Credit card services withdrawn?

[paulears]

What do you make of this?

A while back I commented that a firm I bought a computer from didn't;t send it and then tried very hard to not give me a refund - in the end, American Express refunded me the money.

Dear Customers of nSpire Laptops Ltd,

I regret to inform you that during an un-validated dispute with our merchant bank our contract with our card processing agents has been terminated. This had occurred at the end of August and we were trying to reclaim our account, however, this has been unsuccessful. Because of this, we are unable to process any new orders, refunds or fulfilments. The act of the termination is by no fault of nspire laptops limited but by our merchant bank, a third-party provider.
Unfortunately, this is entirely out of our hands, and we have no control over the situation. NSPIRE LAPTOPS LIMITED currently is in potential litigation talks with our company lawyers.
We sincerely apologise for any difficulty this may put you in; however, we also ask for your understanding that this is by no means an act on behalf of the company.
We have been instructed to inform you to contact your bank providers to retrieve your refund.
Once again, we apologise for any inconveniences that this has caused and that we are unable to help further with this.
Sincerely,
nSpire Laptops Limited

This is worded very oddly, and I'm left wondering what exactly went on. Why would anyone have their credit card transactions carried out by a 'merchant bank'? They told me that any credit/debit card refund takes up to 14 days, which my bank don't do - I can refund whenever I wish? I wonder what's going on behind the scenes?

 

[Mr D]

Been a while since I've signed up for a credit card processing facility but isn't merchant bank the company who process the card payments for a fee?
I sign up to a particular card processor company who charge me high fees per month for example and the actual transaction is done by the merchant bank, not the company I'm paying for the card machine.

 

[obscure]

They are basically trying to get out of refunding money, on the basis that their card supplier has closed their account, and suggesting people go to their own banks to seek a refund.

Of course the status of their card processor account is irrelevant nonsense. They have a contract with their clients and have to honour those contracts or give refunds regardless of what their bank or card processor is doing.

 

[Mark T Jones]

The term they are looking for is merchant service - ie the company processing transactions.

 

[paulears]

The company is run by a recent graduate - strange she mangles her words in such a strange way. I'm glad I got my refund.

 

[Bainzee]

most businesses that accept card payments from their customers require a merchant account, which is a financial agreement between the business/merchant and the merchant acquiring bank.

It seems like the business in question has had their merchant agreement terminated by their merchant bank, which could be one of many reasons i.e excessive chargebacks, fraud etc.

As most businesses that go through litigation, paying back customers seem to be their last priority from experience or they simply do not have the funds to pay you back.

You got your refund in the end, which is the main thing

 

[wevet]

The business is basically skint and they are putting the onus on repaying you on your credit card supplier. The credit card supplier are obliged to refund genuine claims whetehr or not the business has folded.

 

[TotalWebSolutions]

Reading this it looks like they have used a third party terminal provider/agent who in turn requires an Internet Merchant Account to be set up and used with their terminals/service. The merchant bank is the acquirer who provides the processing/settlement of the transactions into the business's bank account - companies such as Barclaycard, WorldPay, First Data, Global Payments etc. If the merchant bank (acquirer) pulls the facility then the terminal can't function.

 

[Scott Hawksworth]

Some good answers here, but as someone who works for a merchant services company (Soar Payments) I think I might be able to give you the complete picture...

Some businesses operate in "high risk" spaces, or become considered high risk due to chargeback ratios above 1% (charge back ratio being the percentage of total processing amounts that are charged back). If they had their account with a particularly risk averse processor... or even if it was a high risk processor, and went over the acceptable ratios, they were likely shut down.

This obviously can leave you, as the consumer, in a bad situation. Fortunately though you got your refund as the processor wants to make things right.

As for the person running the business, they are going to have a tough time getting approved again... and if they did some really shady stuff, it's even possible they would be added to what's called the "Match List" - think of that as a persona non grata list of businesses that processors simply won't work with.

It's all pretty fascinating stuff... but can also get confusing.