The Terminated Merchant File, Explained
Visa keeps a list of merchants terminated for cause. Acquirers must check it before they sign you. Here is what that means for your next account.
The Terminated Merchant File is a Visa-run list of merchants that were let go for cause. If your business was terminated for cause, the next acquirer can see it.
What the Terminated Merchant File is
Visa's standards say a merchant terminated for cause is listed on the Terminated Merchant File. Visa's guide calls the Visa Merchant Screening Service a database that acquirers and their agents use to list terminated merchants. The file is a shared record. One acquirer's decision becomes a record that all the others can see.
How a merchant ends up on it
The file is for terminations for cause. That is the key phrase. A merchant who closes an account or picks a new processor is not the same as one dropped for a reason.
Visa's standards say a merchant's history of terminations, excessive chargebacks, fraud or illegal activity can affect the underwriting decision. The next acquirer can weigh them.
Who searches it, and when
Visa's rules require an acquirer to query a common terminated merchant database before entering into a merchant agreement with a prospective merchant. The check happens before the contract is final, not after.
Visa's guide adds a fallback. If the Visa Merchant Screening Service is down, Visa's guide says a like file must be used instead. So the check is not skipped when the main tool is down.
What Visa's rules require of acquirers
Visa's rules include a section on Required Use of Terminated Merchant Database. In short, acquirers must check the Terminated Merchant File before they sign a new merchant.
There is a limit on how the result is used. Visa's rules say an Acquirer must use Terminated Merchant File data only as an informational tool in the decision-making process. A match is not an automatic no. It is one input among several that the underwriter weighs.
Visa's standards also say the acquirer must tell the merchant in writing if it ends the deal. A termination is not supposed to be a silent event.
Payment facilitators and the file
Payment facilitators have their own duties here. Visa's guide says a payment facilitator must add a sponsored merchant terminated for cause to the Visa Merchant Screening Service. Sponsored merchants terminated for harmful activity go on it too.
The checking duty runs both ways. Visa's guide says payment facilitators should use a terminated merchant file. Visa's standards recommend acquirers ensure TPAs check the Terminated Merchant File for any match to the Sponsored Merchants. Acquirers must grant the TPA access to the Terminated Merchant File, such as VMSS, to monitor for matches.
So a merchant who sells under a facilitator is not outside the file's reach. A facilitator must list a sponsored merchant terminated for cause.
What it means for your next application
Being on the file does not bar you from every account. Visa's rules say the acquirer can use the data as one input when it decides. It cannot be the whole decision. The acquirer still has to decide.
But the history will come up. Visa's standards say past terminations, too many chargebacks, fraud or illegal acts can affect the underwriting decision. Expect the acquirer to weigh it.
Visa's guide also warns about the other direction. It says a business that was declined or dropped may lie on a new application to get payment services. Hiding a past termination to get around the check is a bad idea. The acquirer must search the file either way.
What to do before you apply
Be upfront. Tell the new processor about the termination before it finds the match itself. Bring whatever paperwork you have from the old processor, and be ready to explain what changed since then.
If you sell by phone, read about billing authorization on phone sales before you apply again.
See why banks watch processor accounts to learn more. A clean, honest application is the best start you can give it.