Editor’s note: The following is an open letter from Miriam Ramos of Platinum Solutions, a leading credit card processor for the gentlemen’s club industry, and it comes courtesy of ACE National.
I am seeing a trend that can have irreversible damage when we begin returning to our business. Sharing for awareness.
Chargebacks are going to keep coming during this time. It is critical business owners keep accounts open and be prepared to have funds held while they are in dispute.
When a chargeback occurs the funds are taken from the processor. Immediately. The processor then removes the funds from the business. The dispute is challenged, a business guided by a processor who fights aggressively and has educated the client should see those funds returned in about 30 days depending on card brand.
If these funds are not available to the processor then in essence the processor is forced to “lend” the money to the business. The account is considered NSF. That in turn can result in a business being placed on a TMF (Terminated Merchant File) list. If that occurs the chances of a business being able to process cards will be virtually impossible. No sponsoring bank nor processor will approve an application. The ability to accept credit cards will no longer be an option. With any processor.
Most processors do all they can to avoid this. The process is due to the federal regulations that govern the process and the Consumer Protection Laws. The processor HAS to follow the rules and regulations in order to maintain their own good standing and keep their doors open as well.
If these funds are not available to the processor then in essence the processor is forced to “lend” the money to the business. The account is considered NSF. That in turn can result in a business being placed on a TMF (Terminated Merchant File) list. If that occurs the chances of a business being able to process cards will be virtually impossible.
I am concerned about what may just be a lack of understanding as to why this happens. No one needs to have the bans lifted and find their business unable to process credit cards. We know in advance most of the financial flow will come from that CC revenue stream as we move forward. If there’s an issue, I encourage you to call your processor. Communicate. Seek a loan opportunity if needed.
There are things that can be put in place NOW to increase the cash flow and raise profit margins from the moment the doors open.
One final piece of information. Restructuring is happening at this very moment. Processors as well as the sponsoring banks are reviewing their portfolios. Once coveted industries will no longer find themselves with the support they had when we return to business. Who the members were working with when the doors closed very well may not open the door when the time comes.
Together we can prepare for the changes and minimize the damage.
