Payment Processing Best Practices

Payment processors may freeze your account if they suspect customer or merchant fraud. This can happen if your business experiences a high volume of chargebacks or the processor flags unusual activity, like a large transaction amount or payment details that don’t add up. While small businesses can’t avoid fraud altogether, they can implement practices to minimize the risk of having their accounts frozen. 

Here are some best practices to follow when working with a payment processor.;

Keep chargebacks to a minimum. You may be able to reduce chargebacks by establishing clear return policies, offering responsive customer support and providing clear information about when items are shipped and delivered.

Don’t process a transaction larger than your limit. If your processor places a limit on how much you can process in one transaction, don’t try to process a larger amount. If your business will be regularly processing more than your transaction limit, talk with your processor about increasing your limit.

Notify your processor in advance of large transactions. Letting your payment processor know in advance that you’ll be processing a transaction that’s larger than your usual amount gives it time to ask questions and verify information. 

Know how to contact your payment processor directly. Prompt communication is key to getting an account freeze resolved. The processor might not be able to give you a full explanation of what it's looking at to ensure it can carry out an investigation, but it should be able to tell you why your account has been frozen and what you can do to assist the investigation. If your processor requests information or documentation relating to specific transactions, provide it as quickly and transparently as possible.

Have a backup way to accept payments. Be prepared to accept other payment methods, like cash or check, if your account gets frozen. Payment processors generally stipulate in their contracts that they can freeze accounts and investigate merchant activity for up to 120 days. If you don’t have a savings fund to fall back on, consider reaching out to your accountant or financial advisor, the U.S. Small Business Administration, a local Small Business Development Center or a SCORE business mentor to help address your financial concerns and find assistance in the meantime. Source