As frustrating and disruptive as they can be, payment processing-account freezes, suspensions and, yes, even terminations, are not altogether uncommon for even the most discerning ecommerce merchants.
All online enterprises experience their share of hiccups where payments processes are concerned, but the following suggested precautions may help minimize the frequency and - most important - the severity of any interruptions to your business' cash flow.
Avoid big surprises
Whether your payments are being processed through an account aggregator such as PayPal or Stripe, or through a merchant account-services provider, the account was most likely activated on the basis of some fairly specific expectations around the volume of payments your business would be generating. Another prequalifying condition was probably identifying the nature of the business from which your payments would originate.
Therefore, unexpectedly dramatic shifts in the volume of inbound payments, as well as any significant alterations to the agreed-upon line or lines of business conducted will understandably raise the eyebrows of account aggregators or service providers. Neither event is a necessarily negative occurrence - in fact, a significant spike in sales is definitely a positive thing - unless it catches the account aggregator or services provider by surprise.
The simple solution, then, is to try to anticipate these scenarios and communicate them to your payments-account partners ahead of time. Unfortunately, by not doing so, the merchant may be the one in for a surprise when the account is put on hold - or worse - until things are sorted out.
New opportunities require new payments accounts
Many merchants launch a new business with a payments-processing account and, after some success, expand and explore other opportunities in unrelated lines of business. Because the merchant views this new venture or ventures merely as an extension of the original ecommerce enterprise, he or she will often start processing the new payments through the original account.
Understandably, the payments-processing industry has a different perception of things, and attempts at this behavior will be seen in a negative light and treated accordingly. Once again, any potentially disruptive consequences may be avoided by initiating open, honest dialogue with your payments-account partners before action on their part becomes necessary, but in all likelihood their recommendation will be to open new accounts for all new business ventures.
Treat high-risk payments separately
This brings up another common scenario in which the new venture involves a line or lines of business for which account aggregators and services providers designate greater risk of chargebacks and fraud than other types of business. These high-risk fields include online dating, gambling, adult entertainment and others through which many merchants have experienced great success.
Payments-account professionals, however, treat these businesses as altogether separate entities, and many aggregators and even some services providers will not take on the added risk of fraudulent charges. Attempting to add these types of payments onto an existing account is sure to invite negative repercussions, but there are an increasing amount of highly qualified account-services providers that specialize in high-risk payment processing needs if that's a path you choose to explore.
Expect the unexpected
Despite merchants' best efforts to provide exactly what their customers want, chargebacks are an unavoidable part of the ecommerce industry. Unfortunately, to a lesser extent, so is fraud - regardless of the level of risk assigned to the business you conduct.
Any level of frequency of either chargebacks or fraud has the potential to attract attention from account aggregators and service providers - even to the point of disrupting your business without warning. With respect to chargebacks, merchants may help keep the occurrences to an acceptable level by ensuring that their product and services descriptions are crystal clear, as are their shipping and delivery policies and their refund policies.
Additional protocols for online checkout procedures that can limit the amount of chargebacks, as well as fraud, include using an address-verification system, a billing descriptor, card-verification data and ensuring that your business accepts EMV cards. Finally, also be sure that your business' name, address and contact info appear clearly on the receipt; the first reason being that the customer will be more likely to contact you, the merchant, directly if there is an issue, and second, because many chargebacks are the result of customers seeing an unfamiliar business name from what they are expecting on the receipt.
About the Author: Jared Ronski is co-founder of MerchACT and works with merchants globally to ensure they are paired with the right merchant account for their specific business needs. He has worked closely with higher risk business models and has provided companies of all sizes with payment processing solutions.
