each response is 24-72 hours. You are also not brought in as part of the resolution to the issue; you are told to wait until they can research the transaction in question. If you process with a company such as PayPal, you will be able to call in and speak to a different hourly customer service rep each time you look for answers. Again, they won’t know much, won’t act as your advocate, and will tell you to wait until they have researched the transaction. This process with the FREE programs such as the Square and PayPal can take from 30-180 days to be resolved ! When choosing who you entrust your company’s credit card processing to, always do your homework. FREE should never be a reason to do business with a company. Understand what you’re getting into. Know who you are working with. Make sure you can contact your processing manager and/or processor when YOU need them. Always confirm that you have multiple means of contact; always including phone contact. Question the processor so you understand how they maintain their risk and liability and how it will affect your company’s money flow. If a salesperson ever says it can never happen with their merchant account, RUN!!! It can always happen with every merchant account. The difference is who works for you, what your options are, and how long their process will take. A good processor will educate you on your risk control to minimize any delay in funding of your transactions. If you don’t receive that education, then you’re with the wrong processor.

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