If you happen to be a part of the list or worried that your business might be in it, worry not because it’s not the end of the line — just yet. This ultimate guide will let you know everything there is to understand about terminated merchant files and what it means to be in it. What is a TMF in the first place?
What is Terminated Merchant File?
A Terminated Merchant File is used by processing companies to screen merchant account applicants. It serves as a list of blacklisted merchants and prevents them from opening a new merchant account from a different credit card processor than their previous institution. It’s basically an eCommerce list that warns other financial institutions from doing business with everyone on file.
There are several reasons (fourteen to be exact) for a merchant like you to be included in the list but the most common cause is excessive chargeback or known to professionals as MATCH list reason code 4.
Chargebacks happen when a customer successfully disputes a payment they made on the eCommerce site. And in some instances, they file for a dispute instead of returning the product. When the number of chargebacks exceed the threshold set by the credit card company, the merchant’s ID is likely to be cancelled and then added to the MATCH list.
How to Find Out If You’re in the MATCH list and Who Controls TMF
The most unfortunate thing about the TMF List or Terminated Merchant File list is that you don’t get any formal notification (in written or verbal form). You may already be on the list without your knowledge. Many merchant accounts only find out about their status when they try to open a new account and get rejected by credit card companies.
There are several reasons that could get you listed on the TMF. Here’s the full list of reasons provided by Mastercard and their corresponding explanation:
- Code 01: Account Data Compromise
As a merchant, you could have unknowingly aided in disclosing private account information without authorization, which then led to compromising the account data.
- Code 02: Common Point of Purchase (CPP)
You knowingly caused or facilitated a transaction that disclosed the account information without any authorization.
- Code 03: Laundering
Presenting invalid sales transaction between you and a cardholder to an acquirer is considered laundering. Any participation in such activity falls under this code.
- Code 04: Excessive Chargebacks
- Code 05: Excessive Fraud
The standard limit to fraudulent transactions (counterfeit and such) is limited to less than 8% of the fraud-to-sales dollar volume ratio. Beyond the ratio in one calendar month is a violation to this code.
- Code 07: Fraud Conviction
You have been convicted with criminal fraud. This happens if the business owner, or one of the business owners was filed with criminal fraud.
- Code 08: Mastercard Questionable Merchant Audit Program
You have been labeled as a “Questionable Merchant.” This is determined by MasterCard’s own guidelines.
- Code 09: Bankruptcy/Liquidation/Insolvency
There is a previous record of you not meeting your financial obligations. It may be caused by bankruptcy, insolvency, or liquidation of assets.
- Code 10: Violation of Standards/li>
This relates to any violation made against MasterCard’s Rules manual which is not limited to standard of honoring cards, charging cardholders, transaction amount restrictions, prohibited transactions, and other states rules.
- Code 11: Merchant Collusion
This refers to any participation in fraudulent collusive activities of any form.
- Code 12: PCI Data Security Standard Noncompliance
Failing to abide to the Payment Card Industry Data Security Standard (PCI DSS) requirements is a violation of this code.
- Code 13: Illegal Transactions
This refers to any transaction sanctioned as illegal by the federal government. Participation in any form of illegal transaction is deemed an infraction of this code.
- Code 14: Identity Theft
Purposely using a different identity to enter a merchant agreement — whether as the merchant or as a principal owner, is unlawful and thus considered a violation of this agreement. You need to verify the identifications you present and the falsification of such documents is punishable by law.
There is no definite way for you to know if you are in the Terminated Merchant Files of credit card processors. However, a quick way to self-assess is to check the list of reasons above.
Remember that a single violation of any of the items on the list of code can be an express ticket towards the MATCH list. The best way to avoid the TMF list is to avoid breaking any of the standards above.
But, what can you do if you are already in the list?
How to be Removed from the Terminated Merchant File?
Assuming you are on the list, what happens now? Put simply, the key to your removal and ultimate business reintegration lies in the financial institution that put you in the TMF list. This leads us to the first step you need to take.
Step one is to call your previous credit card acquirer. Find the right contact person that could give you the full explanation as to why you were added in the list. You need to know what you did wrong in the first place, so you know what to do.
While it sounds so easy, it’s not always that simple. It can be easy to get removed from the list if the reason you’re in it is code 4 or excessive chargebacks. The acquiring bank will only have to wait until all the chargeback claims are set right and no further chargebacks from previous customers are made. When you’re in the clear, you will then have a chance to be removed from the list.
In some cases, there are merchants that were added on the list by mistake. This may sound unfortunate, but this is not uncommon. Call the bank again and request for your details to change, and eventually get your business removed from the list. The acquirer still has to conduct an investigation to prove that your claim is true — that there really was an error that led to your business being added on the TMF.
An important note to remember is that MasterCard, Visa and other credit card networks do not simply update the list. In fact, they keep merchant names in the MATCH list for a minimum of five years. Those that get unlisted within five years on the list could be:
- An erroneous listing and was proven that the merchant was only added by error
- A PCI non-compliant merchant that was listed in the MATCH list but is now compliant to the PCI Data Security Standard
Nonetheless, there’s no need to be discouraged! You can still reach out to a terminated merchant file lawyer and seek for legal counsel. They can assist you with the legal actions you can take and represent you in possible arbitrations with credit card companies. Another great option is to seek the services of high-risk merchant account solution providers. They can help you out in TMF list removals or getting merchant accounts despite being in the terminated merchant files list. Talk to your team of experts to get started!
