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NewProductsEducation

Breaking up is and record a close reason for every closed merchant

account. The goal is to collect data that can be used for
hard to do – with actionable strategy.

For example, if we're seeing a data trend of cancellations for
merchants, too merchants on a billing plan like interchange plus, might it
be better to proactively reach out to these merchants and
offer cash discount? Are our cancellations concentrated to
a certain business type? Are our solutions not the best fit
for this particular business type, and if not, can we tweak
our offerings to be a better fit or perhaps focus our sales
efforts on good-fit business types so that we can improve
our retention rate?

Minimize the damage
It is bad enough to lose a merchant, but it's even worse when
a closed merchant is costing us money. Use this checklist
to help prevent expenses related to closed accounts:
By Elaina Smith • Compare the processing bill detail against an active
Secure Bancard merchant list. Any unmatched merchants are likely
closed, yet we're probably paying an account-on-file
s providers of payment solutions, we focus monthly fee for these closed merchants.
mostly on obtaining new accounts, but seldom
do we talk about losing accounts. Every port- • Compare the gateway bill against the closed-
A folio experiences attrition, but what are the merchant list to be sure we're not paying monthly
proper steps to take when merchants leave? What lessons fees for merchants who are no longer processing.
can we learn to prevent us from repeating the same mis-
takes? How can we minimize the damage of lost merchant • Compare any third-party services where the fees are
accounts to ensure they don't keep costing us money even billed per merchant account—PCI services, CRM,
after they're gone? risk monitoring, etc.
Let go • Was any equipment deployed that has ongoing
costs associated even if the merchant is no longer
When merchants tell us they want to break up, they should processing? Did we recover all deployed equipment
be allowed to do it easily. They're essentially telling us from closed merchants?
they don't like us anymore, and they no longer find value
in the services we offer. They've moved on. They have a • Are we losing money on closed merchants because
new merchant services main squeeze, and we're not it. we didn't adequately reserve higher-risk accounts,
and now we're stuck paying their chargebacks
The worst thing we can do is act desperate by making the and resulting fees? If so, it's time to revisit our
merchant jump through hoops or making it impossible to underwriting/reserve guidelines.
complete the cancellation process. We shouldn't continue
to bill them after they've left, nor should we charge them After completing the above we can see how much money
a termination fee when they've abided by their agreement. we've saved and formalize a merchant closing procedure
If the merchant was terminated because we did not hold so that we can prevent these costs before we incur them in
up our end of the agreement, we shouldn't punish that the future.
merchant with an early termination or cancellation fee.
When merchants want to leave, it's important to treat them
Doing these things damages our brand. Not only have just as well as when they started doing business with us.
we lost this account, but this merchant will tell a few of If we take the proper steps to manage merchant attrition,
their business-owner friends that they should never do this will go a long way to protect our brand, gain valuable
business with our company. They'll probably also go out insight to prevent future attrition, as well as eliminate
of their way to leave a negative review. They've moved on wasteful costs associated with closed merchants.
and we should, too. After all, there are plenty of other fish
in the sea.
Elaina Smith is the CFO of Secure Bancard, a wholesale ISO based in
Reflect on what went wrong Alpharetta, Ga. Most recently, she helped develop and implement
Pioneer by Settlement Data Systems, an SaaS solution that enables
If there's an upside to losing a merchant account, it is that ISOs to run their businesses more efficiently. She can be reached at
we might be able to learn what went wrong and work to elaina.smith@securebancard.com.
prevent it from happening again. At a minimum, obtain

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