What To Do If Your Merchant Account Is Terminated

July 28, 2020

Everything was going fine with your online business – until you suddenly discovered that you can’t process any transactions. Or your sales records and bank statements don’t match, you know you should have a lot more money in your account.

What happened? It could be a tech glitch, or another problem. But chances are your merchant account has had a hold or freeze placed on it, or has been terminated. You probably figure this can’t possibly happen without some sort of prior warning from your payment processor, but some processors will act first and notify you afterward.

Steps You Should Follow If Your Merchant Account Was Terminated

Steps You Should Follow If Your Merchant Account Was Terminated

  1. Find out why your account was terminated – It is important you ask questions and find out what was the reason for the termination. A few reasons may include suspicious activity, fraud, and chargebacks. You’ll need this information when applying to a new payment processor. 
  2. Check if you are on the  MATCH list – You’ll almost certainly be listed in the terminated merchant file (TMF), also known as the MATCH (Member Alert to Control High-Risk) list, maintained by MasterCard and accessed by Visa and American Express. The purpose of the list is to “identify a potentially high-risk merchant before entering into a merchant agreement.”
  3. Save necessary paperwork – Merchants should ensure they have previous and recent processing statements and all necessary paperwork. 
  4. Research new payment processors – If your account is terminated, you’ll need to find a new payment processor fast. We suggest you find a payment processor that specializes in high-risk merchant accounts so you will not have to worry about your account being terminated again. Choosing a payment processor like T1 Payments that specializes in high-risk businesses is your best defense against having your merchant account terminated or frozen unexpectedly. And even if your account with another processor has been terminated or frozen, T1 Payments may be able to help you get back to business fast and stay in business with services like chargeback prevention and fraud protection.

Understanding Holds, Freezes and Terminations

Holds: Payment processors can withhold money from your transactions and hold it in a separate fund. Typically, a processor does this to protect themselves from a perceived risk of excessive chargebacks or when it suspects fraud. Holds can be placed on specific transactions (typically ones for a large amount of money, or that trigger the fraud protection filters), or may be placed on a percentage of your overall sales. The hold may be temporary or ongoing.

Processing freeze: Is a temporary halt on your ability to process payment cards. This typically happens when a processor wants to do a full analysis of your transactions, suspects you may not be abiding by the terms of your payment processing agreement, or wants to adjust the terms of your agreement. You’ll usually be given the chance to prove that the freeze should be lifted.

Termination: If your merchant account is closed (terminated) it’s unlikely that you’ll be able to convince the processor to reinstate you. Terminations typically happen when a payment processor believes you have violated the terms of your agreement, usually by misrepresenting your business.

The Risks of Running a High-Risk Business

Global High-Risk Merchant Payment Processing Company

High-risk businesses are subject to sudden terminations, freezes and holds more often than one would expect. Often, this is because a third-party processor provides a merchant account without thoroughly vetting the business, and later discovers it’s a high-risk business. The account is then terminated for violating terms, even if you didn’t misrepresent your business. And don’t make the mistake of signing up for a merchant account with a third-party processor that doesn’t do business with your industry – you may get away with it for a bit, but sooner or later your account will almost certainly be frozen or closed.

Other reasons for sudden terminations and freezes include regulatory changes (which are far more likely to affect high-risk businesses), shifts in the types of businesses accepted by ecommerce platforms, and chargebacks, fraud, or suspicious activity associated with the merchant’s business.

Suspicious activity can include anything that violates the terms of your agreement with the payment processor. This could be making deposits for another merchant, or accepting payments for anything outside of the specific goods and services you stated on your account agreement.

Fraud involves things such as misuse of payment card information, failure to deliver merchandise, overcharging consumers, fraudulent transactions, and other unsavory activities. Some fraud is a deliberate attempt to deceive, and other types are caused by bad business practices or poor customer communications.


While there’s not much that you can do if a processor decides not to do business with anyone in your industry, you do have some control over the most common reasons for merchant account closures: excessive chargebacks. Usually, payment processors expect to see a chargeback ratio of 1% or less. This figure is arrived at by dividing the total number of chargebacks by the total volume processed during a month.

This is a problem for high-risk businesses, which is any business in an industry that has a higher-than-usual number of charge-backs. High-risk industries include:

  • CBD sales
  • Online gaming
  • Online dating
  • Telemarketing
  • Pharmaceuticals
  • Adult products and services
  • Travel services 
  • Bitcoin trading
  • E-cigarette/vaping devices and products
  • Timeshares
  • And others 

If your processor doesn’t understand the particular needs of high-risk businesses, you may suddenly be facing a financial disaster when your account is terminated with no warning.

At T1 Payments, we understand and have experience working with high-risk businesses. We offer secure credit card processing for high-risk merchants and online businesses worldwide. For more information, contact our team of experts today! 

Merchant Account Terminated? Contact T1 Payments

T1 Payments specializes in meeting the needs of high-risk merchants, providing a full suite of Payment Processing and Payment Gateway services. T1 provides flat fee merchant accounts and offers comprehensive account monitoring, reporting and support to help high-risk merchants mitigate chargebacks, fraud and other business risks. Our customer support team members are the best in the business.

To find out more about our customizable global payment solutions for high-risk merchants, please call us at 866-518-2216 or submit an online form.