PART 3: How to Avoid Errors

In welcoming the busiest season for payment processors, we’re diving into merchant applications and the steps that payment processors take to ensure that merchants can thrive and grow thanks to the countless businesses that fuel the ever-changing payment processing system.

To process payments, it is common for merchants (businesses) to go through their POS/software provider (ISV/VAR) to be onboarded with a payments processor, such as BOLD Integrated Payments. While processors work diligently to mitigate the seemingly miniscule errors that can potentially lead to disastrous circumstances for merchants, it is mindful to note that errors are never 100% avoidable.

To limit the probability of said errors, BOLD offers all partners access to a dedicated Partner Relationship Management (PRM) team. The seamlessness of the onboarding process can determine the ease of future merchant account adjustments, such as bank account, pricing, or DBA changes – three of which are amongst the most requested merchant account adjustments.

The better part of this article details information stemming from BOLD Integrated Payment’s Partner Relationship Manager Crystal Deese’ extensive expertise on the topic of merchant applications. As a veteran in the payment processing industry, the 7 years of experience that Crystal has under her belt provides us with the answers that many ISO agents, partners, and even merchants can find tremendously useful.

The goal of this article is to:

•  Discuss the 4 most common merchant application errors,
• Identify the ramifications of said merchant application errors,
• Understand how the processor and their partners can work together in effort to avoid these errors as much as possible, in turn ensuring a seamlessly flexible processing platform for our merchants.

PART I: The Four Most Common Application Errors.

Pricing Errors
Pricing errors mean having to call the merchant to request a signature on a Change Request Form (CRF) to correct the pricing as well as provide a copy of their Driver’s License.

Inaccurate Corporate/Legal Name – TIN Mismatch
Providing inaccurate Business Legal Name and Fed Tax ID combos causes a TIN Mismatch or can Pend the application in Underwriting.

Invalid Banking Information
When Invalid Banking Information is keyed into an application, it causes an ACH Reject to occur.

Owner address matching the DBA address and Owner Nicknames
The Owner address cannot be the same as the DBA Address as it must be the physical address of the Owner. Owner names must be full legal names, no nicknames.

PART II: Ramifications of the Errors.  

Pricing Errors
Pricing Errors cause negative residual income for the Partner or an overcharge to the Merchant. Pricing cannot be changed without a merchant signature on a CRF. The merchant will also have to be back billed on a future statement, or the Partner will have to potentially take a loss for the period the pricing was incorrect. Pricing changes are only approved on the first day of each month, so it is essential that pricing changes are submitted no later than the last day of the month. If the cutoff is missed, partners and merchants will have to wait an additional month, which typically leads to the accumulation of negative residuals and back billing.

Inaccurate Corporate/Legal Business Name
If the Merchant has a TIN Mismatch, they have 90 days to correct their information.  The Merchant will incur a $49/month fee until the TIN Mismatch is corrected. At the end of the 90 days, if the Merchant has not made the necessary corrections, the Risk Department will withhold 25% of their deposits for backup withholding for the IRS. 

Invalid Banking Information
When the Processor receives an ACH Reject, they place a 100% hold on the Merchants funds. To remedy this error, a bank change case must be submitted along with a CRF that is completed by the partner and signed by the merchant. The SLA time for a bank change is 6-7 business days, which can delay funding to the merchant, in turn causing strain on business operations. Additionally, this typically leads to an ACH reject fee of $30 each time a deposit attempt is rejected.

Boarding Owners by Nicknames in Lieu of Full Legal Names
Owners of merchant accounts must be boarded under their full legal names listed on the legal ID or driver’s license. Boarding a merchant with an owner’s nickname results in extension on account pending status.

PART III: How to Avoid Such Ramifications.

Pricing Errors
Merchant pricing is more of a strategic process than an everyday price-tag implementation. It is important for our Partners to work with our PRM team for statement/profit analysis and review, which can be conducted in the form of virtual conference calls.

Inaccurate Corporate/Legal Business Name
Anytime Crystal is completing an application with a Merchant, it becomes her mission to seek out even the most miniscule of errors. Typically, it is very telling that an error has been made if the DBA name matches the legal name. Unless a business is a Sole Proprietorship, the legal name should never exactly match the DBA name. The legal name should always be followed by an LLC or Inc.

Productive research can be conducted on each merchant per the Secretary of State (SOS) website. Amongst the extensive research that she conducts daily, Crystal also verifies the legal name, legal address, and ownership of each merchant. Additionally, she Googles the merchant’s business to verify the business address, the business website to gain insight on their products/services offered, and satellite images reflecting the storefront of the specified address.

While formulating applications, it is imperative that the agent/partner asks the merchant to verify small yet sensitive details such as the EIN, SSN, DOB, Bank Account Number, Routing Number, etc. at least twice in attempt to decrease the margin of error.

Invalid Banking Information
The most reliable method of verifying a merchant bank account is to obtain a voided check. Although voided checks are no longer required to proceed with Click to Agrees, they are still an extra form of verification for the banking information that implements security for both the processor and the merchant. Asking for the voided check or bank letter to verify the banking information upfront can reduce or eliminate the possibility of an account going live with the wrong bank account on file. In the case that it is impossible to obtain a voided check or bank letter, one should implement checks and balances by having the merchant verify the sensitive data twice.

Boarding Owners by Nicknames in Lieu of Full Legal Names
As previously mentioned, the Secretary of State website is amongst the most reliable sources for DBA/corporate name/ownership verification. It is common practice to ask for a copy of the owner’s driver’s license at the time of the application. If you cannot obtain a copy of the merchant’s driver’s license, be sure to verify names that are commonly known to be nicknames, i.e. Jim or Jimmy (James) , Mike (Michael), Pat (Patricia), etc.

 Conclusion

In any given industry, many errors are preventable through the practice of proactivity. Per Crystal’s extensive explanation of merchant application errors, we learn the true value of attention to detail for both the payment processor and the partner. All parties involved are susceptible to the negative effects of the ramifications that can easily be avoided should the processor and their partners provide their due diligence applying the aforementioned points to every last merchant application process.

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