Screening New Merchants

Before signing a merchant agreement, acquiring banks must verify that the merchant that is applying for a merchant account is a valid business. Such verification must include at least all of the following:

• Credit check, background investigations, and reference checks of the merchant.
  
  If the credit check of the merchant raises questions, the acquirer also should conduct a credit check of:
  
  
  
  
  
  
  
  • The owner, if the merchant is a sole proprietor; or
  
  
  
  • The partners, if the merchant is a partnership; or
  
  
  
  • The principal shareholders, if the merchant is a corporation.



• Inspection of the premises and records to ensure the merchant has the proper facilities, equipment, inventory, agreements and personnel required and if necessary, license or permit and other capabilities to conduct the business. If the merchant has more than one outlet, the acquirer must inspect at least one outlet from which it will acquire card transactions.



• Inquiry to the Member Alert to Control (High-risk) Merchants (MATCH) system. If an acquirer chooses to enter into a merchant agreement with a merchant that is listed in the MATCH system, the acquirer will be responsible for all fraudulent transactions.



• Investigation of the merchant’s previous merchant agreements.

An acquirer is not required to conduct a credit check of a public or private company that has annual sales revenue in excess of $50 million (or the foreign currency equivalent), provided the acquirer reviews, and finds satisfactory, the most recent annual report of the merchant, including audited financial statements. A private company that does not have a recent audited financial statement is subject to a credit check and inspection even if its annual sales revenue exceeds $50 million.