The MATCH List: A Merchant's Guide

Key Takeaways:

MATCH Defined: Mastercard Alert To Control High-risk Merchants (MATCH) Pro is a database used by acquiring banks to identify merchants whose processing relationships were terminated for specified risk-related reasons. A listing can make obtaining a new merchant account more difficult.

Reasons Are Coded: MATCH reason codes describe the reason a merchant was terminated, such as account data compromise, transaction laundering, excessive chargebacks, excessive fraud, standards violations, PCI DSS noncompliance, illegal transactions, identity theft, or other conditions.

Processing Can Tighten: Merchants on MATCH may face increased underwriting scrutiny, reserves, higher processing costs, difficulty obtaining standard merchant accounts, or reliance on high-risk processors. The operational consequence depends on how acquiring banks assess the merchant’s risk.

Chargebacks Can Escalate: Excessive chargeback activity can lead to merchant account termination and MATCH placement. Merchants should address chargeback issues before consequences escalate.

Prevent Listing Causes: Fraud controls, Payment Card Industry Data Security Standard (PCI DSS) compliance, chargeback prevention alerts, transparent business practices, and prompt remediation of acquirer concerns can reduce risk for merchants.

Table of Contents

• Key Takeaways
• What is the MATCH List?
• Reasons for Being Placed on the MATCH List
• Consequences of Being on the MATCH List
• High-Risk Processing
• Getting Off the MATCH List
• How to Avoid Being Placed on the MATCH List

The MATCH list is a tool used by acquiring banks and payment processors to identify high-risk merchants. Being placed on the MATCH list can have profound implications for a business, affecting its ability to process payments and maintain a good reputation.

Understanding why merchants are listed and how acquiring banks use this information can help businesses protect their access to payment processing. Merchants can reduce their risk by addressing the practices and payment issues that lead to account termination.

What is the MATCH List?

The MATCH list is a database maintained by Mastercard through its Mastercard Alert To Control High-risk Merchants (MATCH Pro) system. It contains information about merchants whose processing relationships were terminated for specified reasons. This list helps financial institutions manage risk by alerting them to businesses with problematic payment histories, such as those with extremely high incidences of fraud or chargebacks.

Originally developed as the Terminated Merchant File (TMF) in the 1990s, the MATCH list has evolved into a sophisticated risk management tool that plays a vital role in the payment processing industry. Mastercard, along with acquiring banks, oversees this list, which is updated with information on merchants whose accounts have been terminated.

The primary purpose of the MATCH list is to help acquiring banks make informed decisions about whether to establish or maintain merchant accounts with businesses flagged as high-risk. By identifying and monitoring high-risk merchants, the MATCH list helps prevent fraud and other financial risks that could compromise the security and reliability of the payments industry.

Reasons for Being Placed on the MATCH List

The primary reasons a merchant would be placed on the MATCH list include fraud, excessive chargebacks, PCI compliance violations, illegal transactions, identity theft, and transaction laundering. Transaction laundering involves submitting transactions outside the applicable merchant agreement. Mastercard provides specific reason codes for each case, allowing for a detailed categorization of the issues leading to a merchant's inclusion on the list. These reason codes help acquiring banks and other stakeholders understand the specific nature of the risks associated with a particular merchant.

MATCH List Reason Codes

Excessive Chargebacks

Excessive chargebacks can lead to account termination and MATCH placement. Merchants with high chargeback activity may also enter the Mastercard Excessive Chargeback Program. Its monthly thresholds depend on both chargeback volume and the chargeback ratio.

A merchant qualifies for the Excessive Chargeback Merchant category with at least 100 chargebacks and a ratio of at least 1.5%. Merchants with at least 300 chargebacks and a ratio of 3% or higher qualify for the High Excessive Chargeback Merchant category. The ratio compares the current month's Mastercard chargebacks with the preceding month's Mastercard sales transactions.

Merchants can be identified after one qualifying month, although the first month carries no program fine. Continued excessive activity leads to increasing assessments, which acquirers may pass on to merchants. Unresolved chargeback problems can ultimately lead an acquirer to terminate the account.

MATCH placement follows its own criteria. Code 04 considers chargeback activity over the previous three months, a ratio exceeding 1.5%, and chargebacks totaling at least $5,000. Placement does not require several months of prior enrollment in a monitoring program.

Consequences of Being on the MATCH List

Being placed on the MATCH list can have immediate and long-term consequences for a business. In the short term, merchants may face higher fees and increased scrutiny from acquirers. This can make it challenging to secure new merchant accounts or maintain existing ones. Merchants may also be required to maintain a larger merchant account reserve.

Businesses on the MATCH list may face operational challenges, such as restricted access to payment processing services, which can hinder growth and profitability. These limitations can make it difficult for a business to expand or even maintain its current level of operations.

Merchants on the MATCH list often face difficulty obtaining merchant accounts. Many acquiring banks are reluctant to provide services to businesses on the MATCH list due to the associated risks. This reluctance can result in merchants having to seek out high-risk processors, which come with their own set of challenges and drawbacks.

High-Risk Processing

High-risk processors are specialized payment processors that work with merchants on the MATCH list or those classified as high-risk due to their industry or business practices. These processors provide a necessary service for high-risk merchants, allowing them to continue accepting payments despite their increased risk profile. However, there are significant downsides to using high-risk processors.

One of the primary downsides is the higher fees associated with high-risk processing. These fees can include setup fees, transaction fees, and monthly account fees. For merchants already struggling with profitability, these higher fees can be a significant burden.

In addition to higher fees, high-risk processors often impose stricter terms and conditions to mitigate their risk. These terms can include large rolling reserves, where a portion of the merchant's revenue is held in reserve to cover potential chargebacks and fraud.

High-risk processors provide services to merchants who might otherwise be unable to accept payments. For merchants on the MATCH list, working with a high-risk processor can be a lifeline, allowing them to continue operating while they address the issues that led to their inclusion on the list.

Getting Off the MATCH List

MATCH records are automatically removed after five years. Earlier removal is possible when a merchant was listed in error or has resolved the PCI DSS noncompliance responsible for a code 12 listing.

Merchants seeking early removal should contact the acquirer responsible for the listing. PCI-related requests require an acquirer attestation and compliance validation from a Mastercard-certified forensic examiner. If the acquirer cannot or will not submit the request, the merchant may apply directly to Mastercard using the same documentation process.

How to Avoid Being Placed on the MATCH List

Merchants can reduce their risk of MATCH placement by maintaining PCI DSS compliance, addressing acquirer concerns promptly, and implementing chargeback prevention measures, including fraud detection tools and chargeback prevention alerts.

An effective fraud prevention strategy should include multiple detection systems, from simple tools like AVS and CVV matching to complex software that uses machine learning to reject high-risk transactions. The right mix will depend on the specific business.

Unfortunately, not all chargebacks come from true fraud. Some originate from first-party misuse, where a customer makes a false claim to their bank in order to get their money back. To prevent these chargebacks, as well as those that slip through the fraud detection measures, chargeback prevention alerts can be a powerful tool.

Chargeback prevention alerts notify merchants of incoming disputes before they result in chargebacks, allowing them to issue a refund instead.

Because of the fee charged for each alert, this solution isn't the best choice for all merchants, but it's an extremely effective means of getting a merchant's chargeback ratio under control quickly. Some alert providers will even actively monitor each individual MID, notifying the merchant if one nears the threshold for excessive chargebacks and suggesting a change in strategy to compensate.

The consequences of being placed on the MATCH list can be severe, but with the right strategies and tools in place, even merchants in high-risk industries can mitigate these risks.