What would your jewelry store do if one day your merchant services account was terminated and you could not accept any payment cards? Even worse, you tried to open another merchant account only be told you’re on MATCH and declined. What do you do?
The prior questions are very serious, yet overlooked by so many merchants today. Few realize what MATCH means and the implications. Even fewer understand how to mitigate if they find their business on MATCH.
MATCH is the Member Alert to Control High Risk, better known as the Terminated Merchant File list. A business can be listed on MATCH for excessive fraud, identify theft, or fraudulent transactions committed by the merchant. The most common listing is excessive fraud which results from chargeback disputes. Almost all jewelers have experienced a chargeback at one time or another.
It doesn’t take much to get listed. The card associations – Visa, MasterCard & Discover primarily have set a membership rule that chargeback thresholds should not exceed 1% of your transactional and volume dollars processed in any given month. The 1% ratio is more like a guideline with very little enforcement being applied to merchants who exceed that ratio but remain under 2%. Yet with jewelry it doesn’t take much to move into the volume dollar processed range. Take for example, your store averages $90K monthly in sales processed by credit & debit cards. You sold a high ticket watch two months earlier which now comes back as a chargeback. The sale amount was $15K. That one sale accounted for 16.7% of the monthly volume in the month the chargeback was recorded. Forget the 1% – 2% range – you blew right past it.
One transaction generally should not trigger the risk level at the card processor but 1 or more additional chargebacks can! Your processor should be requesting sales details on every chargeback to help you defend it. With every chargeback dispute, a merchant has 15 days to submit their reply (defense) against it. If you do not respond, the chargeback will become final and the provision credit given to the cardholder will become permanent. If the chargeback dispute is ruled against you, it counts. This is where merchants overlook, or do not understand the chargeback rules. Few payment professionals advise you on how to handle sales, when to validate, and how to validate. In jewelry, fraudulent transactions do occur.
I have spoken at JCK and regional conferences, the smash and grab robber is the stupid one. The smart criminals are the ones who steal without the jeweler realizing it until it’s a month or two later via chargeback! The financial consequences and your insurance coverage will come into play between the two thieves. Which one is covered and which one is probably not?
Back to Match, your processor notifies you, because of Excessive Fraud “chargebacks” they are placing your business on MATCH and your merchant account has been terminated. That is your notice. You get no real notice, your account is suspended and the ability to transact cards is terminated. OK you say, no big deal, call another processor. You find out rather quickly that maybe it’s a bigger deal than you thought. All processors through their underwriting process confirm business details which includes validating against the MATCH list. Well your business is on it, guess what? You’re declined.
In the jewelry business accepting credit & debit cards is a lifeline. Most of the sales are paid via plastic. What do you do? Your business is now considered high risk and need to find alternative processors. You find a high-risk processor. Pay twice, three or four times the discount rate you paid prior and have your funding delayed by 2-5 days longer. What does that do to your cash flow and probably even worse, your bottom line?
I have been asked, is there a Due Process for a merchant before being listed. As it stands currently, no. If the processor deems the chargeback legitimate and it’s debited against you, it counts. The thresholds are in place. If they list you, you are given little or no warning. No payment types court venue or arbitration to plead your case. Once you are on the MATCH listing, the business will remain there for 5 years.
Some merchants have tried to be creative by filing a new corporation, EIN and bank account. Even slightly change the store name, but not enough to confuse long standing customers and their local market. Well guess what? The processors are more intuitive and can match business owner, physical address, trade, etc. It will not work; your new corporation is all the same and so is the inability to avoid MATCH.
Is all lost? Not necessarily! There are jewelers who should be on MATCH because of bad business practices. We all contend with bad apples in our business. There are jewelers who through no guilt of their own are on MATCH when they shouldn’t be. There does exist a very narrow path to try and get them removed.
In an educational article, I do not like to put any sales spin. What I am about to say is a message to jewelers who find their business on MATCH or might think they’re heading there. If your store is on MATCH, please contact me. We are looking for cases to review, help, and the bigger picture, get a Due Process established between the Payment Brands and the Payment Processors. We have had success getting jewelers removed from MATCH.
I will end this article with this message – prevent the chargeback! That is the single largest trigger for MATCH. Believe it, more chargebacks occur at the countertop than through online sales. Validating the sale is important. Ask for driver’s license or ID on every sale that is not chip card read. Imprint the card if you key enter it. Have the customer sign the imprinted slip along with your POS receipt. Take a photo copy of their driver’s license or ID. Place those docs in your store vault for 180 days, the maximum amount of time for a chargeback dispute. If disputed, you have the required documentation to defend yourself. Please take note of what I said earlier in this article – you have 15 days to respond to the chargeback. Respond or inaction on your part costs you.
Joe Radest started his career in card payments in 1998 working for the industry giant First Data. Since FDC, Joe has worked with other notable processors – TSYS, Global Payments and Chase Paymentech. Over 7 years ago, Joe branched out on his own, providing complete end to end business management and secured payment technology solutions, which affords business clients the ability to securely transact payments without having sensitive data touching their environment. In addition to 1 Step Technologies, Joe is an equity partner in two other payments companies – Payix Holdings and Fortress Payments Technologies, and serves on two boards. He lives in Atlanta with his family. He can be reached by phone at 770-731-0414 or by email at email@example.com