How to Recover When Your Aggregate Account Processor Closes or Freezes Your Account
As an online merchant, being able to accept credit and debit card payments from your customers online is a fundamental necessity. In looking to fulfill that need, many ecommerce merchants are lured in by the siren song of aggregate processor’s (companies like paypal and stripe) quick setup and easy approval process. However, if you’re reading this, there’s a good chance you’ve just learned what so many other online merchants have had the misfortune to discover: what an aggregate processor giveth, an aggregate processor taketh away just as quickly. You may already have encountered blogs and message boards teeming with comments from your fellow merchants who have had their aggregate processor accounts abruptly terminated or the funds in their accounts frozen for months on end. Worse still is the ensuing quest to for a solution (or even an explanation!) from your aggregate processor’s customer support, which generally involves a merry-go-round of platitudes and non-answers that would almost be comedic, if the survival of your business wasn’t hanging in the balance.
Aggregate Processor Account Freeze: Your First Response
The natural instinct for most people when their aggregate processor account is terminated or frozen is to try contacting the aggregate processor support and resolving the issue. However, of all the stories circulating around the internet involving merchants whose aggregate processor accounts have been frozen, exactly zero of those stories end with, “…And then the aggregate processor rep said, ‘Sorry, our mistake,’ and reinstated my account right away!” The longer you’re forced to go without being able to accept card payments, the more money your online business loses – both from transactions you are unable to process, and in the future patronage of customers who give up and go elsewhere. Getting your ecommerce store back up and running is likely your most pressing concern, and that means getting a merchant account.
Aggregate vs. Direct Merchant Accounts
The account you had with your aggregate processor up to this point gave you access to what’s known as an aggregate merchant account. Traditional, direct merchant accounts are obtained through a bank or other payment processing institution, after an application process in which you and your business are vetted and an account agreement is tailored to suit your specific business’s needs.
Aggregators like PayPal and Stripe forgo this vetting process and individual tailoring in favor of quick setup and easy approvals. Your card transactions are processed through aggregate accounts alongside the transactions of thousands of other, unrelated businesses. Your transaction fees through aggregate processor are most likely higher than they would be with a traditional direct merchant account, and you likely experience some lag time between the customer’s purchase and the arrival of the funds in your account, but the biggest drawback kicks in when something goes wrong. The lack of scrutiny and underwriting during the application process is matched by aggregate processor’s ability to freeze an account at the slightest whiff of unusual activity. This might not be a major problem, if not for the fact that aggregate processor’s fraud detection, account review, and appeals process have the transparency of chocolate pudding.
Why Does Aggregate Processor Close or Freeze Accounts?
After you’ve gotten the ball rolling on your direct merchant account application, you may want to try resolving the issue with your aggregate processor account – especially if you have funds locked away in a frozen account that you need to continue operating your business. Since getting a clear answer out of an aggregate processor representative about why your account was frozen or closed can feel like a superhuman feat, let’s discuss some of the potential causes of an account hold or freeze.
Like any payment processor, aggregate processors takes on a certain level of financial risk with every transaction it processes – in the case of chargebacks or fraud, if the merchant doesn’t have the funds to cover a refund, that money comes out of the aggregate processor’s pocket. To limit its risk, The aggregate processor uses a combination of fraud-detecting computer algorithms and human account review to identify anomalous and potentially fraudulent activity. (Of course, you can never be sure whether an actual person or a chunk of computer code is the one making judgements about your account.) Certain kinds of activity are more likely to raise red flags that could trigger an account freeze or closure:
- A sudden and substantial increase in overall sales volume or transaction rates
- A sudden and substantial increase in individual transaction value
- An increase in chargebacks or customer disputes
- A rate of chargebacks or customer disputes in excess of a fixed monthly percentage
- Any report of fraud against you, substantiated or not
- Suspicious content on your website or legal concerns about any aspect of your business
- Unusually large withdrawals from your account
This is not a comprehensive list of reasons why aggregate processor accounts get terminated, blocked or frozen, in part because getting a clear and specific answer about the reason for action against your account from a customer support representative can be difficult. Aggregate processor’s support representatives seem to be a unable to give straight answers explaining why your account was frozen, instead, perhaps for lack of information availability, they promise to “escalate your case,” and confirm that “You can appeal the decision,” and then leave the ball in your court. This lack of answers can be especially aggravating if, like many merchants, your transaction history is innocuous and consistent, with no obvious red flags that you can identify on your own.
Parting Ways with Aggregate Processors: Durango Merchant Services
In the end, whether you’re one of the fortunate few who achieves a successful resolution to their account dispute with their aggregate processor, or you’re stuck waiting six months to regain access to your business’s hard-earned money, the experience has probably left you reluctant to trust aggregate processor with your livelihood any longer. Fortunately, the alternative of obtaining a direct merchant account for your payment processing needs has far more advantages than drawbacks. While the application and approval process for a direct merchant account is more rigorous than the aggregate processor’s sign-up page, the end result of this vetting process is that your payment processor understands your individual business, its needs, and its challenges. This is especially true when you open a merchant account with Durango Merchant Services; you will be assigned a personal account manager who you can contact whenever an issue arises, and who will likewise contact you if any anomalous activity on your account raises concerns – unlike aggregate processors, which freezes first and asks questions never. It’s hard to overstate the peace of mind that comes from knowing your account is being managed by an actual human person that you can reach out to and communicate with, rather than by a computer algorithm.
If open communication and individual account management were the only benefit to a direct merchant account, that might be reason enough to leave your aggregate processor behind – but there are other advantages as well. Your personal account manager can help you understand and manage robust fraud prevention services like 3D Secure 2.0, and payments from your customers will be deposited directly into your account, without the lag time often experienced with aggregate processors. In addition, when your customers look at their credit card statements, your individual business descriptor and contact information show up on the transactions, rather than aggregate processor’s. This builds customer confidence in your business and reduces the risk that customers will fail to recognize your transactions and issue chargebacks.
Please contact Durango Merchant Services today if your account has been frozen by your aggregate processor or if you want to skip that possibility altogether.