With seeing quite a few messages in the past with people getting their merchant account cancelled because of one or two chargebacks I realize that having a backup solution which can be setup fairly quickly is a very good option (atleast for myself) to give me a bit more relaxation while processing orders.
I was wondering if any of you have a backup solution should something like this happen, I have only had one chargeback in a little over two years and that was due to someone who wanted to cancel and supposedly thought that was the easiest way.
I have noticed this more & more in the past 8 months actually. We have had a number of people contact us about a "back up" plan.
They do not mind paying the extra fees associated & most actually push enough transactions thru to cover their monthly minimums.
I have not seen it being illegal or anything as well. Which is interesting because the way Visa/MasterCard are, I would think they would have something to say about it. But I guess as long as everyone is getting their money, no harm done.
In terms of it being a violation of a merchant agreement - it can be, depending on your merchant processor. Some merchant agreements have a pseudo-exclusivity clause imbedded in it where you are required to process your sales only through them for the given business.
Beyond any contractual or marketing benefits, there is another very valid reason why banks and ISO's get nervous when a merchant has multiple merchant accounts.
The reason is this: it is a common fraud practice for some "bust out" fraud merchants to setup multiple merchant accounts through different processors and then run a vast amount of stolen cards through... $10K here, $10K there... and before you know it, they are skipping town with $100K from cards that are all going to be charged back to the respective ISO/Bank's.
Now... in answer to what you should do, given that YOUR concern is about your account potentially getting frozen - is to make sure that your merchant account is setup with a company that has a really good track record of NOT holding funds and hassling merchants unnecessarily.
If you do that, you'll eliminate a lot of headache, hassle and issues that otherwise can cause you a lot of grief.
Also, if you do setup a backup merchant account - just disclose this fact to the processor so that everyone is on the same page.
I hope this info is helpful and answered your question. If not, let me know.
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