9 June 2007 No Comment Print This Post  Email This Post

My entrepreneurial career began in e-commerce when I was about 15 or 16 in high school. I drifted into the real estate business because I love real estate as an investment vehicle. After a few years I realized that I don’t necessarily like selling real estate, just investing in it. I decided to get back into e-commerce because I’m graduating at the end of the year and I’d like some steady income so I won’t have to get a job.

One of my e-commerce ventures around 2003, an online shoe store, happened to do unexpectedly well. Sales soared along with traffic and in 5 short months I was able to go from $0 to five figures net in a month. It was such a success in terms of sales that I became overwhelmed with the orders, emails and processing (although all products were dropshipped). During Christmas season, things started to go haywire. Long story short, here were some problems:

1. I went over my merchant account monthly sales limit in 7-10 days.
2. I did not have the manpower to sort out and detect fraudulent orders.
3. My supplier would run out of products and take about a week to restock. Customers grew impatient.
4. Charge backs increased significantly during December.

Here comes the TMF

My bank at the time terminated my merchant account and froze my pending funds for 6 months. Although that put a strangle on my cash flow, I thought that was the end of it. I found out today that what happened in 2003 would haunt me for the rest of my business life. The bank put me on the TMF list, which is why I ended up changing my topic for today’s post and getting it up so late in the day. TMF, The match file is like a blacklist where banks put merchants on if they break the rules, or they suspect that they broke the rules. In my case, it was the amount of charge backs received. That, combined with my heavy sales volume probably led them to believe that I was some kind of crook. I found out from my current bank that they, nor do they think any bank, will ever approve me for another merchant account until my name is off of this list. I did some research on the TMF and found this helpful site where they discuss the TMF file and how it affects merchants. According to them:

Once a merchant is on this list it is highly unlikely that future merchant account applications will be approved. The “TMF”, or MATCH list, is essentially a BLACKLIST from which it is almost impossible to be removed.

Wow, impossible sounds so…indefinite. Basically what I have to do now to get myself removed from this list is to contact my previous merchant account provider and explain to them the situation and hope that they will write a letter on my behalf to Visa, MasterCard, Discover, Etc. and tell them to remove my name. The credit card companies at the end hold the power to remove my name or keep it there. I guess that’s why they say its almost impossible.

I’ve decided to work on removing my name later on, perhaps by writing them a friendly letter. In the mean time, I need to get my sites up and running and able to take credit cards. I found some solutions for those who are in the same boat as I am, or those who don’t want to deal with the hassle and liability of getting a merchant account. Here are some alternatives:

1. 2checkout.com. 2checkout is a great way to get your site accepting CC’s quick. The setup fee is $49 and their system is not too difficult to use, plus it integrates well with a lot of shopping cart software. The downside with them is that you are not getting a real merchant account. You are basically using their merchant account to sell stuff, then you are the fulfillment center. Customers technically are buying from 2checkout and not you, which explains why 2Checkout’s fees are higher than normal. Merchant accounts will charge you around 2.3% per transaction plus 25 cents. 2Checkout’s rates are about double.
2. Good ol’ Paypal. You should be using paypal anyway as an alternative to credit cards on your site. What most don’t know is that paypal actually has a feature that allows you to accept credit card payments from customers who don’t have a paypal account. This feature is called Website Payments Standard. There is no application and approval process, and their fees are not bad at all.

Because I already had paypal integrated into my site, I decided to just use the Website Payments Standard software. After a bit of tinkering, I’m now up and running. The main reason I did not use them initially was because I was afraid customers might think that they had to have a paypal account to use it. Even if it scares away 1 sale per month its not worth it.

So there you have it, problem solved. A word to the wise would be not to get on this TMF list! To get some tips on how to avoid getting on this list, visit the findmerchant.com article.