Why would an acquirer close your merchant account?

A canceled merchant account usually results from one of three things: suspicious merchant activity, too many unauthorized transactions, or chargebacks.

What happens if your merchant account gets closed?

If your merchant account is closed, you will have to find processors specializing in high-risk merchant accounts to process payments. However, you should know that high-risk processors tend to be more restrictive and can be significantly more expensive. Aside from this, it will be challenging to regain your former status once you're labeled as âhigh risk.â

What is a revenue hold?

Merchant account reserves are common practice forÂ <a href="https://chargebacks911.com/banking/payment-processing/high-risk-credit-card-processing/">high-risk payment processing</a>. Because of the increased risk level, acquirers withhold a portion of the merchantâs revenue to cover potential losses. The bank will use the reserve account to cover losses if the operating account doesnât have sufficient funds.

What is an account freeze?

While an account freeze is in effect, you wonât be able to process credit or debit card transactions. Any income you have earned in the meantime wonât be deposited until the freeze is lifted. This is assuming the account is not terminated, of course.

Can you still get chargebacks if your account is frozen/closed?

Yes. You can still be held responsible for chargebacks after your account has been closed or terminated. Just because your account is closed doesnât mean you wonât receive chargebacks filed beforehand.<br><br>Since the chargeback process takes a while to set in motion, you could still receive chargebacks for a few months after the date your merchant account closed.

Whatâs the most common reason for a merchant account closure?

The majority of canceledÂ <a href="https://chargebacks911.com/ecommerce/what-is-a-merchant/what-is-a-merchant-account/">merchant accounts</a>Â are caused by excessive chargeback levels. The networks usually require merchants to keep their chargeback ratio below a specific, predetermined threshold. However, itâs probable that a merchant account will be terminated long before the card networksâ thresholds have been breached.