What Is The Dreaded TMF File

To the average person, the words “terminated merchant file” does not mean much, but for a business using merchant account services, it can mean utter ruin.  Landing yourself on this list could all but halt your business’ ability to process payments electronically.  The best thing a business can hope for is to never end up on the list at all, but in the case you find yourself neck deep in it, what options do you have? if any.

To put it plainly, the terminated merchant file is a list of merchants who have been blacklisted for transactions that land them outside the standards agreed upon for the service.  If the standards are breached, the merchants identification number is added to the TMF.  This warns potential service providers that this merchant is extremely risky and the chances of them being able to use account services becomes slim to nonexistent.

The following, are a few things a business should look out for in order to avoid landing on this list:

Too many chargebacks
Unpaid Chargeback Liabilites
Depositing an excessive amount of counterfeit sales
Participating in excessive and consistent fraudulent activity
Money laundering
Identity theft
Merchant collusion

Out of all the possible ways to land on the list, the one to be most vigilant of, is chargebacks.  They are the most common, and likely, the easiest way to end up on the TMF if you are not careful.

History Of The Terminated Merchant File ( TMF FILE )

The TMF was designed to protect banks from dishonest operation, merchants taking part in risky industries and businesses simply not correcting internal issues.  Some would consider the use of the list, at least in terms of modern eCommerce transactions, as a bit outdated.  Over the years, because of the development of newer and better technology, security has become heightened and policies have changed.  A couple of these developments include the use of EMV chips (seen in newer cards), the tokenization of customer data and the initiation of zero liability policies which are aimed at protecting the cardholders.

So, in the unlikely case that you happen to find yourself on the TMF, is there any way to get taken off the list?  The unfortunate answer is, not likely, with a couple very distinct exceptions.  The first possibility would be if you are listed on the TMF in error.  The bank who got you added to the TMF would have to report an error, the list is then corrected and you are formally removed, salvaging your reputation.  Another possible exception would be correcting a noncompliance to a requirement by the PCI/DSS.  Lastly, rectifying existing chargebacks with the bank and ensuring that future ones do not continue is another possible way of removing yourself off the list.

Conclusion:

The reality of it is that there are slim chances of finding your way off the list, once you are put on it.  There is however, a potential, tiny light at the end of the tunnel.  There are some processing banks that MAY be willing to take on the risk of handling your merchant account services if you find yourself on the dreaded TMF.  How selective they will be, and whether or not you will actually be able to attain merchant services is a whole other issue.  Best advice that can be taken away from all this… Do all you can to avoid getting on the list to begin with.  No good can come from it.

Author: Chris Fernandez
Small business authority and entrepreneurial journalist.
Contributing writer at HRMA-LLC
1-877 493-4622
hrma-llc.com

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