or merchants, processors and ISOs/merchant level salespeople (MLSs), entering into a new banking relationship in the acquiring business is a lot like going trick or treating on Halloween; they never know if they will walk away with a goodie or a MATCH listing "trick."

The MATCH is the Member Alert to Control High-risk merchants list. I do very little MATCH list work, because I prefer to focus on ISO agreements, financings and purchases. But some MATCH list stories are too good not to share with readers.

Make no mistake; most people who are on the MATCH list probably belong there. As most readers are aware, MasterCard International maintains the MATCH list, and the card Associations use it to keep their member banks informed as to who may have committed fraud or materially breached Association rules or an ISO or merchant agreement.

To be fair, the Association rules clearly state that a MATCH listing does not prevent a member from providing services to the listed entity.

However, seasoned participants in the business will tell you that the MATCH list is a de facto obstacle to obtaining merchant services or participating in the merchant services business.

In fact, a number of banks and processors will tell you in clear terms that they do not service merchants on the MATCH list.

For the Halloween season, I thought readers might find it interesting, or gruesome, to read some anecdotes of the most horrific MATCH listings I have witnessed over the past couple of years.

I omitted the names of the specific banks and merchants to avoid unnecessary embarrassment. The purpose of this column is to encourage all readers, associated with financial institutions or otherwise, to reflect on the merits of the MATCH list as it is currently being used.

Listed Because of Faulty Bank Software

An online merchant with annual sales totaling more than $1 million dollars asked its processing bank for software to assist in fraud screening.

The merchant had a total of 12 chargebacks during the previous three years(probably a record for an online merchant).

The bank's software proved incompatible with the merchant's business operation. The merchant wanted a refund of the $500 software license fee. While haggling over a refund of the software fee, the bank received a chargeback on the merchant's account for $2,000.

The merchant told the bank's relationship manager that it would not pay the chargeback until they had settled the software license fee dispute. The bank eventually agreed to refund the software license fee. The merchant then paid the chargeback.

Not surprisingly, the merchant terminated its relationship with the bank. Upon signing up with a new bank, the merchant learned that the outgoing bank placed it on the MATCH list.

This example shows a listing of an exemplary merchant because of poor relationship management by the bank over a $500 software license fee. The bank lost a good customer and the merchant almost lost its business because of a rush by the bank to list the merchant on the MATCH list.

Listed Because of Faulty Network

A merchant processed for a year or so with a bank with more than a couple of million dollars per year in volume. The merchant was in the practice of sending its transaction information to the bank in batches, one month at a time.

At the end of a given month, say October, the merchant sent the transaction information for that month, but the network provider did not deliver the information to the bank on time.

As a result, at the end of November, the bank received two months' worth of transactions from the merchant.

The merchant had an annual processing volume quota with the bank. Unbeknownst to the merchant, the bank chose to interpret the annual volume to also include a monthly volume quota, being 1/12 of the annual quota.

>From the point of view of the bank, the merchant had done no processing in October and twice its typical monthly volume in November.

The bank terminated the merchant relationship and froze its current bank account, effectively putting the merchant out of business.

In an effort to pay its suppliers and stay in business, the merchant tried to access its frozen funds at the bank. The bank placed the merchant on the MATCH list.

In this instance, the bank was in error. Not just for being unreasonable about the listing, but also for violating its own 30-day notice provision on any MATCH list record.

Dear John Listing

A merchant with a little less than $1 million dollars of processing per year decided to terminate its merchant agreement with a bank in conformity with the terms of the merchant agreement.

The merchant had no unusual chargebacks or fraud issues. The bank held ample reserves to cover its liability going forward. The bank entered the merchant on the MATCH list. This kind of "adios" listing is not uncommon.

To be fair, I want to state again that the majority of MATCH listings are likely justified, and keeping those bad apples out of the system is good for all concerned.

Nonetheless, when it comes to unjustified listings, I believe capitalists in the old communist-based U.S.S.R. received better treatment than American merchants wrongly listed on the MATCH list today. To prove this point, and based on my experience, it has been the normal practice of member banks to:

• Not provide merchants with the opportunity to challenge a listing before or after it's made
• Not inform merchants when and why they are listed
• Not inform merchants for how long a MATCH listing will remain in effect
• Not inform merchants when they have been de-listed
• Not show merchants a copy of the listing log.

Without diminishing in any way the effectiveness of the MATCH list, addressing the above issues would be a simple and effective way for the card Associations to introduce a measure of justice into the MATCH list system.

I hope readers will not interpret this column as a plea on behalf of the many scoundrels in this business. On the contrary, this is a plea for a measure of easy-to-implement justice for the good guys out there, both off and on the MATCH list.

Short of a major fraud issue, an unjustified MATCH list record is perhaps the greatest disaster that can befall a participant in this business. I hope that in the near future the beginning of a merchant relationship with a bank will resemble less "trick or treating" and more a polite agreement between two upstanding and well meaning businesses.

In publishing The Green Sheet, neither the author nor the publisher is engaged in rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. For further information on this article, please contact Adam Atlas, Attorney at Law by e-mail: atlas@adamatlas.com, or by phone: 514-842-0886.