To protect consumers and ensure that businesses around the world are operating in a legal way, there are a wide variety of statutes and protocols in place. Some of these consumer protections come from the federal government, while others are overseen by different companies or organizations. One form of protection comes from regulating payment processing privileges through something known as a terminated merchant file, or a TMF. Read on to learn more about what a terminated merchant file is and what it means if a business is on a TMF match list.
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What is a terminated merchant file?
Put in its simplest terms, a terminated merchant file is a record that indicates whether or not a merchant should be able to obtain credit card processing capabilities. Much like you may have a credit check run on you when you apply for a loan or new credit card, a TMF can be used to determine whether or not a business should be able to get a new merchant account and processor capabilities. These files are shared from processing company to processing company, so if a business is denied a merchant account from Mastercard, Visa will also have access to that blacklist and avoid giving them a merchant account.
What is the TMF MATCH list?
The TMF MATCH list relates specifically to terminated merchant files from Mastercard and American Express. Although the title of these is different, the MATCH list and a TMF are one and the same. In essence, they are used as blacklists between processors and financial institutions to understand whether or not a business is high-risk or not. If a company’s MATCH file or merchant file is on the TMF list, it could be a sign that the business isn’t trustworthy in how it handles payment processing or could even be involved in illegal activity.
How does a business end up on a TMF or MATCH list?
The biggest contributing factor to a business getting on a TMF or MATCH list has to do with chargebacks. If your merchant account or payment processor is associated with excessive chargebacks from customers, this can be a sign to credit card processors that something is amiss. Another thing that can get a business on the TMF or MATCH list is if a credit card continues to be processed for recurring payments after a subscription to that service is canceled.
Sometimes, excessive chargebacks are associated with fraudulent activity, since they can be used to eliminate some purchases by getting refunds on items that shouldn’t be refunded. In some situations, these kinds of chargebacks are signals to a processing bank that collusion, fraud, or money laundering could be occurring. Counterfeit sales are another type of activity that can put a company on a MATCH list or TMF list.
How can the TMF impact your business?
Especially at a time when eCommerce is booming, being on a TMF list can be incredibly detrimental to your company. Being able to process credit card payments is crucial to doing business in brick-and-mortar stores, too, of course, but if you can’t process a credit card payment as an online store, you’re going to be hard-pressed to make any sales. Once you’re listed as a high-risk merchant, you’re going to stay on the list for at least five years. However, once you’re on the TMF list, there are a few ways that you might be able to get off it as well. If you were listed by accident, for example, it’s generally pretty simple to get off of a TMF list. That being said, aside from updating your PCI compliance, a business account that gets put on the TMF list with other high-risk accounts will stay on the list for years, which is why the best way to protect your business is to stay clear of fraudulent transactions.
