Merchant Monitoring Requirements

Merchant Monitoring

Processors must monitor each of their merchants' activity on an ongoing basis to deter fraud or other wrongful activity. At a minimum, processors must monitor their merchants' deposits and authorization activity

The Credit Card Associations have established certain standards applicable to fraudulent transactions and chargeback activity. Processors whose merchants exceed or violate these standards may be subject to fines or other disciplinary action and may be subject to chargeback liability.

Merchant Noncompliance

If the Credit Card Associations become aware that any merchant has violated any of the rules governing the acceptance of their cards, the use of their marks, the charges to cardholders, the minimum or maximum transaction amount restrictions or the prohibited transactions, they will notify the acquiring bank of the violation and request that it take action to ensure that the merchant discontinues the practice promptly, and in no more than 10 business days.

Acquiring banks may be fined if the Associations become aware of such violations. MasterCard, for instance, may impose an assessment for noncompliance of up to $100,000 per individual violation, with a maximum aggregate assessment of $500,000 for additional or continuing violations during any consecutive 12-month period.

If a processor terminates the merchant processing agreement with a merchant because of a violation by the merchant of one or more of the rules referenced above, the member must report the merchant to the MasterCard MATCH system within five calendar days of the decision to terminate, regardless of the effective date of the termination. All records of rules violations move with the merchant to any new acquiring bank.