BankCardLaw - Frequently Asked Questions

Frequently Asked Questions

What is the Terminated Merchant File or TMF?

The Terminated Merchant File or TMF listed merchants whose merchant accounts were terminated for cause. Though the Terminated Merchant File (TMF) no longer exists, its name is still commonly used to refer to the MATCH file.

What is the MATCH File?

The MATCH or Member Alert to Control High-Risk (Merchants) File is a file containing merchants (and their principals) whose merchant accounts have been terminated for cause. MATCH acts as an important tool for member banks to assess risk prior to signing a merchant.

How does a merchant get listed on the TMF or MATCH?

Generally, a bank will terminate a merchant account and place the merchant on the MATCH when the account has problems that create a high risk of loss to the bank. These problems can include excessive chargebacks, violation of the merchant agreement and rules, fraud, money laundering, and excessive counterfeit cards.

Why do banks care if my merchant business is listed on TMF or MATCH?

Acquiring credit card transactions from merchants is a high volume - low profit margin business for banks. The acquiring bank's risk of loss is substantial and can escalate quickly in today's high-speed transaction environment. So, banks use the MATCH to help assess their risk in opening merchant accounts. If the risk of opening a merchant account exceeds the bank's risk tolerance, the merchant application will likely be declined.

How can I find out if I am on the MATCH File?

You can contact the bank, which terminated or declined your merchant account and inquire whether you are listed on the MATCH, including the reason & reason code for the listing.

What is a High-Risk Merchant?

There are varying definitions for "high-risk merchants." But generally speaking, a high-risk merchant transacts business in a merchant category where loss-causing events (such as excessive chargebacks) are likely to occur.

What is a Chargeback?

A chargeback occurs when the cardholder's bank (issuer) reverses all or part of a credit card transaction back to the merchant bank (acquirer). Then the merchant bank usually charges the transaction back to the merchant account and the merchant is financially responsible. Chargebacks can occur at the cardholder's request or for other reasons such as improperly processed credit card transactions.

What is a Retrieval Request?

A retrieval request or copy request occurs when the cardholder's bank requests the acquiring bank to provide a copy of the transaction receipt for a particular credit card sale. The merchant must provide this record to the acquiring bank. If a merchant does not respond to a retrieval request within a specific time period, the request can become a chargeback.

Does an Authorization Code prevent Chargebacks?

No. This is a common misconception. For many reasons, an authorization code does not guarantee payment to a merchant or prevention of chargebacks. An authorization is approval given by the card-issuing bank to validate a transaction for the merchant bank. Even with an authorization code, a chargeback can occur if, for examples, the cardholder did not receive merchandise, the merchandise is not as described, or the card was charged multiple times for the same transaction.

Why are Chargebacks a Big Deal?

Chargebacks hurt everyone. High chargeback volume (basically more than 1% of 1 month sale volume) is a particularly expensive problem. For the merchant's bank, chargebacks become a tedious diversion of resources and decrease profits due to the bank's high volume-low profit margin operating structure. Merchants too, devote a substantial amount of their time managing high chargebacks rather than operating their businesses. The card issuer's bank and cardholders with disputes also exhaust resources handling chargebacks. Chargebacks take time and cost money to process. They can indicate risk exposure for a particular merchant, lead to cardholder and merchant frustration, and ultimately cause the termination of a merchant account and MATCH listing of the merchant and its principal. Prevention of chargebacks is a major industry concern.

Why does my merchant bank hold my sale proceeds in reserve & still debit funds from my business checking account for chargebacks?

Acquiring banks can lose large sums of money if merchants have insufficient funds in their business checking accounts to cover merchant account chargebacks, credits and fees due. Rather than deposit your entire credit card sales into your business checking account, the bank holds some or all of these funds to cover risk. Banks further reduce their risk by debiting your business checking account for chargebacks, credits and fees due on your merchant account, while continuing to hold reserves.

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