Why Merchants are Placed on Mastercard’s MATCH System Incorrectly

Every week I receive calls from merchants that are incorrectly placed on MATCH.  Improper placement on MATCH can be decimating to these merchants; they will likely not obtain credit card processing while on MATCH and, at best, will find it extremely difficult finding processing.

The Mastercard MATCH (Member Alert to Control High-Risk Merchants) system is a global database maintained by Mastercard that identifies merchants and their principals who have had their accounts terminated for several specific reasons or might otherwise pose a higher risk of fraud or other issues for an acquirer. Mastercard has established rules for an acquirer to determine when to place a merchant on MATCH.  Usually, acquirers delegate the MATCH placement decision to their Independent Sales Organizations (ISOs).

While the intent behind the MATCH system is to protect the payment’s ecosystem, there are numerous instances where merchants are placed on the list incorrectly. These errors can have severe consequences for businesses, impacting their ability to process payments and potentially leading to their closure. This article explores the reasons why merchants are placed on the MATCH system incorrectly and what to do if a merchant finds itself in such a position.

 The Intent of the MATCH System

The MATCH system is designed to help acquirers and payment processors mitigate risk by sharing information about merchants who have previously been terminated for reasons such as fraud, excessive chargebacks, or other violations of their merchant agreements. Mastercard has specific rules on when to flag such merchants. By flagging high-risk merchants, the system aims to prevent these businesses from simply moving from one acquirer to another without addressing the underlying issues. Although these ISOs usually follow the rules regarding MATCH placement, sometimes they get it wrong.

Common Reasons for Incorrect Placement

• Mistaking Identification Theft for Fraud: One of the most common reasons for incorrect MATCH placement is when an acquirer sees a merchant that has engaged in fraud and does not realize that the fraudster has adopted another individual or merchant’s identity.  For instance, I was retained by a large charity that had been improperly placed on MATCH for fraud.  A fraudster had used the charity’s EIN and other identifying information to open a merchant account.  The fraudster used stolen credit card numbers to run several large dollar transactions before the acquirer and ISO quickly shut down the merchant account.  The acquirer assumed that the charity was indeed the fraudster instead of understanding the true nature of what had occurred.

• Clerical Errors: Another common reason for incorrect placement on the MATCH system is simple human error. Clerical mistakes can occur during the data entry process, leading to incorrect information being submitted. This can happen if the merchant’s name, business type, or reasons for termination are entered inaccurately or if the processor puts in the incorrect number of chargebacks or fraud occurrences.

• Programming Mistakes: As credit card processors are increasingly becoming automated, they rely on programmed “rules” to determine when to place a merchant on MATCH. Programming mistakes occur when they use an incorrect rule, such as programming an incorrect threshold for the number of chargebacks needed to place a merchant on MATCH for the reason code associated with high chargebacks.

• Misunderstanding or Misapplication of the Rules: Sometimes, ISOs, including large ones, misunderstand the rules. One incorrectly believed that it should include both VISA and Mastercard chargebacks in the count to determine when to place a merchant on MATCH for high chargebacks. Another believed that it could use the MATCH system placement as a stick to recover small early termination fees. Another, surprisingly, believed that every time the ISO shut a merchant, it had to place the merchant on MATCH regardless of the reason.

•  Misunderstanding of the Legality of a Product or Service: Over the last several years, I have seen acquirers increasingly placing merchants on MATCH for selling products that they understand are illegal. Sometimes they are wrong. Examples would be various types of cannabinoids that are legal under the 2018 Farm Bill. Some processors assume the products are illegal. Other times, they confuse high-THC marijuana products with low-THC hemp products. In these cases, the merchant may be unfairly penalized.

Consequences of Incorrect Placement

Being placed on the MATCH system can have devastating consequences for a merchant. The primary impact is the difficulty in finding a new acquirer willing to provide payment processing services. Acquirers must consult the MATCH system when evaluating potential merchants, and being listed can make it nearly impossible to secure a new processing agreement.  Also, most processors periodically compare their current portfolio of merchants against the MATCH list to terminate those MATCHed by other acquirers.  So, if a merchant has backup processing it is at risk by a MATCH placement by a separate acquirer.

Financial Impact

The inability to process payments can lead to significant financial losses. Merchants rely on payment processing to conduct their daily operations, and any interruption can result in lost sales, decreased customer trust, and potential business closure. Almost all online merchants rely entirely on payments that ride the VISA, Mastercard, and American Express rails.  Without a merchant account, they are out of business.

Additionally, resolving an incorrect placement can be time-consuming and costly, requiring legal assistance and extensive communication with acquirers and Mastercard.

How to Address Incorrect Placement

Immediate Action: Merchants who believe they have been incorrectly placed on the MATCH system should take immediate action. This involves gathering all relevant documentation, including communications with the acquirer, transaction records, and evidence supporting their case. Time is not on the merchant’s side.

Communication with Acquirers: Open and clear communication with the acquirer helps. Merchants should contact their acquirer to understand the specific reasons for their placement on the MATCH system and provide evidence to dispute any inaccuracies. Regrettably, most of the time, merchants are unable to reach a decision maker who understands what is going on and has the power to reserve the listing.

Legal Assistance: Legal assistance is almost always needed to remove a merchant from the MATCH list. Only a few merchants have been successful in removing themselves without lawyers. The few law firms focusing on this type of work can help you navigate the complex process.  They understand the rules and, in some cases, have relationships that can be leaned on to assist in the removal.

Conclusion

The Mastercard MATCH system plays a crucial role in managing risk within the payments ecosystem. However, incorrect placement on the system can have severe and far-reaching consequences for merchants. If you are placed on the MATCH list, we strongly recommend that you immediately contact an attorney experienced in removing merchants from the list.