What is the Terminated Merchant File?

The Terminated Merchant File (TMF) is a list of business owners with flagged merchant accounts. It is also known as the MATCH (Member Alert to Control High Risk) list. Mastercard maintains the TMF and keeps track of revoked merchant accounts.

Landing on the TMF is the ultimate consequence of excessive chargebacks. Payment processing becomes unavailable to TMF merchants. Very few account providers make exceptions for these business owners.

Financial institutions and banks reference the TMF when considering merchant account applications. The universal database helps protect providers from working with businesses that can likely cause losses.

Ending up with your merchant identification number (MID) on TMF doesn’t happen overnight. Most likely, a history of out-of-control chargebacks and fraud led you to be flagged. Although recovering from being a TMF merchant isn’t a walk in the park, it’s still possible to bounce back and be able to process payments again.

Who is on the Terminated Merchant File?

Terminated merchant file businesses are high-risk merchants who have been blacklisted. A business usually escalates to a high-risk status before Mastercard lists them on TMF.

What is a High-Risk Merchant?

A high-risk merchant has a large possibility of incurring chargebacks. The type of industry and business history can determine a merchant’s risk level. A high-risk status helps banks and payment processors decide if they want to work with certain businesses.

Being a high-risk merchant doesn’t make it impossible to find account providers and other merchant services. However, mainstream banks and merchant services providers are not likely to take on a high-risk merchant. These businesses have better luck seeking help from account providers specialized in high risk merchant services, such as Revitpay.

Reasons Your Business is Listed in the Terminated Merchant File

Excessive chargebacks is a common reason for becoming a MATCH list merchant, but it is not the only one. Mastercard has corresponding reason codes’ to indicate why a business becomes listed on the TMF.

Code 01: Account Data Compromise

Account data compromise can be intentional or unintentional by the merchant. Another person or merchant uses the account data outside of authorized account owners. The account data may have been stolen. However, a case in which a merchant willingly gives access to unauthorized parties would fall under this reason code as well.

Code 02: Common Point of Purchase (CPP)

CPP happens with card-present merchants. Account information is stolen from point-of-sales terminals, then used to make unauthorized purchases.

Code 03: Laundering

Merchant money laundering looks like presenting invalid transactions as valid. These false transactions are not made by real cardholders. Businesses may be creating false covers for illegally-obtained money by misrepresenting transactions.

Code 04: Excessive Chargebacks

Chargebacks are the result of customer disputes in which a merchant fails to correct or are at fault. Fraudulent transactions can cause chargebacks as well as authorization errors.

Each major credit card company has a different chargeback threshold. Chargeback thresholds determine how much a merchant can exceed in their chargeback to transaction ratio. For example, Mastercard’s monthly chargeback threshold is 1% for merchants.

Code 05: Excessive Fraud

Fraud can lead to excessive chargebacks, however, a high number of fraudulent transactions is reason enough for merchant accounts to be shut down. Like chargebacks, credit card companies have fraud threshold guidelines to determine how much fraud is excessive. Fraud threshold can be measured by the fraud-to-sales dollar volume ratio as well as the total dollar amount lost to fraud in a month.

A high amount of fraud can be a sign of weak security on the part of the merchant. So although merchants are victims of fraud, there are measures they can put in place so that they can protect their transactions as much as possible.

Code 06: Reserved for Future Use

This reason code is currently unused.

Code 07: Fraud Conviction

A merchant, principal owner, or merchant partner commits criminal fraud and is convicted.

Code 08: Mastercard Questionable Merchant Audit Program

Mastercard implements their Questionable Merchant Audit Program (QMAP) as an in-depth guideline and investigation system. A business can qualify as a questionable merchant through a combination of different reasons, such as excessive fraud, as well as other inappropriate activity.

Code 09: Bankruptcy/Liquidation/Insolvency

A merchant faces bankruptcy or liquidation. They’re unable to pay off their debts and may need to sell their assets.

Code 10: Violation of Standards

The bank that hosts a merchant’s account, or the acquirer, may report a merchant under this code in cases of violating card company standards or rules.

Code 11: Merchant Collusion

Merchant fraudulent collusion can include instances of authorized cardholders and merchants creating false transactions.

Code 12: PCI Data Security Standard Noncompliance

Payment Card Industry (PCI) standards enforce secure transaction processing. These security regulations include appropriate ways to accept, store, and transfer cardholder information. Noncompliance can lead a merchant to be blacklisted.

Code 13: Illegal Transactions

Illegal transactions refer to the Federal Election Campaign Act of 1971 and use the article as a guideline as to what constitutes an illegal transaction committed by a business.

Code 14: Identity Theft

A business’s owners or partners are suspected to be of questionable identity. This indicates that an unlawful merchant agreement has taken place.

What to do if Your Business is on the Terminated Merchant File

If your name is on the TMF, it does not mean the end of your business. There are ways to remove a merchant’s name from the MATCH list. Depending on the reason code, businesses can consult their payment processors or lawyers to reverse their TMF status.

Additionally, every high-risk merchant should take all precautions to prevent ending up on the TMF. Chargeback prevention tools such as chargeback notifications can help keep your business on top of disputes and fraud. Revitpay uses a combination of expert consultation and technology to aid high-risk merchants in keeping their chargeback rates low. Revitpay is also well-versed in other important aspects such as PCI to keep merchants in compliance.