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Merchant Credit Card Processing Horror Stories

banks are changing the game for merchants who accept credit cards.



10:47 pm on Jun 9, 2010 (gmt 0)

WebmasterWorld Senior Member 5+ Year Member

Some banks are changing the game for merchants who accept credit cards.

With the economy in a slump many credit card processors are requiring merchants to keep funds in reserve to cover future processing fees or potential chargebacks.

We'd heard of this in the past but never really had an issue with it. Until Now!

We recently had some fraud out of Canada to the tune of $4700 over a few months. Yea we were pissed, but it was a loss we could deal with.

That is until we noticed just after Memorial Day that we realized we werent getting our settlements, at first we thought .. ok it's just after a holiday so there's a delay, but after a week of no money I mean NO money coming in we got very concerned and called Chase Paymentech to see what was going on. Of course we get transferred all over the place and no one gives us real answers and then are finally sent over to someone at a totally different company First Data. Huh?

After about 10 phone calls later we finally get an answer as to what the heck is going on. Basically because of the fraud and that we actually give credits to customers that make returns, and because we were doing more business than last year they have decided to hold back over $15,000 for an undetermined period of months.

Apparently this is not so new news... First Data has aparently been doing alot of this lately.
FirstData is apparently the processor for Chase Paymentech.

At any time, at the sole discretion of the bank, the bank has the right to place funds on hold in a non-interest barring reserve account. Reserve account is to protect the bank from future losses due to fines, chargebacks, ect that may come through your merchant account. Hold time-frame will be determined by the bank and is usually for long enough time period to cover future customer chargebacks.

I found this really great article.. here's an excerpt
Combine the delivery of the service or product fear with the merchant processing company's fear of their customers going out of business and you have a situation where the merchant processing companies are starting to require some kinds of businesses to maintain cash reserves. That might not sound so onerous, but if you are a "high risk businesses" that accepts $4 million a year in credit cards, you may be looking at a $200,000 cash reserve requirement. That might be enough to push the merchant out of business thus having a self-fulfilling prophecy.

not sure if I can link to it, but here it is:

Here's more information from Visa and Mastercard.


[usa.visa.com...] (see page 104-108)
2.2.D.1.a Visa U.S.A. monitors the total volume of U.S. Domestic and International Interchange and Chargebacks for a single Merchant Outlet and identifies Merchants that experience all the following activity levels during any month:

  • 100 or more Interchange Transactions
  • 100 or more Chargebacks
  • A 1.00% or higher ratio of overall Chargeback-to-Interchange volume

    We don't fall into ALL of these with Visa. (note the all terminology above)


    Mastercard (released 5/12/2010) [mastercard.com...]

    Mastercard Chargeback Guide (released 04/16/2010) [mastercard.com...]
    b. The chargeback-to-transaction ratio (CTR) is the number of MasterCard chargebacks received by the acquirer for a merchant in a calendar month divided by the number of the merchant's MasterCard sales transactions in the preceding month acquired by that acquirer. (A CTR of 1% equals 100 basis points.)

    c. A Chargeback-Monitored Merchant (CMM) is a merchant that has a CTR in excess of 50 basis points and at least 50 chargebacks in a calendar month.

    d. A merchant is an Excessive Chargeback Merchant (ECM) if in each of two consecutive calendar months (the "trigger months"), the merchant has a minimum CTR of 100 basis points and at least 50 chargebacks in each month. This designation is maintained until the ECM's CTR is below 100 basis points for two consecutive months.

    So if we didnt fall into either of these categories according to visa/mastercard guidelines, why did Chase Paymentech and First Data do this?

    A. Because they can. It's a way for them to pad their coffers against the economy.

    No help from Chase, no help from Chase Paymentech and no help from First Data. They simply don't care to even be remotely reasonable.

    Tell us your horror stories.

    [edited by: lorax at 10:29 am (utc) on Jun 17, 2010]

  • amythepoet

    1:24 am on Jun 22, 2010 (gmt 0)

    WebmasterWorld Senior Member 10+ Year Member

    Bewench, I just got notice today from amex that they are going to do this to me too, then I got second notice, hat the amount in reserve is 0.00 so I calle dup and said what is going on here, of course nobody home, have to call in the a.m.

    this is NUTS!

    [edited by: amythepoet at 1:41 am (utc) on Jun 22, 2010]


    3:01 am on Jun 22, 2010 (gmt 0)

    WebmasterWorld Senior Member 10+ Year Member

    Same thing happened to me as bewenched described--I got a chargeback initiated by the bank a couple months after the transaction. The customer had their stuff and they had no problem. The bank did a chargeback because I had captured more than 7 days after authorizing. I lost the chargeback. Now, I just capture everything right away. If customers question it, I tell them that I do it because otherwise, the bank will charge me to authorize the transaction again. Which is also true. I hate these skeevs so much that if there were a way for me to conduct business without taking credit cards, I would do it. But there is no way at this point--at least, not and make a living.


    10:42 am on Jun 24, 2010 (gmt 0)

    10+ Year Member

    RBS Worldpay just suspended my account (customers can pay them, but they won't pay me.) This after a strange message requesting our original paperwork:

    "It has come to our attention that the bank and bank code on our system are incorrect. In order to correct this, please could you provide us with your original Bank Compliance Form, stamped by your bank. Please send it to the following address."

    Incorrect? They correctly deposited my funds for years.

    I said I was travelling and didn't know how long it might take me. I asked them how soon they needed to have the document. And they responded by suspending my account!

    Sounds to me like they wanted to build a reserve because they see trouble coming - I suspect due to the European debt crisis and austerity measures - and want an excuse to hold my money. Is this happening to anyone else?

    I responded by removing them from my payment pages, leaving Paypal as the only way to accept credit cards. I will now see if my sales drop off. If yes, I might add Google Checkout.


    10:43 am on Jun 24, 2010 (gmt 0)

    10+ Year Member

    By the way, are there any good cedit card processors out there? Is there a thread somewhere on this subject?


    11:58 pm on Jun 30, 2010 (gmt 0)

    5+ Year Member

    You might want to switch over to a 3rd party payment processor until you can clear that up. I'd even suggest getting a different processor that's not affiliated directly with your bank like that. Just my 2 :)


    12:26 am on Jul 1, 2010 (gmt 0)

    5+ Year Member

    HRoth, I just had the same thing with a mastercard transacction - first time in a year they did this, they said because I captured it after 7 days they initiated a chargeback. I am so pissed because there is no customer service available, and the customer already received their package. The person at first data told me to call the customer and run their card again... I have already tried to call the customer and left a few message but they havent called back... so i guess I am out of luck


    1:18 am on Jul 1, 2010 (gmt 0)

    WebmasterWorld Senior Member 10+ Year Member

    It's unbelievable isn't it?

    I would be persistent, ask for the boss


    3:11 pm on Jul 1, 2010 (gmt 0)

    WebmasterWorld Senior Member 5+ Year Member

    Maximus1000, I feel your pain. We've had that happen a few times now. We got nothing resolved with them, the customer never got their money back, the bank kept it!

    Things like this are going to force ecommerce sites to store credit card information. We currently do not do it for security reasons, but it's looking like we may have to.


    We're actually thinking about giving a discount for using paypal over credit cards. Even though there's not much more protection with paypal either.


    5:48 pm on Jul 1, 2010 (gmt 0)

    5+ Year Member

    Bewenched, really the bank kept the money? That is not right at all, in my case they refunded the customer. I am considering implementing Authorize.Net's CIM module on my site. This way all the CC information is stored on Authorize.net server, so we can charge again if need be, and also the customer likes the convenience of having their credit card on file (but its still secure given that me or my employees cannot see their CC Info, its all on Authorze.net servers)


    6:22 pm on Jul 2, 2010 (gmt 0)

    WebmasterWorld Senior Member 5+ Year Member

    I'm not blaming Authorize.net, they are just the gateway. But I am blaming Chase/Chase Paymentech and FirstData for all of this mess.


    Here's an update:
    They still are not giving our money back, stating it can be anywhere from 3-6 months before we get it back. So as a result of not having the operating capital that we need we are having to lay off one employee today.

    This saddens be greatly! I really hate having to do this with unemployment the way it is here in the states. The summer time is our slowest time of the year, but come september/october it starts ramping up again and we will definitely need another sales person just to handle the volume.

    So thanks alot Chase Bank! Because you decided to keep OUR money to play with, we are having to lay off an employee!

    I think we will be implementing the ability to accept electronic checks and quite possibly give a discount for doing so.


    6:44 pm on Sep 3, 2010 (gmt 0)

    WebmasterWorld Senior Member 5+ Year Member

    Just wanted to give an update to our still ongoing horror story with Chase Bank, Chase Paymenttech and First Data.

    A few weeks ago we did get some of the reserve money back, but not all of it.

    Apparently there has been such a problem with First Data that Chase is no longer having them do their processing for them. But that's both good and bad. Good in that this BS shouldnt happen again, Bad in that First Data is still holding back funds.

    From our discussion with Chase, they are having to send a collections letter to First Data to get our money back. That has now been two weeks ago and we still do not have that money and Chase has not been able to get it back from First Data.

    Through all of this we began looking at other Banks and processors and found that now Bank of America is having First Data do their processing.... so watch out if you are using Bank of America as your merchant services/credit card processing.


    7:14 pm on Sep 3, 2010 (gmt 0)

    WebmasterWorld Senior Member 5+ Year Member

    Maybe I'm naive, but this sounds like it's just blatantly against the law. Have you checked to see if there's any class action suit going against them or anything? Or maybe you could see if a lawyer might be willing to start one.
    This 42 message thread spans 2 pages: 42

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