Chosen Payments has recently seen an escalation in actions taken by the Risk Management departments of banks that provide funding for merchant transactions. Funds are held when transactions are deemed by the bank to be suspicious in nature.
Behind the Scenes
Before we share some tips on how to avoid having your funds delayed, we will provide a brief education about the relationship between Chosen Payments, the funding bank, and your Merchant Account. In order to provide overnight funds, Chosen Payments engages with a partner bank (called the funding bank) that provides funds to you immediately on behalf of the particular bank that issued your customer’s credit card. Let’s say your customer uses a Wells Fargo Visa to make a $10,000 purchase. Our funding bank provides the $10,000 into your Merchant Account overnight and then contacts Wells Fargo to ask for reimbursement for the amount they advanced to you. As a result of this relationship, the funding bank owns and manages the risk of every single transaction they process on your behalf. This is important to note as Chosen Payments has absolutely no control over risk holds or other delays in funding except to serve as your advocate based upon what we know about you, your business, and our history of doing business together with you.
Risky Business Holds
From time to time, merchants will have their funds held on a “risk hold”. This happens when the funding bank decides to take a closer look at a specific transaction. The Merchant Services Risk Monitoring department can flag a transaction for closer inspection for many reasons. The most common risk is caused when a transaction is much larger than your average transaction amount. Chosen Payments can help you avoid unnecessary funding delays by working as your advocate. If you are processing a transaction that is unusually larger than what you normally process, contact Chosen Payments before you attempt to process it. We will ask you to provide a copy of the invoice being paid, the cardholder information such as name, phone number and email address. We will forward this to the Risk Management Department to let them know in advance. The most important aspect of a large sale is to make sure the cardholder participated in the transaction. It’s just prudent business on their part and no reflection of your business.
Too Many Returns/Refunds
Another red flag can be raised by processing too many returns or refunds in a short period of time. This can even cause the bank to ask for 90 days to six months of past bank statements to demonstrate you have sufficient fund in the bank to cover additional refunds in the future if you start “trending” in refunds. Every cardholder has the right to dispute a charge for up to six months. This means you must have the money in the bank to cover your largest transaction in the past six-month rolling window.
Chosen Payments is not always notified when one of our merchants has funds held. If you discover that you are missing funds for a particular transaction or batch of transactions, contact your Chosen Payments Account Executive immediately by calling 855-4CHOSEN or send an email to Success@chosenpayments.com. We will track your funds down and assist you in getting them released as quickly as possible by working together with you to provide any requested documentation.