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Reasons for OFFSHORE merchant account hold

If a merchant account is put on hold, the account cannot be used for a period it the investigations by the processing bank are complete. The investigations check if the agreement was breached and makes a ruling whether to terminate or reinstate the account.

There are several reasons as the why a business is found violating the service agreement. By finding these reasons, one can try avoiding the mistakes which lead to a merchant account being held. Following are a few reasons which lead to merchant account holds:

-       Excessive Chargebacks – the processing banks take chargebacks very seriously. Excessive chargebacks is one of the main causes for merchant account closures and holds. A general misconception with regard to chargebacks is if a chargeback is won it will not be charged against the trader. However, this is not the truth. If a merchant wins or loses a chargeback case, the trader will face a chargeback. Too many of these chargebacks will cause merchant account holds or closures. A superior offence is the best possible defence against a chargeback. A trader needs to be upbeat to stop a chargeback before it occurs. Also, it is necessary to have a prevention plan for chargebacks.

-       Processing more than the declared average ticket and processing volume – While applying for merchant accounts, it is necessary to declare the average processing volume for each month and the average ticket. Most of them forget these figures after the start processing, but it remains with the processing banks. These 2 figures not just a formality. In case processing is carried out more than the average ticket or declared volume, it could lead to merchant account holds or termination of merchant accounts.

-       Using merchant accounts for accepting imbursements for other trades – A merchant account is given to an individual or a business for the use of that unit only. It is strictly prohibited to accept imbursements for another business or person. Once this behaviour is detected, it is a certainty that the account will be terminated.

When suspicious behaviour is detected during processing, it becomes another lead cause for a merchant account being held. It is tough to come out of this situation as these are applied by processing banks with no notice given to a merchant. Merchants usually realise that their merchant account is put on a hold while charging credit cards or when the sales made from credit cards are not being deposited on the ledger of the checking account. To prevent holds that happen due to doubtful processing activity, one has to avoid behaviours which lead to the triggering of fraud alerts. There are a few guidelines that need to be followed while processing transactions. If these are followed, the triggering of alerts could be avoided. If an account gets held, then there is nothing much that can be done, expect focusing on controlling the damage. It is also advisable to seek legal help from a lawyer who is a specialist in bankcard laws.

Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.