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The story behind most surprise merchant account debits

Why is my merchant account provider taking money OUT of my account — in the middle of the month?!

Doesn’t it feel great to have a business where people come to your site, place an order, you fulfill the order, and boom, a couple days later money magically appears in your bank account?

It is truly the best of all possible worlds: you have an income stream producing money for you night and day — and you have the flexibility to work on your site when it is convenient for your schedule. Not bad, huh?

So, what happens when the cash flow reverses direction and money is taken out of your account? Especially in the middle of the month — when you least expect it? Keep in mind we are not talking about your payment gateway specifically, we are referring to your credit card processing account, or merchant account. If you are unclear on the distinction please visit our homepage for a description.

Typically the explanation is very simple and worth keeping in mind, just in case you find yourself in that very situation.

There are two likely scenarios for this reversal of cash flow:

The first is when you have a chargeback. A chargeback occurs when your customer isn’t satisfied with your service, product, fulfillment, delivery time, refund policy, etc. Even if you know they are, shall we say, embellishing the truth, they still have the right to complain to their bank. In the most general terms, their bank issues a chargeback which impact you in two ways — the money you received for that product or service is taken out of your account, plus a chargeback fee is also taken out of your account. At that point, you can either fight the chargeback (get in touch with your processing agent for the specifics of how to do so) or just let it go. Unfortunately, the odds are stacked against you as the merchant, and in favor of the customer because you are an e-commerce merchant and unlike a merchant at a storefront you never see the customer, and never swipe the card. One way to think about it is that in many ways your customer’s bank is the ultimate arbiter of these kinds of disputes, and normally they prefer to keep their customer happy. So, keep that in mind, if you find yourself facing a chargeback.

The second reason money is taken out of your checking account in the middle of the month, is for a refund. It’s easy to forget that when you log into your payment gateway and issue a refund (to do so in NMI, for example, login and the Refund link is the 6th item down on the menu to the left of your screen, in Authorize.Net you can simply go to Tools, Virtual Terminal, and select “refund a card”) the money for that refund has to come from somewhere. And guess what, it comes from your checking account.  I’ve had numerous people ask why me, “Why do you think money is coming out of my account, when I’ve haven’t had any chargebacks, should I call the processor?”. My first response is always a question: “Have you issued any refunds lately?” And then the bright light of recognition dawns, and I’m am routinely told, “Well, as a matter of fact, I certainly have!”  And with that, the mystery is solved.

It is surprising to have money withdrawn from your account in the middle of the month — we all want it to be going INTO and not OUT OF your account.

If you run into that, take a deep breath, there is normally a good explanation; call your processor, agent, or even your friendly neighborhood payment gateway specialist and put him or her to work for you to help figure it out!

John Stevenson, high risk payment gateway specialist

John @ taskerpaymentgateways.com