By Ken Musante
Napa Payments and Consulting
Before boarding a merchant and as part of the underwriting process, all acquirers must query the Mastercard Alert to Control High-risk Merchants (MATCH) system, which confirms for acquirers whether the merchant applicant has been previously terminated for cause.
Similarly, if an acquirer terminates a merchant for one of the MATCH reasons, the acquirer is obligated to add the merchant to MATCH. Thus, potential future acquirers will be aware of the merchant’s actions and status, and this will help keep bad actors out.
There are 13 MATCH reason codes. Some of the reasons are technical and binary such as 02-Common Point of Purchase; others are more subjective such as 04-Excessive Chargebacks and 03-Laundering.
Like a bad tattoo, MATCH will follow the merchant, principal and guarantor for five years. Removal from MATCH is rare, expensive and difficult. And merchants placed on MATCH face extreme difficulty in obtaining merchant accounts, as well as a significant increase in their processing fees if they do obtain one.
Merchants and payment professionals should understand the MATCH system, the MATCH reason codes and how to maintain compliance with their merchant accounts to avoid being added to MATCH.
It is important to stress that acquirers are obligated to add a merchant to MATCH if, at the time of termination, the acquirer has reason to believe that a MATCH condition exists. So while all acquirers are subject to the MATCH rules, some MATCH conditions, as I pointed out previously, are more subjective than others.
For example, Reason Code 03-Laundering is described as the merchant was engaged in laundering activity. Laundering means that a merchant presented to its acquirer transaction records that were not valid transactions for sales of goods or services between that merchant and a bonafide cardholder.
In most cases, laundering is self-evident but, at the margin, there are cases in which one acquirer defines "not valid" differently than another acquirer does. Likewise, I have seen acquirers define Reason Code 04-Excessive Chargebacks and Reason Code 10-Violation of Standards differently.
The MATCH system is designed to help acquirers make optimal decisions in adjudicating a merchant. The MATCH system checks many different fields, including the merchant name, principal(s), DBA, phone number and address. MATCH also compares both phonetic and actual spellings.
Through the inquiry process an acquirer compares a pending merchant with MATCHed merchant data as well as any other inquiries pulled during the past 360 days. In this way, an underwriter knows whether a merchant was MATCHed and how many other acquirers recently reviewed an application from that merchant.
In addition to providing critical information at the time of the underwriting decision, the MATCH system issues retroactive MATCHs if an acquirer queries the MATCH system and the specific merchant queried is added to MATCH by any acquirer within one year of the inquiry.
When merchants' accounts are closed for cause and MATCHed, merchants are sometimes not aware they were placed on MATCH and only learn of this when they apply for a subsequent merchant account and are declined. Should this occur, to investigate further, the merchant should ask for the acquirer or Interbank Card Association number (ICA) for the acquirer who added the merchant, the date of the placement, and the reason code.
Merchants and their sales professionals should clearly understand the requirements placed upon them through their merchant agreement. They should respect and follow those requirements and maintain open communication with their acquirer through the life of their account. When closing, they should verify they are being closed in good standing so as to avoid any mis-MATCHed-understanding.
As founder of Humboldt Merchant Services, co-founder of Eureka Payments, and a former executive for such payments innovators as WePay, a division of JPMorgan Chase, Ken Musante has experience in all aspects of successful ISO building. He currently provides consulting services and expert witness testimony as founder of Napa Payments and Consulting, www.napapaymentsandconsulting.com. Contact him at firstname.lastname@example.org, 707-601-7656 or www.linkedin.com/in/ken-musante-us.
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