Merchant account terminations are triggered by a range of conditions, some of which the merchant has direct control over and some of which it does not. Excessive chargebacks are the most common trigger, and they affect high risk merchants disproportionately because the industries they operate in generate elevated dispute rates regardless of how well any individual merchant manages its customer relationships. Fraud flags triggered by automated risk monitoring systems can result in termination even when the merchant's activity is entirely legitimate, because the automated systems that flag accounts operate on pattern recognition rather than individual review. Violations of the processor's acceptable use policy, including operating in a restricted product category, can result in termination if the processor updates its policy after the merchant account is already open.
What happens immediately after a merchant account is terminated depends on the processor. Most processors freeze settlement of funds in transit and hold those funds for a period ranging from several weeks to several months as a buffer against anticipated chargebacks on recent transactions. The merchant's payment acceptance stops on the termination date, and the held funds are not released until the processor determines that the chargeback exposure on those transactions has passed. The merchant is therefore dealing simultaneously with the loss of payment acceptance and with the loss of access to a portion of its recent revenue. 27 Blockchain's terminated merchant account payment processing solution addresses the payment acceptance problem immediately, while the fund hold situation is resolved through the merchant's direct engagement with the terminating processor.
