The MATCH List – A Blackhole
Literally ever other day I get a call from a merchant asking my help in getting them off the MATCH list. I try to be sympathetic to their plight but my response is always the same. I know of no way to get off the MATCH list and I have never gotten anyone off of it. Below I will discuss the MATCH list and how merchants find themselves on it.
The MATCH list, also know as the Terminated Merchant File (“TMF”) list , is a data base that is maintained by MasterCard. The data base contains names, addresses, social security numbers and other information used to identify merchants that have had their merchant agreements terminated because the merchant breached the terms of the merchant agreement. So in order to end up on the list, the merchant has to do something contrary to the terms of the merchant agreement which most often is related to chargebacks I find. Mainly people end up on the MATCH list because they exceed the 1% chargeback threshold that the card associations have in place or they owe money for unpaid chargebacks on their merchant account.
The importance of the MATCH list is that every ISO checks it when they are underwriting a merchant account. All the information provided by the merchant applying for a merchant account is checked against the MATCH list. This can result in what is called a partial MATCH where say only the address shows up as being on the MATCH list. It alerts the underwriter then to delve more deeply into the file to determine if the business really is on the MATCH list. That way, people who think they can get around the list by changing the company name or ownership get identified as really being on the MATCH list despite their attempts to disguise their identity.
If you do find yourself on the MATCH list the impact is that 90% or more of the processors will reject your application out of hand. So if you try and apply for a merchant account you will find out that the processor will reject your application or will start processing for you and then shut you down and hold all your funds if they catch it later. The small percentage of processors who will accept your application for a merchant account will charge you a much higher rate for processing credit cards which could have disastrous results.
Assume that most people who take cards for products sold over the internet pay 2-3% or so of each transaction in the form of fees for processing credit cards. If you are on the MATCH list, most processors that will accept you will charge you 5% or even much more in order to allow you the right to process credit cards. And usually the processor will also want a considerable cash reserve on file before even processing credit cards. So you can see, for the typical internet retailer that works on small margins (i.e. less than 10% profits), being put on the MATCH list is tantamount to putting the merchant out of business.
To make it worse, there is no way I know of to get off the MATCH list. Many people have called me and said that they were told that if they paid the money that was due the processor the processor would take them off the MATCH list. But that is not the way it works.
Being put on the MATCH list is akin to getting a speeding ticket. The merchant has violated the terms of the merchant agreement by for example, failing to pay chargebacks in a timely manner. That has happened and can not be undone by paying the chargeback at a later time. The “violation” is the event that causes the merchant to breach the terms of the merchant agreement, such as not paying the chargeback when the merchant had to, and that fact cannot be erased by paying later.
That is not to say that it is impossible to get off the list. If for instance you had your identity stolen and were placed on the list for someone else’s actions, it seems plausible that you could get off the list but even that poses some issues.
First, you have to determine who put you on the MATCH list. For the most part, you are placed on the MATCH list by the ISO or processor that is in charge of risk monitoring for the merchant account. But, that information concerning who placed you on the MATCH list is not publicly available, you can only find out that information if you have access to the MATCH system. Any processor that rejects your merchant account application will usually not give out any information about who placed you on MATCH. So barring a lawsuit and successfully forcing MasterCard to provide you the information by way of discovery or a subpoena, that could end you attempts to get off the list.
And processors have no incentive to take you off the list at all. In fact, they have every reason to keep you on the list. It is mandatory under the card association rules that a merchant be placed on the MATCH list in the event that the merchant violates the terms and conditions of the merchant agreement. My understanding is that if the processor fails to place the merchant on the MATCH list as mandated, if that merchant causes any unpaid losses in the future such as unpaid chargebacks, the processor who failed to place the merchant on the MATCH list will have to pay those losses, not the merchant’s current processor. So as you can see, the processor have every incentive to keep the merchant on the list.
I can summarize by saying what I say to the people that call me to try to keep the call short. If you are on the MATCH list, you are doomed. There is no way off of it that I know of and you never fall off it based on time. So follow the rules so you do not find yourself in this situation. Otherwise, even the best attorney is unlikely to be able to help you!
The information contained herein is for informational purposes only and should not be relied upon in reaching a conclusion in a particular area. The legal principles discussed herein were accurate at the time this article was authored but are subject to change. Please consult an attorney before making a decision using only the information provided in this article.