A recent article in the on-line version of Business Week reported that First Data and Elavon have expanded their attack on e-commerce merchants by increasing the number of merchants subjected to withheld cash reserves; typically oneor two months’ worth of transactions They can do that under the terms of your contract.
At least one other processor reports that they have increased their requests for financial statements from their merchant customers.
If a merchant is suddenly subjected to cash reserve withholding they’ll essentially loose two months of transaction income even though they continue to sell product. This means smaller merchants won’t have any cash for operating expenses or stock replenishment. You can see how that might have a negative impact on your business.
At Merchant911, we’ve always suggested to our members that they should sweep their merchant accounts on a regular basis to avoid falling into this trap. Eventually, the processor will get their hands on your cash but at least cleaning out the merchant account might slow them down a bit. It’s better than being caught off guard.
If you read the entire article, the last paragraph relates what one company did against Wells Fargo Merchant Services who pulled this tactic. It worked once – keep it mind if it happens to you. And be sure to tell us about it. We’ll help!
We didn't lose the game; we just ran out of time.
Vince Lombardi
And now we are back, equiped with more tools and knowledge, to beat up the crooked fraudsters.
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