Screening New Merchants

Before signing a processing agreement, merchant services providers and acquiring banks must verify that the merchant from which they intend to acquire card transactions 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 merchant services provider or the acquiring bank also should conduct a credit check of one of the following:
  
  • The owner, if the merchant is a sole proprietor.
    
  • The partners, if the merchant is a partnership.
    
  • 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 merchant services provider or the acquiring bank must inspect at least one outlet from which they will acquire card transactions.
  
• Inquiry to the Member Alert to Control (High-risk) Merchants (MATCH) system. If an acquiring bank chooses to enter into a processing agreement with a merchant that is listed in the MATCH system, it will be responsible for all fraudulent transactions.
  
• Investigation of the merchant's previous merchant processing agreements.
  

Acquiring banks are 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 it reviews, and finds satisfactory for purposes of the acquiring being considered, 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.