BANKS ARE CONCERNED ABOUT MERCHANTS PAYING THEIR FEES
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Due to recent events, the economy is in a fragile state across the globe leading to a period of hardship for many businesses. It has also spurred a surge in chargebacks, refunds, and disputes as events, travel, and service-based industries are forced to cancel and/or delay their services. Due to this, a large number of businesses are unable to pay their fees to their banks. An increase in chargebacks and the inability to pay fees are rightfully concerning to a bank because they signal that a business is becoming high risk. All of this is wreaking havoc on business owners’ ability to obtain and maintain merchant accounts.
To understand this, you must know the following: There is 6 month time period that consumers have to dispute charges. Disputes result in chargebacks that the merchant is ultimately responsible for. However, if the merchant’s business closes down, they are no longer available to pay chargebacks so the liability falls to the merchant account provider.
Banks do not want to be responsible for paying a company’s “leftover” chargebacks if they end up going out of business. To hedge against this scenario, account providers often implement holds or freeze accounts to ensure that they have access to your money in the event that your business closes down and you have outstanding chargebacks. In mid-March, 2020, one of the largest credit card processing companies in North America did just that and isolated FIFTEEN different industries to start holding 10% of their money moving forward.
Learn the steps you can take from our guide: Avoiding Merchant Account Issues When Banks Are Scared (by COVID19) – 2020
WHAT’S YOUR NEXT STEP?
If your business has been processing over $250,000 a year, you need to be working with the right banking partners. Let our team of Certified Payment Specialists support you by assessing your current situation.
Do you have the right providers? Do you have enough merchant accounts?
We want to make sure you’re working with providers that understand your model – and that your accounts are structured properly. Just complete our 10-minute application here, or call us at: (800) 805-4949.