High-Risk Merchant Account Attorneys: Reserves, MATCH and Processor Disputes
Our attorneys are industry leaders in high-risk merchant accounts who can resolve reserve account issues with your processor.
Merchants in the high-risk category should be prepared to pay additional fees and face scrutiny from payment processors. However, before agreeing to work with a processor that specializes in high-risk accounts, you should have a legal expert you can trust to thoroughly evaluate and negotiate your contract. Because the electronic payments industry is continually evolving, you need the assistance of a payments attorney with expertise in litigation with the knowledge and experience to address all your business needs.
At Global Legal Law Firm, our attorneys are experts in matters involving electronic payments. We represent merchants, affiliates, marketers, ISOs, processors, and financial institutions. In this article, we’ll cover high-risk payment processing and how our lawyers can help you protect your business.
Guidance for High-Risk Merchants
Identification of High-Risk Merchants
Processors classify certain merchants as high-risk based on certain issues or occurrences, industries, products, and sectors, most commonly because of a potential for a high volume of chargebacks or a susceptibility to fraud. Other issues may include accepting foreign currency, fraud, or a poor credit card processing history. Once classified as a high-risk merchant account, it may be difficult to find a processor or process credit card payments. Those who accept you generally require high reserve fund accounts.
Reserve Funds
High-risk businesses may be required to post funds upfront in a reserve account. Or the processor may hold back a portion of the merchants funds to collect a “rolling reserve.” The agreements will typically state that the processor “will” release funds at the 180-day mark. But many agreements state that the processor can hold those funds “until the liability expires,” which arguably could be forever. And many payment processors use this excuse to hold reserve funds. Some processors will also exercise the right to offset for risk or damages, like an early termination fee. The early termination fee can sometimes be over $1,000,000. While your payment processor can use these funds as insulation against unforeseen losses like fraud claims or excessive chargebacks, the Card Brand Rules require a “reasonableness” standard.
These terms, however, are negotiable between you and the ISO/processor/bank. And having experienced payments attorneys in your corner provides additional assurances to the ISO/processor/bank that your business will comply with the Card Brand and their best practices.
MATCH List
The Member Alert to Control High-Risk Merchants or MATCH list indicates that a business has engaged in poor practices and, as a result, had its payment processing revoked. Activities that can land a merchant on the MATCH list include fraudulent activity and transaction laundering. Getting off this list is not easy and requires the help of a legal expert with experience getting people off MATCH. Additionally, if you’ve been placed on the MATCH List and need to get processing now, we can help you.
Getting your business back on track may require legal assistance, and our lawyers understand the complex nature of electronic payment ligation. The experts at Global Legal are well-versed in the complex standards processors hold and can assist you in regaining control of your business.
Why Law Advice and Counseling Is Valuable
Seemingly small business problems can grow into more complex legal issues. Hiring a lawyer who takes a business-first approach and provides you with invaluable advice can help you minimize risk. Our attorneys can ensure your business starts on the right foot by drafting all necessary documents, providing sound advice, and helping you avoid legal pitfalls.
With the advice of a knowledgeable lawyer on your side, you can structure your business such that it remains compliant with the myriad of regulations that govern business activities. Another example of how our attorneys can help protect your business’s best interest is drafting and providing opinion letters. Banks accept opinion letters from expert payment attorneys to certify the legitimacy of a business. Get expert guidance from Global Legal’s attorneys, who understand the vast and widely unknown payment space. We stay on the cutting edge of policy and practice and can help you fully understand your legal risks and benefits.
Addressing Reserve Account Issues
Our merchant legal services expert attorneys are well-versed in reserve accounts. Addressing issues with your reserve account can help reduce or eliminate the need for a reserve account in some cases. In other cases, our attorneys will take a business-first approach to help you determine how to optimally conduct your business while maintaining a reserve account. If you are required to have a reserve account, communicate with your processor to get specifics. Ensure you maintain thorough payment records, ideally for nine months, to protect yourself in the event of chargebacks.
Opinion Letter
Global Legal can provide an opinion and analysis of your businesses’ compliance with Card Brand Rules and bank/ISO/processor regulations. This may allow you to obtain more favorable terms related to the reserve, pricing, and other matters.
Global Legal Law Firm is Your Expert in High-Risk Merchant Accounts
Global Legal has successfully helped many clients get their reserve accounts returned as well as navigate the process of maintaining a reserve account. Our attorneys will help you protect your business by ensuring that even high-risk merchants are not subject to overly burdensome reserve accounts. We are industry leaders in providing legal services to the electronic payment processing industry, so you can feel confident that you will receive knowledgeable and tailored advice.
High-Risk Merchant and Reserve Account FAQ
Most merchant agreements state that reserves are released at 180 days after account closure. Many also contain language allowing the processor to hold funds “until liability expires,” which has no fixed end date. Card Brand Rules impose a reasonableness standard, and that standard is what a payments attorney uses to force release of a reserve.
Processors classify a merchant as high-risk based on chargeback ratio, industry vertical, average ticket size and processing history. Common triggers are a chargeback ratio above 1%, monthly volume over $20,000, average tickets above $500, or operating in a vertical with elevated fraud or regulatory exposure.
Yes. High-risk accounts typically carry a higher setup fee, a compliance fee, and monthly fees often around double a standard account. Acquirers and card brands may also add fines when chargeback or fraud ratios exceed the limits written into their rules.
Yes. If a chargeback ratio meets or exceeds the acquirer’s threshold, the acquirer can freeze or terminate the account and report the business to MATCH. Placement is not automatic and is frequently the result of processor error, which is why removal is often achievable.
Only within the terms of your agreement and the Card Brand Rules’ reasonableness standard. If the processor cannot articulate an ongoing liability that justifies the amount held, continued retention is challengeable. Documented chargeback history and a demand letter from payments counsel resolve many of these without litigation.
A rolling reserve withholds a set percentage of each day’s settlement for a defined period, commonly 180 days, releasing on a rolling basis. An upfront reserve requires a lump sum deposited before processing begins. Rolling reserves are more common for high-risk accounts because they scale with volume.