As rewarding as owning your own business can be, when it comes to merchant accounts, certain challenges have the potential to be catastrophic. In fact, one of the worst things that can happen to a small business is to have their merchant account suspended. That’s why some business owners do everything they can to avoid that possibility. And sometimes, this includes load-balancing.
Load-balancing – the act of spreading transactions across multiple merchant accounts – is a tool some merchants have used to monitor transactions, track sales volume, mitigate risk and reduce chargebacks. Load-balancing is most common in the e-commerce/card-not-present space and often impacts merchants with high chargeback ratios.
E-commerce merchants, unfortunately, fall victim to high chargebacks for a number of reasons that are often beyond their control – with friendly fraud being one of the most significant. Despite its name, friendly fraud is anything but friendly and can be detrimental to a merchant account’s healthy standing. Friendly fraud occurs when a consumer makes a purchase with their own credit card and then disputes the transaction after receiving the goods or service.
Since friendly fraud is so difficult to combat and often results in higher-than-allowed chargebacks, some business owners resort to load-balancing to save their businesses and/or merchant accounts, often without realizing that they are committing deceptive, unethical practices. In just the past few years, numerous customer relationship management tools (CRMs) and merchants have faced stiff repercussions for load-balancing because it’s a card brand violation and often seen as a roundabout way of avoiding certain restrictions.
While many business owners believe that load-balancing is a means to protect their business’s ability to function, there is a better way to ensure that merchant accounts not only stay healthy but also operate within the card brand rules.
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National Merchants Association: a Proactive Solution to Load-Balancing
National Merchants Association (NMA) has in-house Underwriting and Risk departments responsible for monitoring accounts throughout the entire lifespan of a merchant identification number (MID), beginning with a merchant’s application submission. These departments conduct extensive reviews and analysis of a merchant’s existing relationships with other acquiring banks and track the history of those relationships as well.
To further reduce the possibility of load-balancing and to verify legitimacy, NMA carefully monitors whenever more than one MID is being used by the same merchant. Additionally, our robust and ongoing Personal Account Number (PAN) analysis ensures that recurring bills (re-bills) aren’t being shifted across different or multiple MIDS.
In addition to our in-house protocol, we employ proprietary software that allows our payments experts to monitor merchant accounts effectively, utilizing custom risk flags that audit each transaction without thresholds.
NMA also has an exclusive partnership with Fraud Wrangler, a comprehensive risk mitigation solution that works to meet merchant needs throughout the transaction and merchant account lifecycles. Fraud Wrangler is comprised of automated frictionless 3DS, risk alerts, chargeback interception, representment, and post-termination refunds, and is designed to help keep merchant accounts active and healthy longer.
The bottom line: NMA works with merchants to help them grow – never capping their ability to grow – while eliminating the need for perceived load-balancing. This is simply a small part of why we believe we’re A Merchant Account That Works For You®.
If your business is prone to chargebacks, you should always follow best practices to keep your merchant account in good standing – so you don’t have to rely on load-balancing.
Chargebacks have the potential to impact any e-commerce business. Fortunately, NMA stands alongside our merchants in upholding card brand rules and holding consumers accountable for friendly fraud and undue chargebacks.