Merchant Account Melt Down

How to survive a merchant account meltdown

Earlier this week, many customers of the third party processor Paysystems received some shocking news.

Due to issues "beyond their control" they were losing the ability to process Visa and Mastercard for a large portion of their customers. All of this was effective immediately. No transition period to get ready for it.

Can you imagine having a site pulling in $30,000 - $50,000 a month suddenly paralyzed by losing its credit card processing? That is exactly the nightmare faced by some of those effected.

Even worse, some of that revenue lost was recurring customers who had signed up for a subscription.

What Happened?

There is some speculation that some of the problems was due to some of the types of sites they were processing payments for. These sites had high charge back rates and didn't meet the new guidelines that Visa and MC have recently put into place.

SafeGuards To Consider

One big step towards avoiding these problems is getting your own merchant account.

People relying on a "third party" processor like Paysystems run the risk of being penalized by other business that processor also has as customers.

When you have your own merchant account, you are judged on your own merits. Not only that, but you get to keep more of the money anyways so usually it makes more sense financially to do so. This is the merchant account that I use for my sites.

Have Alternate Methods Ready

It certainly doesn't hurt to have back up accounts in place. For example, I also have several clickbank accounts and a paypal account. This would allow me to implement an emergency plan to at least keep money flowing until I worked out the issues.

Another possibility is to get a second merchant account.

This backup account could be put into place quickly if there is a problem with your first account. Make sure you get it through a separate provider so that you further reduce the risk of their being an issue if there happens to be a problem.

The bottom line is it is better to have as much control over your own credit card processing as possible. Make backup plans and get your own merchant account.

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