Confessions of A Banker

CONTENTS
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Page 35
Page 38
Page 41
Page 57
Introduction
First, let’s clear the air - payment processors and merchants are on
the same team. Processors want your business to thrive, safely,
because they profit from your success. To grow a healthy business,
payment processing and e-commerce should go hand-in-hand.
Yet, just about every business owner who wants to scale their
business has, at some point, had a payment processor problem.
Why is this? In the following pages, we will break down everything
e-commerce entrepreneurs need to know about payment processing
so they can grow their business in a safe, consistent manner.
CHAPTER 1
THE BASICS: WHAT IS PAYMENT PROCESSING?

Payment processing is the electronic transaction of payment for goods or services.
This transaction is between the merchant (the business owner) and the customer
buying the product or service. The technology processes, verifies, and accepts or
declines credit card transactions with the assistance of specialized hardware and
software on your selling platform.
Who is Involved in Credit

Card Processing?
The Issuing Bank The BankCard Brands
Every one of your customers has a Visa, MasterCard, Discover, and
bank that provides them with the tools American Express are the four major
to make payments with a card. For BankCard brands. Most business
example, those who bank with Chase owners are surprised to learn that the
might receive a debit or credit card - BankCard brands are in charge of the
this is what the issuing bank provides banks and processors. Every bank and
their customers to make payments. processor must adhere to the rules
Likewise, Wells Fargo issues a card to
Li that are
a set by these card brands,
its customers and takes all of the ultimately giving them power over
interchange fees charged by the practically every online transaction.
BankCard brands with every These companies work with
transaction. governments to determine the rules
around card use, acceptance, and
security while also managing
interchange rates. Interchange rates
inte
are the same for every processor and
bank.
CHAPTER 2
PROCESSING PAYMENTS AND PRICING MODELS

A payment processor is the money mover. They transfer the payment information
between the necessary banks and the card brands. Businesses are connected to the
processor through either the payment hardware or software the e-commerce
platform uses. With every transaction, the required information connected to the
card profile is routed to the appropriate banking networks. When a merchant
“batches” or closes payments out for the day, the funds are moved from the Issuing
Bank to the merchant’s bank account. Any involved interchange fees based on the
card type is provided to the merchant and the card brands to reconcile the
ca
transactions. An important note: payment processors are liable for all transactions
they facilitate. This means they take on risk for their merchants with every
transaction. This will be important to remember later as it will explain how and
why processors run their operations. For example, let’s say you charged $100K
in volume, but received $10k in chargebacks. If your bank account only has $100,
the processor is liable for the remaining $9,900 of chargebacks.
Payment Gateway
What is a Payment Processing The Sponsor Bank

Gateway? The sponsor bank is responsible for
A payment processing gateway getting the funds from the merchant to
connects the payment technology the processor. They are also
(terminals, shopping carts, etc.) to the responsible for the card brand’s
payment processor. This is integrated transaction fees. All payment
into platforms like Shopify through an processors have a sponsoring bank(s)
API. Many processors have their own that they work with for underwriting
payment gateway and are often and risk.
risk Each processor will have a
resellers of other gateways.
gat BIN (Bank Identification Number) with
all their merchant accounts located in
that BIN. The payment processor is
responsible for ensuring the BIN at the
bank has properly balanced the terms
of the transactions.
CHAPTER 2 PROCESSING PAYMENTS AND PRICING MODELS
to the issuing bank, back to the

Virtual Terminal acquiring bank. This routes the
approval or denial code that has been
received back to the merchant’s
What is a Virtual Terminal? payment acceptance application at the
Virtual Terminals are the software or cardholder’s bank.
web-based solutions that allow
merchants to process payments from 5. The acquiring bank submits the
their online store. Most use Shopify, transaction and applies the interchange
BigCommerce, WooCommerce, or rate for each sale with the cardholder’s
Clickfunnels to the payment processor bank. The card-issuing bank transfers
using a virtual terminal. the transaction amount, minus the
applicable fees, to the acquiring bank.
Money is then deposited from that
How do Credit Card account into the merchant’s
me account
Transactions Work? from the acquiring bank, minus the
1. When a customer enters payment payment processor charges.
info to buy your product or service
with their credit card, the cardholder’s There are several types of transactions
data is sent with an authorization you will experience as you take
request to your payment processor. payments online.
2. The payment processor routes the

cardholder information through the Purchase
card network to the customer’s credit A credit card purchase, or a sale, is the
card bank. The bank will approve or most common type of transaction that
deny the transaction based on a series e-commerce merchants will encounter.
of authorizations and send the results When a customer purchases from
back to the processor. your site, the merchant will process a
request for payment from the
3. Once the payment processor has customer’s bank. The credit card
the approval or denial, they send the information and the amount of the sale
in
information to the payment gateway. are sent to the payment processor.
The payment processor sends all
4. The settlement network can now transaction data and the information
transmit the cardholder's data of the to the correct card network, asking the
transaction from the cardholder’s bank customer’s issuing bank to either
approve or deny the transaction for Captures may take up to 30 days to

the requested amount of the sale. complete after the original pre-auth
In simple terms,
terms this asks whether the was submitted. The funds, however, are
customer has the funds to pay for the only frozen for the first seven days.
product or service. If so, an approval
code is returned to the merchant from
the payment provider. All of this Voids
happens in real-time; within a few A void cancels an authorized
seconds, the transaction was transaction. This would happen in the
processed and approved or denied by
pr event of an incorrectly entered
the correct card network. purchase amount. The transaction
voids so it can be entered correctly
and reprocessed, meaning the
Pre-Auth
customer is not charged for the
A pre-authorization is very similar to a original transaction that was submitted.
submitted
purchase, but it does not complete the Voiding a transaction prevents the
sale. Because the sale is not completed, charge of interchange fees. However, in
the funds are not yet captured and the case of a refund, the interchange
deposited into your account. Similar to fees are still charged, and the
purchase, the transaction is processed transaction fees will not be returned.
in real-time to provide an approval
code to the merchant
me for the We should also note that voids can
transaction. The funds are not debited only be performed if the batch of
from the cardholder, but instead transactions has not yet been settled.
“frozen” or “reserved” for a period of Batches that have been settled will
time, usually 7 to 10 days. When a need to be refunded.
merchant is ready to proceed and
“capture” the pre-approved funds, they
will submit a capture
c request to Refund
complete the sale. A refund can only be performed after
the batch has been settled and is
essentially a negative purchase against
Capture
the transaction. If possible, always avoid
Capture happens after a credit card refunds. Since refunds require charging
pre-auth has occurred. The capture will the customer for the original
be approved when the pre-auth has transaction, they will see the charge
created the approval code. and the refund for the transaction.
The refund amount is then debited offer same-day deposits, as it would

from the merchant’s account and sent mean they are extending their own
back to the customer account. Refunds assets to cover the deposit while the
are not processed in real-time, so the customer's payment is still in process.
customer’s bank can take up to 10
business days to reflect the transaction
on the customer’s statement. Credit Card Processing Fees
& Costs
As cash transactions are becoming less
Verify
common, and card use is at an all-time
Verification is a $0 transaction typically high, it is essential for today’s business
processed when the card is not owners to know and understand the
present. This is for when the merchant various fees involved when taking
wants to verify the credit but does not credit card payments.
process the payment for the set
amount. This is often referred to as a
Token or Tokenize the credit card for What are Interchange Fees?
later use.
us When a verification happens, Interchange fees are triggered with a
you are checking the credit card credit card transaction. The card issuer,
numbers, security codes, and such as Visa or MasterCard, have fees
expiration dates for validity. Because they charge to the transaction
no amount is being sent, the processor. Debit and credit cards,
cardholder's balance is not being along with business, corporate, and
verified. rewards cards, all have different
interchange fees. There are over 200
inte
different card types, and the
Credit Card Processing Time interchange rate is the same for every
While the credit card approval takes processor. While the card brands set
only a few seconds and the sale is then the interchange rates, it does not mean
credited to your account instantly, the a processor can change or adjust the
actual payment settlement time is interchange rate.
usually between one and three
business days, depending on the size of Each of the four major card brands has
the transaction. During this time, the their own interchange rates that apply
acquiring bank fully
ful reconciles the to the different types of cards. If you
payment before releasing funds. Most were to combine each of the
standard payment processors do not transaction networks, there would be
over 200 different levels of interchange. For example, if the merchant has a
Understanding how these interchange processor charging them 1% over
rates work will benefit how you interchange and an authorization fee of
account for your business’s pricing $.10, they would pay the interchange
model. It also helps to understand fee, plus 1% of that charge, plus the
things like how to process Level II/III auth fee of $.10 on each transaction. It
data, which are business to business is common to find the percentage is
and business to government referred to as a basis point - 1/100th of
re
transactions, and the right technology a percent or .01%. In the example
configuration, transaction timing, and above, 1% over interchange is 100 basis
operating procedures to adhere to PCI points.
compliance. All of this will help ensure
you are getting the best interchange If your business accepts numerous
rates. Note that understanding your business to business transactions, it is
chosen pricing models will allow
all you worth working with a processor that
to understand your cost involved for can process Level 2. Level 2
every transaction you accept. transactions go through additional data
checks to qualify b2b transactions at
lower interchange fees. Choosing a
Credit Card Pricing processor who can facilitate these
pr
Models/Structures transactions will dramatically increase
What is Interchange Plus? It only your savings.
sounds overwhelming, but Interchange
Plus is the most transparent pricing Interchange Plus:
model for any business. In most cases, • Merchant will only pay for the
Interchange Plus is more cost-effective interchange on transactions and the
than flat-rate pricing. With Interchange level they use it at.
Plus, the merchant pays the exact • You will know exactly how much
amount for the interchange plus any much you are getting charged on
added fees for the merchant provider. every transaction.
This model helps when dealing with
inflation and overcharged flat rates by
breaking down what you pay on every
transaction into a straightforward
equation. Interchange percentage plus
any transaction fees involved.
Other Pricing Models to Tiered Pricing

consider There are three common tiers used
While Interchange Plus (IC+) is the for tiered pricing: Qualified,
preferred pricing structure for most Mid-Qualified, or Non-Qualified. Each
businesses, there are other options out tier is based on the kind of card run
there you may want to consider. for the transaction. Every card you run
in a transaction has an involved level of
security. Transactions ran with
Flat-Rate Pricing high-security levels
l often have the
You see this often with Stripe or lowest transaction fees, meaning the
Shopify payments. Flat rate pricing is transaction is on a Qualified tier.
exactly how it sounds: merchants are Mid-Qualified tiers have higher
charged a flat fee for every transaction transaction fees, and the Non-Qualified
regardless of the type of card and how Tier will have the highest rates. For
it is run. This is a better structure for example, a merchant with tiered
merchants with low processing pricing would have a Qualified rate of
volumes. Higher volumes will still want
volumes 2.75%, a Mid-Qualified Rate of 3.00%,
to consider IC + for the best possible and the Non-Qualified Rate of 3.25%.
rates. Flat rate is simple and takes the Keep in mind these rates include the
headache away from those who are interchange fees.
just starting to take payments for their
business. It is simple because the rates Tiered Pricing Structure:
are not optimized for each transaction, • Merchants pay less for the Qualified
but it also means flat rate can get transactions they take.
expensive as you scale your business. • Merchants can be charged more for
Flat rate often works to get a the non-Qualified transactions.
merchant to agree to a deal, even • Tiers can be broad and unspecific.
though the back end often hides high
authorization fees and built-in fees.
Flat Rate Pricing Structure:

• Good for small-volume merchants.
• Does not include per transaction
fees associated with the pricing.
• Merchants don't see the interchange
rates they are paying or the
transactions qualify for.
CHAPTER 3
CHOOSING A PROCESSOR: CHEAPER ISN’T BETTER

Every business owner needs to consider the price tied to the payment processor.
However, the lowest price is not always the best one to pursue. While there are
many payment processors with similar and attractive fee structures, there are many
factors beyond price you must consider. For example, it is worth choosing a payment
processor that aligns with your business objectives and will help you avoid problems.
As always, you get what you pay for. Merchants have problems with holds on their
payments because the processor likely doesn't know a thing about their business. If
you happen
h to have a spike in the volume of our sales, it might set off a fraud or risk
alert, meaning your funds might be held back.
Ask yourself: what do I need from a payment processor? Do you need support,
chargeback protection, level 2, or something easy to use? Consider the technology
they provide and if they can help with setup issues. The quality of service they offer
is paramount, as you will want a payment processor that can act fast when
something unexpected happens.
Price Shouldn’t Be Your you need to know what functions

Central Focus come with the processor and what
Generally, payment providers keep gateway you are using.
their prices low to attract as many
potential clients as possible. While it's Don forget about customer service. It
Don’t
important to not overpay for a is harder to create a relationship with
payment provider, it is always the customer service desk at the
worthwhile to pay for a premium bigger processors. Smaller processors
service. Your processor should be can create a tailored solution that fits
transparent with you on what they are
transpa your needs and takes the time to
charging and what services they are understand the basics of your business.
providing. The secret industry truth is Working with a processor
p that is both
that value isn't free and creating a responsive and has outstanding
relationship with a quality payment customer service will go a long way in
processor is an invaluable step in helping the growth of your business.
growing your business successfully. As your business scales with bigger
As an e-commerce business owner, volumes and you start to see
CHAPTER 3 CHOOSING A PROCESSOR: CHEAPER ISN’T BETTER
chargebacks, you will want a process transactions when a card is

relationship in a place where a not present. Their methods include
conversation with a real person can network intrusions, tampering
release your funds. Customer service schemes, wire attacks, and dozens of
is important when something new tactics every year.
unexpected happens - like receiving
fraudulent transactions. With the
relationship comes quicker
quic solutions What is the Importance of PCI
for your problem that could have cost Compliance?
you money somewhere else. Complying with the rules and
Developing a trusting relationship with guidelines of PCI will help protect your
your payment processor will change business when dealing with fraud.
the way you look at the business, so Systems that have PCI SSC Security
choose the right one! backings reduce the scope of your
responsibility as some data breaches
can cost small businesses up to
Why It’s Important to Secure
$25,000. Staying up to date with PCI
$25,000
Your Transactions
Compliance will ensure you are
The Payment Card Industry Security protecting yourself and your
Standards Council was created by Visa, customers while taking payments.
MasterCard, Amex, and Discover in
response to an alarming increase in
payment fraud. In the 1990s,Visa and
MasterCard lost over $750 million
from transactional fraud. The council
was created
c to standardize the
industry; the PCI DSS (Data Security
Standard) was created and applied to
all businesses that took credit card
payments. This new standard meant
more protections for both the
merchant and the cardholder and strict
security from
f the card brands.
Every year, criminals find cunning new

ways to steal cardholder information
and exploit e-commerce platforms that
CHAPTER 4
HELD FUNDS AND RESERVES

Holds are one of the worst things that can happen to your e-commerce business. If
you haven’t experienced it yourself, you have most likely heard horror stories from
other online retailers. Nothing can bring you growing business to a standstill like
your payment processor placing a hold on your funds. Or worse! They could also
freeze your transactions and even terminate your merchant account.
The Most Common Merchant Defining Withheld Funds (Hold)

Problem: Withheld Funds And When a hold happens, it means that
Reserves the processor will take a portion of
A hold happens when your payment your processing volume and hold it in
processor holds off on sending the a separate account to protect
money from your transactions because themselves financially. This usually
they see something unusual happening. happens in the event of fraud,
A spike in sales volume may be chargebacks, refunds, and anything else
assumed as fraud, or an increase in the risk department
depa would consider a
chargebacks, or if you change risk to the processor. When a hold is
something on your site and are no applied it can be for one transaction or
longer selling what you originally the total volume of the transactions. If
signed up to sell.Your processor has all you're scaling and your processor is
the power, and right, to hold your not aware of the volume increase or
funds at any time if they feel like they model that will trigger an alert to hold
may be at risk for financial exposure. If funds until the problem
p is resolved.
you experience your first hold, and you
have an otherwise clean history, the
risk team will likely evaluate the issue Can Your Processor Legally
and release your funds once it is Hold Your Money?
resolved. They may ask you for Yes. They can. The longer answer is
documentation to help them clear somewhere in the contract you signed
whatever issue triggered the hold - be when you applied to work with the
prepared to show them whatever processor. The terms of service you
documentation theyth ask for. agree too are fairly standard across the
payment processing industry. Always
read any contract before you sign.
CHAPTER 4 HELD FUNDS AND RESERVES
Depending on the processor, certain What is a Merchant Account

provisions can be negotiated out of a Reserve?
contract before it is signed. Still, the
A merchant account reserve is when
condition for a processor to hold your
your processor takes a portion of your
money is almost never removed from
funds and sets them aside in a different
any agreement. There is too much of a
account to protect their own assets
risk for the processor, especially if they
against unexpected events. Much like a
don't know
kn what you do, what you sell,
security deposit to the acquiring bank,
how you run things, or even if what
the reserve will safeguard the
you do is legal. Holding funds on
processor from any unplanned liability.
pr
certain out-of-the-ordinary activities is
Since the processor is ultimately taking
a standard industry practice. They can't
the risk, they have to protect
be liable for something that isn't legal
themselves from the worst-case
or outside of proper business
scenarios.
practices. After all, your acquiring
practices
bank is essentially fronting you money
through the credit card charges. If your What’s the Purpose of a
account proves to be the kind of Reserve?
dangerous risk where the bank might
not recoup money from chargebacks, The funds held in a merchant account
refunds, or fraud, the bank will hold the for a reserve are similar to the funds
funds until the problem
p is resolved. or equity required for a loan. Acquiring
banks are essentially extending a line of
credit on your behalf until the
Everything You Should Know chargeback time limit expires.
About Reserves
The merchant
me account reserve ensures
Each merchant account is different
the acquirer or processor will not take
based on the acquirer, the processor,
a loss on your account, much like an
and how that account is viewed.
escrow fund that is in place in case
However, regardless of your account
things fail. For example, if the
type, there isn’t a merchant out there
merchant’s operating account doesn’t
who doesn’t dread the merchant
have sufficient funds to cover fraud,
account reserve.
chargebacks, or refunds, the bank
chargebacks
won’t be liable for any transaction
disputes that may occur.
Merchant Account Reserve? Reserve accounts are sometimes

Each processor has its own rules, required at the beginning of a new
regulations, and qualifications for merchant processing agreement but
reserves on merchant accounts, but are usually removed after a
there are some common criteria most predetermined period of time. If the
processors use when vetting a merchant's processing record remains
merchant. One of the biggest clean during that time and has few
determining factors in deciding if a chargebacks, then the assumed risk
chargebacks
reserve is necessary is the level of risk
rese lowers and the reserve ceases. In
tied to the merchant. The risk could be higher-risk accounts, the reserve might
tied to anything from the product or be enforced for the life of the
service being sold, the business model, agreement.
or even the reputation the business
has within their respective industry.
Reserves, And Why You
Shouldn't Fear Them
Generally, high-risk merchants need a
reserve from the outset of the As we said previously, a reserve sounds
merchant processing agreement. like a situation you should dread. Of
However, keep in mind that any course, no one likes the idea of having
merchant can be subject to a reserve a portion of their revenue retained; a
at any time. If the risk of working with reserve is there to protect the
a merchant’s increases, the processor’s merchant as much as it does the
risk protection
p must also increase. processor. When you accept credit
cards as payment, there will always be
ca
Merchants who forced to have a risk factors that increase the likelihood
reserve on their account are usually: of disputes, chargebacks, fraud, and
even businesses’ closure. In these
• Processing card-not-present
cases, it is helpful for the Merchant
transactions (e-commerce).
Processor to have “funds set aside” to
• Selling products or services deemed
cover unplanned losses.
risky.
• Have a higher average ticket or
For example:
transaction amounts.
• Have a higher monthly processing • Receiving numerous chargebacks,
volume. especially those in fraud cases.
• Are in an industry with very high • Losing the licensing or certification
chargeback rates. to sell your product/service.
• Having numerous customer disputes.
•
Everyone has a different experience

when it comes to funds being held or
accounts being terminated. Still, there
are a few common trends that seem to
happen across the payment processing
industry. Not everyone has unlimited
Reserves are in place to protect the
processing or the ability to scale;
processor, but they are also in place for
some merchants
me have one hundred
the merchant. A reserve allows the
dollars in their bank account while
processor to mitigate risk, and the
they are processing $30k-100k in
lower the risk the more freedom you
volume. Poor customer service,
have to scale your business. Many
delayed shipping, or poor-quality
merchants choose Stripe because of
products result in chargebacks that
the easy signup
sig and attractive pricing.
almost always lead to a hold and ruin
However, many of the same merchants
your credibility with payment
end up leaving Stripe because of
processors. One of the worst business
random holds and delayed payments as
practices is not having the money to
they attempt to scale their business.
refund products in the event of a
Stripe is like any other processor, they
customer dispute.
take on the risk of your business.
When your scaling sets off an alert like

high volume, chargebacks, or refunds,
they have to retain your funds until they
feel it is safe to continue accepting your There are a handful of methods for
risk.This is why starting with a reserve obtaining and holding funds in a
can help tremendously.The reserve merchant account reserve. The
absorbs the risk that would otherwise processor will choose what they
trigger a random hold somewhere
som believe is the best type of reserve
down the road.There is nothing worse depending on the business.
for your business than attempting to
scale and having to pause everything
because of a hold.You can't fulfill orders,
pay for ads, and you may not be able to
pay for the systems you have put in
place. In many cases, the resulting
plac
chargebacks from a hold will ultimately
eat away at the money being held!
A rolling reserve gradually releases an escrow account at the start of the

held funds to the merchant as the set processing agreement. Up-Fronts are
reserve time period expires. Funds are typically used to protect processors
released monthly, issuing the earliest from very high-risk merchants who
withheld funds first. For example, funds have a problematic history with
held in February are released in August chargebacks.
of that year.
Who Determines Your Reserve

Capped Reserve Amount?
A capped reserve retains a percentage The reserve amount on your merchant
of volume until a predetermined cap is account is usually done by the payment
met. For example, if your cap is $30k, a processor’s underwriting team. The
percentage of your monthly volume is underwriting team will review the
held until the $30k is met. The fixed merchant’s banks and their own
amount is typically half the merchants payment processor’s criteria and
starting volume. Once the cap is policies when determining the reserve
reached, no additional funds are
reached amount. The underwriters will also
amount
reserved for the duration of the consider factors such as the
merchant agreement. This is the most merchant’s credit history, what
merchant friendly reserve because the industry they do business in, any prior
funds are already set aside if you can processing problems, and the business
afford to not aggressively scale during model the merchant uses when
the first three months. In that time, you determining the reserve time and
can reach your cap and then be free to amount.
amount
scale with large volumes.
When are Reserve Funds

Up-Front Reserve Released?
An Up-Front reserve is determined by Your funds’ release depends on both
the processor based on your expected the type of reserve and how your
monthly volume. As you develop a business operated during the reserve’s
relationship with your processor, it is timeframe. If there is a problem with
best to give them a realistic estimate of your account anytime during the
your anticipated monthly volume. The duration of your agreement, you might
Up-Front reserve is a percentage of not see your money for up to six
the anticipated volume deposited into months after your processing account
is closed. If you have a temporary When a bank terminates an account, it

reserve, you will likely see your funds means the account is no longer in
after the perceived window risk has good standing with that bank and their
passed, usually around four to six processor. A majority of the time,
months. accounts are terminated due to fraud
or chargeback issues. When this
You can always have a discussion with happens, the processor will hold the
your payment processor about money until all the perceived risk has
mon
adjusting the release schedule of your passed. A transaction can be
funds. While it may feel like a difficult submitted to a chargeback up to six
conversation for many e-comm months past the purchase date, and
merchants to have, keep in mind that that is generally the amount of time
reserves are there to protect the (or approximately 180 days) that the
processor as much as they are to
pr money could be retained.
protect you. However, If you run your
business well and build a relationship To give you an idea of the types of
with your processor, you greatly contract language that allows your
increase your chances of getting your process to put holds on your funds,
funds released on a more favorable here is the agreement Stripe uses with
timeline. In other cases, reserve funds its clients.You’ll find how the concept
might not be released until the of funding holds and reserves on
merchant account is closed and in merchant accounts are always in the
good standing. processor contract. Avoid surprises,
pr
READ THE CONTRACTS!
CHAPTER 5
WHAT YOU MIGHT NOT KNOW ABOUT CONTRACTS

While Square’s language above sounds severe and gives the company power over
your business’s money, it is a fairly boilerplate agreement. For instance, Stripe has
similar language in its standard user agreement. The most relevant part for
merchants is in Section C, Paragraph 8.
In certain circumstances, we may require or for any other reason. We may fund the
you to place funds in reserve or to impose Reserve with funds processed through
conditions on the release of funds (each a your use of Payment Processing
“Reserve”). We may impose a Reserve Services, by debiting the Payout Account
on you for any reason if we determine or another bank account associated
that the risk of loss to Stripe, with your Stripe Account, or by
Customers, or others associated with requesting funds directly from you.
your Stripe Account is higher than So, again, by entering into the agreement,
So
normal. For example, we may hold a you have agreed that Stripe can establish
Reserve if: (i) your or your Customers’ a reserve fund and can fund the account
activities increase the risk of loss to us or in various ways, including reaching into
to your Customers, (ii) you have violated any bank account associated with your
or are likely to violate this Agreement, or Stripe account and pulling the money.
(iii) your Stripe Account has an elevated or
Dispute If
abnormally high number of Disputes. 18 Reserve Account; Security Interest
we impose a Reserve, we will establish 18.1 You expressly authorize us to
the terms of the Reserve and provide establish a Reserve Account pursuant to
you Notice of the amount, timing, and the terms and conditions set forth in this
conditions upon which the funds in the Section 18. The amount of such Reserve
Reserve will be released to you. In many Account shall be set by us, in our sole
cases, the Reserve amount will be the discretion, based upon your processing
entire amount of Charges processed using
enti history and the potential risk of loss to
the Payment Processing Services.We may us as we may determine from time to
change or condition the terms of the time.
Reserve based on our continuous 18.2 The Reserve Account shall be fully
assessment and understanding of the risks funded upon three (3) days notice to you,
associated with your Stripe Account, if or in instances of fraud or suspected fraud
required to do so by Payment Method or an Event of Default, Reserve Account
Providers or Payment Method Acquirers, funding may be immediate.
CHAPTER 5 WHAT YOU MIGHT NOT KNOW ABOUT CONTRACTS
Such Reserve Account may be funded by A freeze results in a review of your

all or any combination of the following: account and most likely the
(i) one or more debits to your implementation of a reserve fund, or in
Settlement Account or any other the worst case, termination of the
accounts held by Bank or any of its account.
affiliates, at any financial institution vested
in the name of the Client, any of its Looking at Stripe’s
Stripe contract, freezing an
principals, or any of its guarantors, or if
pr account has more to do with refusing
any of the same are authorized signers on to take credit card payments. Look at
such account; (ii) any payments the contract below in Section A where
otherwise due to you, including any they talk about termination instead of
amount to from TeleCheck; (iii) your freezes.
delivery to us of a letter of credit; or (iv) if
we so agree, your pledge to us of a freely
transferable and negotiable certificate We may suspend your Stripe Account
of deposit. and your ability to access funds in your
Stripe Account, or terminate this
Not only have you agreed to have the Agreement, if (i) we determine in our sole
processor set up a reserve fund, but you discretion that you are ineligible for the
have also agreed to the various ways Services because of significant fraud or
they can acquire the money to build the credit risk, or any other risks associated
fund. with your Stripe Account; (ii) you use the
Services in a prohibited manner or
otherwise do not comply with any of the
A Processing Freeze provisions of this Agreement; (iii) any Law,
A freeze occurs when the payment Payment Method Provider or Payment
processor temporarily shuts down a Method Acquirer requires us to do so; or
merchant's ability to take payments. (iv) we are otherwise entitled to do so
The processor may use a freeze to under this Agreement. A Payment
analyze the merchant’s processing Method Provider or Payment Method
behaviors and decide if they are Acquirer may terminate your ability to
obeying rules and regulations. Freezes accept its Payment Method, at any time
usually raise red flags. This could be for
usual and for any reason, in which case you
chargebacks, refunds, or a spike in will no longer be able to accept the
transactional volume within your Payment Method under this Agreement.
merchant account.
There are paragraphs throughout the If you use the Services again or register
agreement addressing freezes, such as for another Stripe Account, you are
Section C, Paragraph 1. It states that if consenting to this Agreement. We may
Stripe thinks you violate the agreement terminate this Agreement or close your
you signed, they can refuse to process Stripe Account at any time for any reason
any of your credit card charges.Your (including, without limitation, for any
account would be effectively frozen. activity that may create harm or loss to
the goodwill of a Payment Method) by
Section C, Paragraph 1: providing you Notice. We may suspend
Stripe works with various Stripe affiliates,
St your Stripe Account and your ability to
Payment Method Providers and Payment access funds in your Stripe Account, or
Method Acquirers to provide you with terminate this Agreement, if (i) we
access to the Payment Methods and determine in our sole discretion that you
Payment Processing Services.Where the are ineligible for the Services because of
Payment Processing Services enable you to significant fraud or credit risk, or any other
signi
submit Charges (as defined below), we risks associated with your Stripe Account;
may limit or refuse to process Charges (ii) you use the Services in a prohibited
for any Restricted Businesses, or for manner or otherwise do not comply with
Charges submitted in violation of this any of the provisions of this Agreement;
Agreement. (iii) any Law, Payment Method Provider or
Payment Method Acquirer requires us to
do so;
so or (iv) we are otherwise entitled to
Stripe do so under this Agreement. A Payment
Section A, Paragraph 10 of the Stripe’s Method Provider or Payment Method
Services Agreement specifically Acquirer may terminate your ability to
addresses account termination. The accept its Payment Method, at any time
relevant language is as follows: and for any reason, in which case you will
a. Term and Termination: This no longer be able to accept the Payment
Agreement is effective upon the date you Method under this Agreement.
first access or use the Services and
continues until terminated by you or
Stripe.You may terminate this Agreement
by closing your Stripe Account at any time
by opening the data tab in your account
settings, selecting “close my account” and
setting
ceasing to use the Service.
Note Stripe’s specific reasons listed in

(i) – (iv) for account termination.
Looking at the other portions of the
agreement, Stripe can terminate their
services if you:
• Provided incorrect information
when registering/applying to open
an account, including giving false
identity or organization type
(Section A, Paragraph 2).
• Use Stripe’s
Stripe services for illegal
activities or for restricted business
activities (e.g., financial services,
selling counterfeit goods, gambling,
providing adult content, selling illegal
drugs or drug-related paraphernalia,
etc.) (Section A, Paragraphs 7 & 8).
• Fail to comply
comp with the rules of the
credit card networks or NACHA
(National Automated Clearinghouse
Association) (Section C, Paragraph 6).
• Fail to set up and link a bank
account to take or send payments
to Stripe to settle payment funds
(Section C, Paragraph 7).
• Fail to comply with PCI standards
(Section D, Paragraph 2(c)).
CHAPTER 6
8 GOLDEN NUGGETS TO SUCCESS WITH A PROCESSOR

Cash flow, especially uninterrupted cash flow, is an essential part of running an
e-commerce business. In the e-comm space, cash flow is crucial to ad spend, product
fulfillment, and resolving lines of credit. It would be a nightmare if you wake up and
discover, without notice, that your payment processor is withholding all of your
money.Your payment provider has all of the power when it comes to your payments,
and they have the power to stop your business in its tracks with a freeze or a hold.
We know this happens every day to so many e-commerce business owners, and
some never
n recover from such catastrophic disruption. Fortunately, we have the
steps all business owners should take to keep this from happening and help you stay
in business. Keep in mind: Nothing is going to help you if you are selling something
illegal, committing fraud, scamming your customers, or having an extremely high
number of chargebacks.
Pick the Right Type of

Processor processors means you are the
merchant of record, and your terms
Merchant agreements vary depending can often be negotiated because they
on the processor. When dealing with are tailored to your unique processing
payment providers, there are only two history and industry type.
kinds of agreements: direct agreements
and third-party agreements. There are App
Applying for one of these accounts
also specific processors for high-risk takes more time than signing up with a
merchants who need specialized, direct company like Stripe or Square. The
agreements.
ag underwriters will take more time to
review your business before approving
an account because they offer a more
Option 1: Direct Agreements personalized experience. As the
Traditional merchant accounts that are merchant, you are being vetted before
me
a direct agreement account create a processing; these accounts are often
unique account that is under your much more stable than going with a
name. This includes large companies service like Stripe. When using a direct
such as Global Electronic Technology, agreement, the back and forth between
OrbitalPay, and others. Having a you and the processor takes more
direct agreement with one of these work on the front end but will be
CHAPTER 6 8 GOLDEN NUGGETS TO SUCCESS WITH A PROCESSOR
worth it in the long run as you are to greater scrutiny down the line.
developing your relationship with that
processor. As we previously pointed out, you may
have your own experience with
Di
Direct agreement merchant accounts third-party processors like Stripe and
are best for well-established businesses their tendencies to hold funds and
or for experienced e-commerce terminate accounts. This also means
business owners who have the capital you will be processing alongside
and cash flow. These tend to be a accounts that will never have a
better option for businesses chargeback while doing onlyon $10k a
conducting more than $15,000 a month that is considered a minimal
month (in some cases,
cases even above risk. As a result, your spike in volume
$5,000 monthly, depending on the and a handful of chargebacks will stand
model). If you are not a out, likely shutting you down before
well-established business owner or they give you any warning. Remember,
new to e-commerce and making nearly all of these contracts have terms
consistent volumes, third-party and conditions that allow
all them to
processing is a better solution for you. place holds and terminate accounts at
any time for any reason or even no
reason at all.
Option 2: Third-Party
Processing These processors are ideal for
low-volume and infrequent businesses
Most business owners are familiar with
that are just starting out and need to
third-party processors. Third-party
be cost-efficient when starting out.
processors like Stripe, PayPal, and
Third-party processors typically have
Square, lump individual users into one
no monthly fees and charge a flat
large merchant account. Their
percentage rate on each transaction.
agreements are very broad and the
These processors
p tend to also be very
signup process is simple. There are
mobile and virtual focused, a perfect fit
very few checks and balances in place,
ve
for businesses that do not have a
which means you may run into issues if
physical location.
the processor doesn’t understand your
business and or how quickly you
intend to scale. Lumping everyone
together means they can get accounts
activated quickly, but this also means
that you and your account are subject
Be Honest With Your Low-volume merchants using a

Expectations & Stick To Them third-party processor won’t have
Here's some irony for you: making too issues with inconsistent volumes so
much money can actually hurt your long as your numbers stay relatively
business. ALL payment processors low. Inconsistent processing is less of a
want stability! Just like how you want concern as most e-comm businesses
your orders delivered on time and in a have low ticket sizes and equally low
consistent manner, processors want volumes.You may find this is the case
volumes
consistent volumes. Processors expect for you as you start taking payments
merchants to process relatively
me with your e-commerce business.
consistent volumes from one month to However, it is always a good idea to
the next. Problems tend to happen remember why and how large volumes
when you go from $10K one month to and transactions are usually the reason
$250K the next. They also like to see for most holds and freezes.
consistent order sizes within your
merchant account. If most of your Any processor will be a bit nervous
orders are for $50, a red flag will go up when you start to double, triple, and
when a $2,000 ticket comes through. even quadruple your monthly volume
over 30 days.
Applying for a merchant account
requires you to provide information The key is to be realistic and
about your business based on current transparent with your sales volume.
stats or what you expect your business Being honest with them will only help
to do. Most processors will ask about you in the long run. After all, they do
your monthly volume and your average ultimately control your payments and
ticket size. This information will help your record as a merchant. If you do
the processor
p gauge what kind of end up going over your volume,
activity they can expect on your document everything, and be as
account. Average volume will give an proactive as possible. If your ads are
idea of how much volume they should converting like crazy and you are
be seeing while the average ticket helps scaling past your expected volume,
them understand the ticket size and send the processor information and
what risk you have for processing. For proof of sales. This will build trust and
example, if you sell several
exampl a relationship with the processor and
thousand-dollar items and later receive the risk team.
team If you know you have a
chargebacks, that risk would have been new campaign launching, call your
insured when the account was vetted. processor ahead of time and let them
know you might be expecting bigger risking their own profit margins.
volumes. Little things, like clear Furthermore, lying about what you are
communication, can go a long way with selling compromises the trust they
your experience working with a have in you as a merchant.
processor.
This is crucial for e-comm business
owners to understand. Many
Sell What You Said You Are e-commerce businesses will use the
Selling same store to start selling all kinds of
Lying or misrepresenting your business different products - essentially violating
is a fast way to get holds on your funds contracts with a direct agreement
and possibly have your merchant processor as they have tailored their
account terminated. You should conditions based on what you’ve gold
NEVER lie to your payment processor them. Of course, you might change out
(or to anyone, really) about what you your inventory or pricing, but you
are selling or change details later to need to be open with your processor
avoid looking like a high-risk account.
av to avoid issues and allow them to
If you don’t want to pay a higher fee make necessary changes on their side
because you are in a high-risk industry, of things. Letting them know that you
then you shouldn't be in business at all. have decided to rebrand your company
I can guarantee you that a few or the products you sell will help
interchange percentage points are not maintain the sustainability of your
worth the hassle of your merchant account. This way, your processor
account terminated. won’t be thrown off when different
sized transactions come through
Your processor will assign you a looking suspicious. As we know,
Merchant Category Code (MCC) suspicious charges lead to account
when you open your merchant reviews and potential holds on your
account. The MCC will identify the funds or even a termination of your
type of business and industry you do account.
business in.Your MCC determines
your interchange rates, which directly Always read your processing agreement
affects what you pay on each
af and know what you are entitled to do
transaction. Banks and processors and what is against the rules. If you
don’t appreciate being lied to about want to expand your product line,
what you are selling, especially because ensure it is not high risk and does not
they are absorbing your risk while violate the agreement you signed.
Don’t Mix Your Accounts getting filled and delivered on time.

Since any kind of suspicious behavior This may also signal that you are
could raise red flags and trigger a careless and potentially accepting
review, mixing your accounts is fraudulent charges. When a chargeback
definitely a bad idea. When a series of happens, the merchant’s funds are
transactions come through that is taken away and held by the processor -
inconsistent with your previous it’s impossible for them not to know
processing or your current business, when it happens.
h It is unlikely that you
your processors
p assume something will suddenly see a large spike in
fishy is happening. This can ultimately chargebacks all at once since your
affect your processing limits and give processor will likely freeze or place a
your current processing provider the hold early on. At this point, the
appearance that you are at risk of processor will likely inquire about
exceeding those limits. establishing a rolling reserve to cover
future chargebacks. Some third-party
futu
However, suppose you have been in processors will automatically terminate
business for a while and have a good an account that yields too many
history and relationship with your chargebacks. Generally speaking,
processor. In that case, it is always processors with direct agreements will
worth asking about opening a second give a few warnings and require the
merchant account. Again, good merchant to show how they plan to
communication is the bedrock of decrease the number of chargebacks
dec
payment processor relationships.
pa coming through. This usually happens
over several months, allowing the
merchant to help themselves fix the
Minimize Chargebacks problem without terminating the
The dreaded chargeback. Chargebacks account.
are inevitable for most merchants and
are impossible to avoid in any e-comm The industry standard for chargebacks
environment. Depending on how many is around 1% over total transactions.
chargebacks you get, you could quickly However, every processor varies as
find yourself facing a hold, freeze, or they also have to deal with Visa and
even account termination. Chargebacks MasterCard's rules for chargebacks.
are a clear sign to the processor that
ar We have seen many merchants get
the merchant isn't doing a sufficient job their chargeback thresholds lowered
of explaining their product or service, to 75 chargebacks a month.
month Yet again,
what it does, of if their orders are this is why it is important to
communicate with your processor and monitoring for fraud and chargebacks
be open to whatever chargeback to steer clear of anything risky for
protection support they may offer. your business.
Minimize Fraud Keep Documentation

When you are accepting Chargebacks can happen up to 180
card-not-present transactions, credit days after the purchase of the product
card fraud is going to happen. This is a or service. According to most legal
very common problem for both agreements, the reserves taken for
merchants and consumers in today's these accounts are subject to being
online world, and it is difficult to held for up to six months. This is why it
manage as card fraud happens in so is important to protect your business
many different ways. The United States
ma and always
a keep records of six months
is slowly transitioning to EMV cards, of transactions at least. Batch data,
which will reduce fraud among invoices, contracts, and every
card-not-present merchants, but transaction that took place on your
e-commerce merchants will still be hit account are always good records to
hard. E-commerce business owners have on hand should you need to
need to start protecting their protect yourself. This data is especially
lilivelihoods, especially from fraud. Most important to keep when unexpectedly
impo
online payment processors use AVS large transactions come through, as it
checks to detect fraud and confirm the proves the customer agreed to the
customer's shipping and billing address product or service they bought. This
against any misentered information.You will help reduce the risk of
have probably noticed this update in chargebacks against your merchant
your Shopify stores. If it appears as a account. If you’re accepting new or
high-risk transaction,
transaction you can either different transactions that are well
dif
override it or approve it. However, it is outside your usual transaction size,
usually your liability at risk if you do having a record stored for that
approve it. transaction will only protect you.
Many payment processing providers If you get a chargeback notice and

will deem your account too risky or decide to fight the chargeback, do so
unacceptable if they find a high level of immediately and send as much
fraud within your transactions.You documentation as possible to your
need to accept the responsibility of processor.
Communicate With Your They want to guide you and help both
Processor companies - theirs and yours - profit.
For example, Black Friday. Tell your
We’ll say it again: communication is key.
processor months ahead of what your
Openly communicating with your
plans and expectations are so they can
processor early and often can prevent
prepare, raise limits, and notify the
problems from happening. If you're
correct department about the spike in
planning on scaling, let them know
volume.
volum
ahead of time that they should expect
bigger volumes. Contrary to popular
If you’re fortunate and can quickly
belief, payment processors are not
belief
grow your business, you can talk to
here to shut you off.
your processor about increasing your
cap or monthly volume limits to
reduce the potential for holds.
CHAPTER 7
WHAT TO DO IF YOU HAVE A HOLD, FREEZE, OR TERMINATION
It’s very possible you might not know when a hold is coming or if you are facing a
termination until the next transaction doesn't go through. Not every processor will
give you an advance warning. They will usually take the measures they deem
appropriate measures to mitigate their risk.
This is why
w it is very important to know what’s going on with your merchant
account.You will most likely have a good idea based on refunds, chargebacks, or
fraud charges that something may be coming your way. Always know when you
might be at risk of violating terms with your processor.
But let's say you do get a Freeze, then that you can cover the amount held
what? in case of chargebacks. If you have a
• Don't call your processor’s healthy cash flow, in some cases a
customer service line just to yell. cap or monthly limit is raised as you
The person on the phone is not have shown you can cover what you
responsible for your hold, but they would be liable for.
can help you find out the reason for • If you have your funds frozen, you
the hold. can use a small business loan to
• Once you are redirected to the cover operating expenses or
right department, maintain your continue fulfilling orders. In a pinch,
calmness. Be prepared to provide a credit line will also work.
any and all requested • In some cases your account will be
documentation you have to the reactivated, and you will be very
processor as quickly as possible. Let aware of the processor’s guidelines.
everything run its course.Your Obey these rules to avoid future
processing will either be reinstated
pr problems.
(maybe with a reserve), or you will • Account termination means you are
be facing a termination because you now looking for a new processor.
have violated their terms, and they This may be challenging as
have deemed you too big of a risk. processors talk to one another, and
• When dealing with a freeze or a terminated accounts tend to leave a
hold, processors will ask for bank mark on your record. Furthermore,
statements or other assets to show who terminates you can also
CHAPTER 7 WHAT TO DO IF YOU HAVE A HOLD, FREEZE, OR TERMINATION
complicate things. If you were Your best course of action is to avoid

terminated from Stripe, it could a hold, freeze, or termination in the
have less impact than being first place. Be clear from the beginning
terminated from a direct agreement about what you expect to do with
processor who took the time to your business and what limits your
tailor to your business. High-risk processor puts you on. Clear
processors are generally very hard communication with your processor is
to be terminated from
f as they have always the best route. If you need
al
more lenient rules and deal with bigger volumes, talk with them and see
high-risk accounts often. In the case what they feel comfortable offering.
of a termination, your name will be Make your account rep your best
added to the terminated merchant friend, and if you don't have one don't
file (TMF). This lets other let that stop you. Processors have
processors you have had your customer support teams for this
account terminated,
terminated which makes reason. And always let the processor
things more difficult because you are know when you are making changes to
now a high-risk merchant and will your account.
have difficulty obtaining a new
merchant account.
CHAPTER 8
THE RULES AROUND CHARGEBACKS

Chargebacks are inevitable in the world of e-commerce. A chargeback is when a
customer files a complaint with their bank over a charge on their credit card. This
process was initially established as a way for customers to fight fraud, stolen cards,
and mistaken charges, but now have become a way for customers to commit fraud
to the point where 86% of chargebacks today are disputed as friendly fraud.
Unfortunately, as little as 10% of the time the customer will contact the merchant if
they have a problem with the order, the other 90% will go straight to their bank.
Let get one thing clear: a chargeback is not a refund—it’s a dispute. The customer
Let’s
files a complaint against a merchant to get the transaction reversed, and the money
returned.
Every chargeback has a reason behind it. The customer’s bank will issue codes
indicating the reason for the chargeback so you can see what is being disputed.
Here is a typical scenario of how an ask all kinds of questions to prove you
e-commerce chargeback might happen: have sold the product to the customer.
Is there any evidence that the
1. Customer visits your e-commerce customer received the goods? This is
site: They view the products and make why you must keep all documentation
a purchase. of your business to fight these charges.
It also means you MUST fulfill orders.
2. The customer files a chargeback: Otherwise, you're screwed.
Otherwis
At the end of the month,
month the customer
reviews their bank statement and sees 4. The bank will then make a decision:
a transaction they might not recognize on the proof, you submitted. If your case
and jumps on the phone with their is strong enough, the chargeback is
bank to issue a chargeback. This is why canceled. However, if it’s not..
having a detailed description is
important. Use the store and product 5. The customer gets their money
name in your description if possible. back: Through arbitration, if the bank
feels the purchase was invalid, the
3. The customer’s issuing bank takes money will be taken from your
over: They will contact your bank and account and returned to the
CHAPTER 8 THE RULES AROUND CHARGEBACKS
customer. If the customer did make can help you when Visa or
the purchase and filed a fraudulent MasterCard gets involved.
complaint, you will lose the cost of the Chargebacks always mean lost profits.
product purchased and an additional Some merchants think they can just
chargeback fee from your processor. fight chargebacks when they happen. In
reality, it is always better to have a
chargeback prevention plan in place,
Every new chargeback dispute will
especially in the e-commerce world.
start to add up for the merchant.
• Standard fees: Every chargeback It Takes a Ton of Time To

has fees involved. The merchant Fight Chargebacks
must pay a fee to follow up on the
complaint, and if they lose the Even if you do try to dispute every
dispute, they are also hit with a case, fighting chargebacks is a huge,
chargeback fee for having a time-consuming process. If you're a
chargeback in the first place. small business with limited resources, it
• Lost revenue: When a customer might not be possible to spend the
files a chargeback, not only does time needed to fight all the
that merchant miss out on revenue chargebacks you might face.
from the purchase, but they will
likely lose the goods to that
Chargebacks Might Be Your
customer as well.
Fault
• Fines: Processors will issue fines
for the chargebacks against you. Yes, it’s true.You might actually be the
Because chargebacks often lead to reason for your own chargebacks. Are
bigger problems, they are monitored you using Aliexpress? Are your tracking
very closely. Merchants who exceed numbers working? Are your products
the chargeback threshold also face delivered two months too late? Did
fines.Visa has a standard chargeback the product show up smelling like
threshold protocol that goes
th cigarettes and looking like it was used
beyond what the processor may use. in a soccer match? You are responsible
If a merchant exceeds the threshold, for all of these factors, but this also
they are put into an enforcement means they are well within your
period to clean up their act. If they control. In some cases, the errors are
fail to do so,Visa can fine them up to honest mistakes. Is your name clear on
$25,000 for the review fee. This the bank statement? You need to make
seems severe,
s but your processor sure your DBA is clear, recognizable,
CHAPTER 8 THE RULES AROUND CHARGEBACKS
and connects directly to what you are attentive, you will likely see a reduction
selling. If not, (which isn’t in the number of chargebacks filed
recommended) make sure the against you.
customer is informed through the
purchase email.
Why You Should Consider
Third-Party Chargeback
Best Practices for Reducing Prevention
Your Chargebacks
When it comes to chargebacks,
It's not all doom and despair when it preventing them is better than fighting
comes to chargebacks. Think of it as a them. Processors always recommend
learning experience on how you can using a third-party chargeback
change your business for the better. protection company or using the one
they might have available in-house.
Try these tips to help reduce Using a third-party will help prevent
chargebacks: chargebacks completely
complete and give the
• Keep detailed and well-documented merchant more time to grow their
proof of all sales and transactions. business.
• AVS verified on file, make sure your
processor supports it (most do).
What are the current
• Make sure your business name is
clear and it matches your DBA Name . chargeback rules?
• Be as transparent
transpa as possible with Most processors follow a similar set of
the products you’re selling and the rules, but each has slight variations in
customer expectations. If shipping how they handle chargebacks.
takes three weeks, don’t promise it However, all processors follow Visa and
in two days. MasterCard's rules for chargebacks.
• Have the refund policy easily After all, it is Visa and MasterCard
accessible on your site. who have the power over the
• Use a trackable shipping method to processors, and both have programs to
pr
save yourself from a lot of deal with the security of transactions:
headaches. Verified By Visa and MasterCard
Secure Code. Using either one for
While these steps will save you a lot of e-commerce transactions lowers the
time down the road, they won’t merchant risk of getting chargebacks.
necessarily prevent you from having
chargebacks. If you’re careful and
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CHAPTER 9 RECURRING & CONTINUITY
prior to sale, during the sale, and after • The confirmation of the
each successful transaction. This can customer's agreement to the
also impact membership and customer subscription.
retention rates. • The start date of the subscription
for the product or service.
• Must include details about
Requirements for Subscription product or service details.
Merchants Accepting Visa Cards • The transaction amount and
Subscription merchants that take Visa billing dates must be shown.
(which is anyone with a subscription • Must include a link to allow the
or any business) will have to adhere to cardholder to easily cancel
all the rules in play by the beginning of membership.
October 17th, 2020. As you may have • If a trial / introductory offer /
heard,Visa announced they are promotional period has expired or
updating rules for merchants that offer the recurring payments have
free trials or introductory offers for a
fr changed, the merchant must send a
subscription program. reminder notification to the
customer at least seven days before
The Visa rules follow on the heels of the charge and give them the option
the similar MasterCard rules that went to cancel.
cancel
into effect earlier this year. MC's rules • Merchants will also be required to
focus more on merchants selling disclose the length of the trail, the
subscriptions for physical goods, while introductory offer, the promo
Visa’s rules are more geared to digital period, and allow the cardholder to
products that offer trials and take the steps to cancel before the
subscriptions.
subscriptions start date of the initial transaction
and recurring transactions.
Here are some of the most important • Me
Merchants will be required to give
components of Visa’s new rules: the customer a notification that
• New enhanced notification allows for easy cancellation
requirements that the cardholder regardless of how the cardholder
must be sent the terms and initially interacted with the
conditions at the time of enrollment, merchant. Canceling needs to be as
even if the customer is not being easy as unsubscribing from an email
billed at the time. This notification list.
list
must include:
CHAPTER 9 RECURRING & CONTINUITY
It is still unclear how and to what Visa has announced that they intend to
extent the card brands will enforce the enforce the new policies and partake
rules. However, we know the card in mystery shopping as a means of
brands don't mess around and checking compliance. As always,
ultimately have power over the banks violating the rules can lead to losing
and processors when dealing with processing capabilities.
merchants.
CHAPTER 10
MATCH LIST
No, not the dating site! In the e-commerce industry, this is the one list you do not
want to be on. Being on this list will immediately end your business and everything
you have worked for.
What is the MATCH List? MasterCard's acquirers are required to

MATCH was rebranded from the review the MATCH list before entering
Terminated Merchant File and was into any new agreements with
created by MasterCard to help merchants. In the vast majority of
acquiring banks identify high-risk cases, and even at the most high-risk
merchants before engaging in a processor, it is very doubtful you will
processing agreement with them. be accepted. Some payment
processors that specialize in handling
pr
very high-risk accounts will still accept
What does MATCH stand for? merchants on MATCH, but the
reserves and the rates placed on these
MATCH stands for Member Alert To accounts can be extremely high and
Control High-risk merchants. unreasonable.
There’s no formal notification process

How does MasterCard's
when a merchant is placed on the
MATCH work?
MATCH list. Unfortunately, most of
When a processor terminates you for these merchants don't find out they
violating terms and conditions your have been placed on MATCH until
information is submitted to the they attempt to open a new account
MATCH list. Merchants on this list are and a processor runs a check.
considered very high risk and have a
very difficult time getting merchant Why would someone be on the
accounts in the future. MATCH list?
When you are put on MATCH you will Each merchant on the MATCH List is
not lose any active merchant accounts assigned a reason code. Each code
that you are currently in good standing gives detail as to why they are on
with, but you will have an almost MATCH:
impossible time trying to open new ones.
CHAPTER 10 MATCH LIST
1. Account Data Compromise processors and the acquiring banks

2. Common Point of Purchase which place merchants on MATCH
3. Laundering with little oversight from MasterCard.
4. Excessive Chargebacks
5. Excessive Fraud
6. Fraud Conviction How to get off MATCH?
7. MasterCard Questionable Merchant
MasterCa If you are on the MATCH list for
Audit Program PCI-DSS, you will likely be removed
8. Bankruptcy/Liquidation/Insolvency from the list after five years. For
9. Violation of Standards everything else, it is nearly impossible
10. Merchant Collusion to get off the list and there is usually
11. PCI-DSS Non-compliance no recourse. The best thing you can do
12. Illegal Transactions is to stay off the MATCH list in the
13. Identity Theft first place.
plac
If you are on the MATCH list, it is also
Not all these codes are not always the important to avoid doing anything that
merchant’s fault or within their control, might get you resubmitted by another
like identity theft and account processor, as every entry resets the
breaches. However, most of the reason five-year penalty clock.
codes are completely valid reasons for If you’re on the list, be prepared to pay
cutting off a merchant from processing, large sums upfront for a reserve and
such as money laundering, fraud, pay very high risk-assessment rates
cheating consumers,
consumers or comply with when you open a new account.
security regulations. Of course, as
we’ve learned, having a huge number of
chargebacks and fraud attempts are How to Avoid The MATCH List
expensive and risky for any Simply put, avoid violating your
e-commerce company. processor’s terms and conditions, use
good business practices, and focus on
Fraud and chargebacks can the things you can control. Always
impact even the best-run maintain and comply with rules and
regulations, take the steps needed to
business.
prevent fraud, and do everything you
While MasterCard does have a clear can to stop chargebacks and fight them
set of rules and requirements for the when they do happen.
MATCH List and what can get a
merchant on it, it is often the
CHAPTER 10 MATCH LIST
The MATCH list is the worst place you How are these fees charged?
could be as an e-commerce owner.
The issuing bank that the card is issued
AVOID it. Chargebacks are avoidable,
from (e.g. Wells Fargo credit card is
but find out why they happen when
issued by Wells Fargo), the payment
they do happen. Improve your customer
processors, the credit card brands, and
service and try to be the brand and
the merchant’s bank all charge fees on
business that you would want to buy
every transaction. There are over 300
from. Build and run an ethical business
fr
different fees bundled into a single
that you can be proud of.
interchange fee that you, the merchant,
inte
pay. These fees are made up of the
What is An Interchange Rate? time, interest rates, and risk involved
when completing a transaction. Card
Interchange fees are associated with brands adjust their interchange rates
payment transactions. The merchant's twice a year, the rates are always
bank must pay the credit or debit card changing and never static. These
bank fee when a purchase is made. interchange fees make up 70-90% of
inte
These fees are paid to the issuing bank the total fees paid to the banks by the
to cover the cost of the handling and merchants.
approving payment.
CHAPTER 11
AFFECTING FACTORS
Transactional factors affecting The Most Reliable Gateways
interchange Gateways are going to be important
Debit cards have lower interchange for e-commerce business owners.
rates as they present a lower risk; each Because a lot of the really good
credit card brand will charge a processors who offer direct
different rate based on the type of agreements are directly integrated
card used. Rewards cards that pay with Shopify, you will need to choose a
perks, like points or miles, charge good, compatible gateway.
higher rates because they entice Authorize.net is a great option for any
Authoriz
consumers to use the card
ca to receive e-commerce business owner as they
the added perks. have something for everyone and you
mainly want to use them as a gateway
Rates can also vary based on the to a processor. They are a third-party,
business model and industry, as some so the tailoring of your solution is not
higher-risk industries are more prone like what you would get with a direct
to chargebacks. Restaurants and agreement. The gateway is for
ag
supermarkets tend to have the lowest businesses that have a merchant
rates as no one charges back their account and need to use authorized
tacos or a gallon of milk. These rates technology to process payments on
have been negotiated over time to the
ha the platform of their choosing. This
low rate they are today. While plan is very cost-effective as it is just
industries like adult, e-commerce, $25 a month and $0.10 per transaction
Nutra tend to be the highest risk with a $0.10 batch fee.
because they are card-not-present
industries and the chargeback rates
have stayed high as the industries have NMI
grown. NMI is another great choice for
e-commerce merchants. They are a
very reliable and versatile payment
gateway that offers a variety of tools to
support e-commerce merchant’s
needs. The payment technology gives
the merchant more security control
for the cardholders.
ca
CHAPTER 11 AFFECTING FACTORS
NMI is unique in that they allow the This is an essential tool that allows the
merchant to have multiple merchant merchant to direct the flow of
accounts per user. transactions, which is useful if you have
volume caps or a lot of chargebacks
that need to be spread out.
How to ensure a reliable

boards an e-commerce merchant and a
sponsor bank restaurant merchant. The e-commerce
Direct agreement processors work merchant will be boarded in the BIN at
with the bank directly. Most direct the higher-risk bank so that bank is
agreement processors work with aware of how a merchant operates and
multiple banks and will place different is familiar with the business model,
merchants at different banks based on while the restaurant is boarded at the
what they sell or the risk of the low-risk bank that deals with low-risk
lo
business. The processor wants to get retail clients. A bank that deals with
the account live
li so they, too, can make higher-risk merchants allow for that
money on your account, this means merchant process within the bank's
they are working for you when placing guidelines. The key to finding a reliable
an account at a bank. They will take sponsor bank is to use a direct
your account and place it at the agreement processor to increase your
appropriate bank for the best chance lilikelihood of working with the right
of approval. For example: a processor type of bank.
How to continue processing if ultimately the processor’s choice of

you get banned (what to do to how much risk they see in your
avoid detection) accounts.
If you get put on the MATCH list, all
your current and active merchant Things to set up on your store
accounts will remain active. However, to avoid getting holds or bans
opening a new account is next to
impossible. If you think you are at risk Make sure the Terms and Conditions
of being put on the MATCH list, do on your site are clear about what you
EVERYTHING in your power to abide are selling and how you are selling it.
by chargeback numbers, volume The refund and shipping policy needs
expectations and prevent fraud at any to be accurate and something you can
means necessary. This means you might hold yourself to. Do not make any
have to take your $500K a month promises on your site that you or your
store to $350K if that means the risk product or service can't do. Sell what
pr
goes down dramatically. Risk is relative you signed up to sell. This doesn't mean
to the merchant, you should be aware you can only sell one product, but it
of what you and your team can handle does mean that you do need to be
and what the processor would realistic with what you are selling.
consider “safe”. At this point, it is Don’t start selling shorts and then shift
about the longevity of your business. to selling a portable hair removal kit.
No pump and dumps.You need to run These two
t products have very
the active accounts like this is your last different risk and are assessed
chance at getting a merchant account. differently. With a direct agreement, the
Avoid problems at all costs. processor needs to be aware of what
you are selling so they can also avoid
Remember your current processor is fines and having to deal with VISA and
not notified about MATCH (unless MasterCard.
they were the one that put you on) so
behaving and following the rules will
only help you sustain your current How to negotiate or reduce
merchant accounts. However, if your holds
processor runs a MATCH check on As we’ve previously discussed, use a
active merchants - which is done every
acti direct agreement processor. This way,
couple of months - your processor you can build a relationship with your
may terminate your accounts.You can processor and help them understand
try asking for a reserve, but it is your business.
However, having a hold against you violated and why your funds are held.
gives them a reason to believe you are The longer that you wait to fix the
doing something that might put them problem the less trustworthy you are
at risk. Supply your process with in the eyes of your processor. Always
whatever they ask for. This means if be cooperative and polite with the
they have questions you need to have people who are holding your money,
the answers for them. If the volume hostility never helps. Always go out of
spikes, be prepared to show why. If you
spi your way
w to show documentation and
have an increase in chargebacks, have a always ask if you can show more to
plan ready that shows you are taking support your claim. If you have other
the reins on fixing the problem. merchant accounts in good standing
with your processor, don’t be afraid to
Be proactive. When your funds are leverage them to release your funds or
held, find out why, quickly, and the reduce your holds.
correct steps you need to take to fix
the problem. The same goes for
chargebacks, especially because If customer service can’t solve
chargebacks are heavily favored to the my problems, who should I
customer. Submit all the correct speak to? How should I get a
paperwork in a timely fashion for
pa hold of them?
every chargeback you get. If you can At companies like Stripe, customer
prove a good record at winning service is very basic and in most cases,
disputes, then you can help your case they will provide very little information
in getting your processor to release about your account. With any
your money. processor, you want to try to talk with
the VP of Risk as they are the ones
Be aware of any rules that you may who are in charge of holds and freezes
have accidentally violated. If it wasn't on merchant
me accounts. Always be
chargebacks or a volume spike, it's polite with the customer service and
likely it was a violation of the terms risk departments as they control your
and conditions. Pretty common funds. Ideally, you always want to
violations include selling or advertising communicate with your processor and
illegal or unauthorized products, create relationships. Being a good
misrepresenting your business model,
mis merchant and running ethical
or going over your volume cap. It's businesses will go a long way. Show
important to reach out to your your processor that you are of value
processor and find out what you and low-risk before attempting any
high-risk activity. Communicate clearly Descriptors are something that most

and politely, and always ask for a e-comm business owners are not
manager when talking to a processor. aware of. Descriptors, or billing
decorators, are what shows up on the
customer’s card statement. For
Do these laws apply to other example, if your LLC is registered as
countries outside the US? “ABC Company” but your product
If not, what policy does Europe and DBA
D are “Blue Pillow 2.0,” your
hold in general, Asia, and South descriptor needs to be what the
America? product is. The customer will recognize
If you take Visa, MC, Discover, or Amex, the product, not the LLC name, which
the rules apply to the US and to the will help with chargebacks when
rest of the world. However, different people don’t recognize the charge.
regions have different variations on the Have a toll-free number or any
rules. Generally, the variations are very office/customer service
se phone number
small and most are not different from so that customers who do not recall
country to country. the purchase can call in a verification
before they call their bank to issue a
All Rules can be found here. chargeback. It is also worth doing the
diligence of testing your shopping carts
and follow-up flows for errors. This
Finish Your Setup Properly means emails,
emails billing statements,
shipping confirmation, and everything
The first thing e-comm business
else you might send.
owners need to do is present
everything correctly on their site.
Always make sure that the email
Make sure you clearly display your
Ma
confirmations are sent immediately
businesses contact information on
after the purchase. It is also important
every page of your website, follow up
to make sure there is a refund order
emails, shipping materials, and any
email confirmation and information
correspondence between you and
about how their card issuer may take a
your customer. If customers can't
full billing cycle to apply the refund to
reach you, the chances of a chargeback
their account.
account Be completely
increase dramatically. Contact info for
inc
transparent with your customer.
your business should include phone
numbers and email addresses.
Policies need to be clear and available your chances of winning disputes.

on all pages of your site. This means
that policies for your billing, returns, Maintain all records and documents
shipping, backorders, and your privacy that you need to support your case
policy. This is important for your because the odds are stacked against
processor and provides insight into you to prove the transaction was
what they should expect for refund legitimate. This might include
times.
times confirmation and follow-up emails with
any tracking details. Always ask for
Everything needs to be set up properly signatures on deliveries so you can
signatu
on your e-commerce store including prove the package was shipped and
clear terms and conditions, clear delivered in a timely manner. Track the
shipping and refund policy, and no IP address and the download time and
promises that can’t be proven. Be dates of any digital communications
realistic with your volume and scale at with the customer so you can prove
pace while communicating with your they live or work at the address that
processing as to what is happening.
pr the order
o was shipped to.
Unexpected increases in volume,
chargebacks, and refunds are never Always look at the chargeback reason
good surprises. codes for valuable information about
the customer’s motives. Depending on
the card, each card brand will have its
How to properly file a dispute own reason code for the dispute. The
and increase your odds of reason code will provide the motive
winning it behind the chargeback and the dispute
First things first, ALWAYS fight your will be based on that.
that
chargebacks when you have the
evidence. Chargebacks were created Try to solve chargeback issues within
to protect the customer, which means customer service. Having a proactive
it can be challenging to win a dispute. customer service team can go a long
For this reason, merchants need to do way toward reducing chargebacks.
everything they can to reduce the Make sure you have a clear customer
number of chargebacks they
th get. service number for your clients to call,
Chargebacks will happen, but it doesn't rather than leaving them with the only
mean you will lose all of them. About option of calling their bank for a
50% of chargebacks are actually chargeback. With clear contact
friendly fraud, which means you can up information and refund policies, you
can drop the number of chargebacks What should you do if your

placed against you.You want your processor doesn’t release held
customers to go through you to funds after the 180 days?
resolve problems instead of their bank.
Processors can legally keep your
When a chargeback comes in, you will
money 180 days, but if you receive
have about 7 to 10 days to accept and
chargebacks at any time in that 180
fight the file. Always try and issue a
days, the clock resets. Theoretically, a
refund instead of a chargeback.
chargeback
processor could hold your funds for up
to a year if you receive another
Should disputes always be filed chargeback on day 180 of the original
or can they be left unattended? hold.
hold
This is a big question for e-commerce

business owners. If you are fulfilling Do Not Mix Your Merchant
orders and providing your customers Accounts
with the product or service they are If you sign up with a processor to sell
buying, then yes, you should fight every shorts for $35, you shouldn’t be
chargeback. If you are not fulfilling running any other businesses through
orders or using Aliexpress with their that account. If they see charges for
three-month shipping times, don't
th $9.99 when they are expecting $35, a
waste your time because you will not red flag raises and you’ll likely be up for
win.You need to fight against a review. Some e-comm business
chargebacks because friendly fraud owners will blend their accounts,
accounts
accounts for 40% of all chargebacks. which is not legal, and breaks the
This means people who legitimately terms and conditions you agreed to
bought your product or service and with your processor. If you have
received it are claiming fraud. This chargeback issues on one of your
means you can potentially win these stores, do not attempt to run those
chargebacks by supplying all transactions on another store that has
documentation proving the product or no chargebacks.
chargebacks
service was delivered to the customer.
Chargebacks stay on your record, so
fighting them and removing as many as Legal hacks to process higher
you can will help keep your processing volumes and mitigate risk
history clean.
It’s simple: Have a clean processing
history and ask for reserves.
Yes, ask your processor to hold a when you apply for a merchant
percentage of your funds. Processors account, as it is a significant indicator of
hold all the risk. When you're scaling how processors view you and your
your business to higher volumes you business.
become more of a risk to the
processor. Putting the reserve in place Why does credit matter at all? When a
is one way to process higher volumes business runs a credit card transaction,
with lower
l risk. The reserve will the funds are taken from the
mitigate the risk on your account so customer’s account, transferred
that if something unexpected happens, through your processor’s gateway, and
the processor has funds to cover it. If deposited into your business bank
you are capped at a certain volume, try account. This happens on the
to maintain your volume cap for a few assumption that the customer is
months with a clean history. This can getting the goods or services that they
also be worked out in advance with paid for. If the customer issues a
your processor as to what you chargeback, the processor will remove
realistically expect for a volume. Having the business bank account’s funds and
a clean history can be your biggest refund the product’s charged amount. If
asset when working with a processor. there are not enough funds in the
Build a relationship with a new business account to cover
c the
processor, have few chargebacks, and chargeback and the relevant fees, the
stay just under your cap for a few
st processor will have to pay out of
months to show they can trust you. pocket to cover the chargeback cost.
Then let them know that you are This example is for a single chargeback,
looking to do higher volumes through but there are many cases where fraud
your account. Between a clean history can leave a bank or processor with
and having a reserve, processors will hundreds of thousands in fees—credit
hund
almost always allow you to work with matters. Good credit means you’re not
higher volumes. likely to leave the processor with
excessive fees they’ll have to pay.
Credit and the importance of During the application process, your

credit for a merchant account personal credit will affect your
A merchant account is essentially a merchant account in one of three
credit line that allows you to take ways:
credit card payments from customers.
Your personal credit is very important
1. If your personal credit is in poor Does my personal credit affect

health, there's a chance your my rates with my processor?
application will be declined. Usually, No, personal credit does not affect the
only extremely poor credit scores are rates that are involved with your
declined. merchant account. Personal credit will
only affect the account’s approval,
2. If your personal credit is in an OK potential reserves on the account, and
standing the merchant account will be a possible delay of funds.These are all
approved but the processor may ask measures processors use to mitigate
for a reserve or a delay on funding the risk of a potentially
potential risky merchant
your payments. with poor credit.
3. If your personal credit is good, the
account will likely be approved. Can you still get a merchant
account with poor credit?
After the account is approved, your The answer is yes, but only with the
credit risk will be measured by the right processor. The processor may put
processing activity. restrictions on volume until you have
established your business as low-risk.
How good does your credit score Work with the processor and build the
need to be? There is no exact rating, relationship. Follow guidelines of limits
but generally, a score of 601 to 660 is for monthly volumes and let your
considered fair. Anything below 601 business be what determines your risk,
will either be declined or asked for a not your personal credit. Working with
reserve or delayed payments.Your direct agreement processors will allow
credit does not need to be perfect to you to be appropriately vetted even
get a merchant
me account. The strength with poor credit.
of your credit score will determine the
amount of volume you can request
from your processor. Poor credit Qualifications for High-Risk
indicates a higher risk, which leads to a vs. Low-Risk Merchants
lower processing volume request.
When talking about the risk of your
When a processor reviews your
business, it is important to be honest
personal credit,
c it comes through as a
with yourself. Service providers don't
soft check; this means it will not affect
like taking risks, especially when the
your score.
risk involves their money and liability
on products or services.Your business’s the payment provider will vet your

risk level has nothing to do if you're a business and determine your risk level.
trustworthy person and everything to
do with the type of business you are in. Low-risk merchants might mean:
Many factors go into what is and isn’t • Your company brings in less than
high risk. $20k a month.
• Your average ticket is low, under
These factors include: $100.
• If the industry you’re in has a higher • You have almost no chargebacks in a
chargeback ratio. Example: Selling low-chargeback industry.
tacos at a restaurant has a different • You are in a low-risk industry.
risk valuation than a business that • The credit-card
c is present at your
dropships products from China. transactions.
• The company is new or does not • You're incorporated in a low-risk
have a clean solid merchant history. state.
• The company’s
compa revenue is not yet
financially stable. If you are high-risk, you can expect a
• The owner has bad credit. few things when trying to get a
• High average ticket price. merchant account.
• Customers buy months in advance
for the product or service (airplane • Higher fees and additional charges.
tickets/ Presale). • Fewer and less favorable service
• Customers ingest the products.
p options.
• The product can potentially harm • Account Reserves.
customer.
• The product features nudity or adult Is it possible to become a
content. low-risk merchant?
If your business hits any of these The short answer is: yes, in some cases.
factors, you're likely a high-risk If you are in the adult space or selling
merchant.That being said, there is a diet pills you will never be able to
gray area on what is considered high or evade the high-risk label. However, if
low risk.That's why it's important to you are at high risk because of your
understand what applies to you and if chargebacks, you can make changes to
you are a high-risk merchant working your business to have your category
with a high-risk processor.
p Before you changed.You should also be prepared
changed
are approved for a merchant account, to lower your risk before looking for a
new merchant account; this means Things needed for the LLC and
making sure your financials are in check, business bank account:
your business model is clean and safe,
• LLC approval docs will be either
and your chargebacks are kept to a
Articles of organization, certificate
minimum.
of organization, and certificate of
formation.
A few things you can do to lower your
• Passport and phone number and
risk are:
contact information.
• Reduce your chargebacks and use • LLC address.
fraud-prevention tactics. • Empl
Employer Identification Number
• Maintain a stable stream of revenue EIN or SS-4.
and consistent volumes. • CP 575 Letter (this will be mailed to
• Outline your terms and conditions the address of the registered agent).
to benefit your business practices (if • EIN Verification Letter 147C.
shipping takes 14 days, make sure
your T&C’s and shipping policy says
14 days). Organization Template for
e-comm Business Owners
Qualifications for foreigners to process I always recommend keeping all your
in the US. stores and the banks and processors
you use well-organized. Here is a
Non-US residents can open an LLC template that will help you keep your
and get a bank account in the U.S.The stores organized.
LLC must be approved before opening
the business bank account. For those
who are friendly, but non-US citizens,
Mercury is a company that does not
make you travel to the U.S. for you to
create an LLC. Many banks will require
cr
proof of address, lease, utility bill, or
phone bill.They want to know you have
an office in the US and will not allow
you to use a registered agent address.
With Mercury, they tend to be more
flexible with the online entrepreneurs and
in some cases let you use a registered
agent for the LLC office address.
What connects you to a Nutra Business Model Protocol

merchant account? Nutra is very similar to the
A merchant account is provided to a dropshipping world. Most companies
business.The owner of the business is are small e-commerce stores that
tied to the merchant account and private label mass-produced products.
everything involved with the merchant This model is extremely difficult to get
account. Information like the principal processing for. Unfortunately, the
on the corporation or the LLC ties the chargeback rate and the percentage of
merchant account to the business. fraud within the industry
indust are the main
What does this mean? reasons that Nutra accounts are
considered high risk. Consumable
Nutra invites more room for error and
Information that ties your chargebacks as customers hold these
merchant account to you: products to a higher standard.
Name, phone numbers, addresses, email
addresses, corporations, LLCs, DBAs, When starting a Nutra business, you
EINs, SSNs, and URLs. All the principal’s first have to find a high-risk processor. A
personal information on the high-risk processor will vet your site
corporation or LLC links to the correctly and is already familiar with
merchant account and business your business model.This will be
associated with it. important when you begin to scale, as
the processor should be involved with
you throughout
th the process. Nutra is
banned from most mainstream
processors as the risk of fraud is just
too high.
Nutra, and the models that go along A subscription or trial based Nutra
with it, see a lot of chargebacks because account must have a high-risk
of their misleading way of doing processor to work with.This processor
business.Trials and subscriptions are will vet the site correctly and make
two of the highest-risk models and sure there is no misleading information,
Nutra accounts tend to use both as well as ensure T&C’s and Return
models. Nutra models that use the Policies are in check.
straight-sale model are
a still classified as
high-risk, but may be subject to lower
fees and reserves.
CONCLUSION
Well, this is it ladies and gentlemen.You have become more educated that 99.9% of
entrepreneurs regarding the only process that allows you to collect payments in real
time. If you can diversify your risk you will be able to scale in a way that minimizes
your liability and allows you to have an organized plan with regards to your payment
processing.
My hope is that you can spot instances in your day to day operations that have been
deemed ill practices or that can get you in trouble so that you are focused on
longevity and long terms play over quick cash grabs.
I recently partnered with the bank that processes all my payments, as Stripe and
PayPal become more corporate and less flexible I have found it extremely important
to switch to a processor that allows for open communication channels so that I can
build and scale with little fear.
I usually
usual don't share information regarding my advantageous SOPs but this is too
crucial for people not to know as my hope is that you don’t face the same obstacles
I did. I have spoken with the heads of the bank and come to an agreement with
them for your sake.
If you operate a US business entity then this is relevant for you.
I have
h decided to give you guys access to my payment processing team so that you
can also have more personalized processing and be able to scale with less trouble
and get more pointed questions when you need help.
Attached below
bel is a link to the application page. In this application page you will be
asked some basic questions about yourself and your business model and then
someone from the bank will process your information and contact you to get you
cheaper processing with a reduced chance of holds or bans.Yes, you actually got
access to something worth millions here. The best part is that this will be cross
referenced with the PDF purchases so no one who pirated the purchase will have
access to the single best opportunity of the year. Sorry scammers.
Information with no actualization means very little that is why I am gonna help you
In
guys practically put into practice what you’ve learned in this PDF.
CONCLUSI
ON
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Confessions of A Banker

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CONTENTS

THE BASICS: WHAT IS PAYMENT PROCESSING?

Who is Involved in Credit

PROCESSING PAYMENTS AND PRICING MODELS

What is a Payment Processing The Sponsor Bank

to the issuing bank, back to the

2. The payment processor routes the

approve or deny the transaction for Captures may take up to 30 days to

The refund amount is then debited offer same-day deposits, as it would

Other Pricing Models to Tiered Pricing

Flat Rate Pricing Structure:

CHOOSING A PROCESSOR: CHEAPER ISN’T BETTER

Price Shouldn’t Be Your you need to know what functions

chargebacks, you will want a process transactions when a card is

Every year, criminals find cunning new

HELD FUNDS AND RESERVES

The Most Common Merchant Defining Withheld Funds (Hold)

Depending on the processor, certain What is a Merchant Account

Merchant Account Reserve? Reserve accounts are sometimes

Everyone has a different experience

When your scaling sets off an alert like

A rolling reserve gradually releases an escrow account at the start of the

Who Determines Your Reserve

When are Reserve Funds

is closed. If you have a temporary When a bank terminates an account, it

WHAT YOU MIGHT NOT KNOW ABOUT CONTRACTS

Such Reserve Account may be funded by A freeze results in a review of your

Note Stripe’s specific reasons listed in

8 GOLDEN NUGGETS TO SUCCESS WITH A PROCESSOR

Pick the Right Type of

Be Honest With Your Low-volume merchants using a

Don’t Mix Your Accounts getting filled and delivered on time.

Minimize Fraud Keep Documentation

Many payment processing providers If you get a chargeback notice and

WHAT TO DO IF YOU HAVE A HOLD, FREEZE, OR TERMINATION

complicate things. If you were Your best course of action is to avoid

THE RULES AROUND CHARGEBACKS

• Standard fees: Every chargeback It Takes a Ton of Time To

What is the MATCH List? MasterCard's acquirers are required to

There’s no formal notification process

1. Account Data Compromise processors and the acquiring banks

How to ensure a reliable

How to continue processing if ultimately the processor’s choice of

high-risk activity. Communicate clearly Descriptors are something that most

Policies need to be clear and available your chances of winning disputes.

can drop the number of chargebacks What should you do if your

This is a big question for e-commerce

Credit and the importance of During the application process, your

1. If your personal credit is in poor Does my personal credit affect

on products or services.Your business’s the payment provider will vet your

What connects you to a Nutra Business Model Protocol

If you operate a US business entity then this is relevant for you.

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