By Sarah Zilenovski
It's a worst-case scenario for a small ecommerce merchant: the business experiences a rise in chargebacks, so the acquirer terminates the merchant account and adds the business to the MasterCard Alert to Control High-risk Merchants (MATCH) list. For the next five years (unless a merchant can prove the business doesn't belong on the list) the business will be flagged as high risk to merchant account providers. That can make doing business more difficult and more expensive.
To recover, a merchant will need to find an account provider willing to work with him or her, as well as bring the chargeback ratio down to an acceptable risk level. Whether a business is trying to avoid MATCH status or working to cope with it, comprehensive payments-fraud controls are crucial.
For those new to the payments industry, MATCH, formerly known as the Terminated Merchant File list, is also sometimes called the Member Alert to Control High-risk Merchants. The list is maintained by MasterCard Worldwide and also used by Visa Inc. processors and other networks to screen potential merchants before allowing them to open an account.
Many low-risk providers won't do business with merchants on the MATCH list. These merchants often must work instead with high-risk specialist account providers that charge more in transaction fees to cover their potential higher expenses.
If one of your merchant customers is placed on the MATCH list, the merchant needs to know why it happened before he or she can address the situation. Excessive chargebacks are the primary reason merchants are put on the list, although there are a dozen other reasons that can also result in a merchant landing on MATCH, including data compromise, merchant fraud convictions, money laundering, bankruptcy, and Payment Card Industry Data Security Standard noncompliance.
The exact figure may vary by network and acquirer, but a chargeback ratio higher than 1 percent can trigger warnings, account closure and MATCH listing.
If chargebacks are the reason for a MATCH status – or if a business isn't on MATCH but its chargeback ratio is rising – the merchant must understand why the business has so many chargebacks. Inadequate product descriptions, shipping problems or unfamiliar descriptors on credit card statements can spur chargebacks. Typically, though, the main reason is fraud. That can come as a surprise to owners of small or new businesses.
If you think professional criminals only go after big merchants, think again. Fraudsters go for the easiest targets. That includes new merchants who are just getting started and don't yet have fraud protection in place, and small merchants who may have some fraud protection but not a comprehensive program.
In addition, all U.S.-based card-not-present (CNP) merchants are currently at elevated risk for fraudulent chargebacks as criminals move away from POS fraud, and CNP fraud levels increase overall in the wake of the October 2015 EMV liability shift.
Most small-business owners take it as a matter of course that they need a CPA to prepare their taxes and a payroll company to administer employee pay and benefits. These professional services save merchants time and help to maintain compliance with government and bank regulations.
Many of these same merchants try to handle some or all of their fraud prevention in-house, with varying results. Working with fraud experts can reduce chargebacks and help merchants comply with chargeback-ratio standards set by acquirers and card networks.
If one of your merchants is on the MATCH list due to fraudulent chargebacks – or is experiencing an increase in chargeback fraud that's bumping up the chargeback ratio – it's important to help that merchant put a comprehensive fraud-prevention program in place. This will demonstrate that the merchant is taking measurable steps to reduce the chargeback ratio to an acceptable level. Companies are available to help with this. With a little research, your merchant customer could be back in good standing once more.
Sarah Zilenovski serves as Marketing Manager at ClearSale, where she is part of the founding team of the ClearSale U.S. branch. Email her at firstname.lastname@example.org; follow her on Twitter @ClearSaleUS
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