The MATCH List: A Merchant's Guide

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 the MATCH list's purpose, the reasons for being listed, and the consequences is essential for maintaining a reputable business and ensuring smooth payment operations. This comprehensive guide aims to provide an in-depth look at the MATCH list, its significance, and strategies merchants can use to avoid being added to it.

What is the MATCH List?

The MATCH list, which stands for Member Alert to Control High-Risk, is a database maintained by Mastercard that identifies merchants deemed high-risk by acquiring banks. 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, merchant collusion, identity theft, and money laundering. 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 are the most common reason for a typical merchant to be added to the MATCH list. This typically occurs after a merchant has spent several months in a dispute monitoring program such as the Mastercard Excessive Chargeback Program without improvement. Enrollment in this program occurs when a merchant's chargeback ratio exceeds 1.5% for two consecutive months, and a ratio of over 3% will place the merchant in the "high excessive chargeback merchant" category. Merchants in these categories will have to pay additional fines and fees, as will their acquirers. These fines increase over time, often leading the acquirer to terminate the merchant account if the problem remains unresolved

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.

Despite these challenges, high-risk processors play a crucial role in the payments ecosystem by providing 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

The MATCH list typically retains a merchant's information for five years. After this period, if no further issues arise, the merchant is automatically removed from the list. If a merchant was added to the list for PCI noncompliance, they can request early removal from the acquirer that originally added them by demonstrating that any compliance issues have been resolved.

How to Avoid Being Placed on the MATCH List

The best way for merchants to avoid the MATCH list is by implementing robust 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 your 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.