What is Terminated Merchant File (TMF)?

This article submit by Credit Card Processing Blog.

A terminated merchant file, or TMF, is used when a merchant wants to open a merchant account in order to accept credit cards. When consumers do not pay their credit card payments or auto payments, the creditor has the option to report the consumer to one of three credit reporting agencies. If this occurs and the consumer then tries to get a loan or open another credit card, the potential creditor can pull their credit report and see that they were late on their Citibank payment or that they missed five automobile payments. A consumer’s credit report can hinder their ability to get a loan, a car or even an apartment.

What is the MATCH / TMF File?

When consumers do not honor the terms of their credit agreements, the creditor may report the default to a credit reporting agency. If the consumer applies for additional credit, the new creditor obtains a credit report and learns about the consumer’s previous history. The merchant processing banks (also known as “acquiring” banks) do not have a similar credit-reporting agency available that can report information about the way that a business handles its merchant processing responsibilities. The card associations, instead, use a file known as “MATCH.” The MATCH File is a database file, previously and most commonly known as the Terminated Merchant File “TMF.” This Terminate Merchant File is used by MasterCard and Visa processing banks, known as “acquiring banks,” to identify specific merchants and principals who have already been terminated. Once a merchant is on this list, it is highly unlikely that future merchant account applications will be approved. The “TMF”, or MATCH list, is essentially a BLACKLIST from which it is almost impossible to be removed.

How exactly is the MATCH file used when I apply for a Merchant Account?

Your new merchant acquiring bank must query every merchant account application against the Terminated Merchant File to determine whether a company, or its principals, has been terminated. If your new acquirer receives a response indicating a “possible match” against a merchant or individual listed on the file, the acquirer must double check and make certain the listed merchant or individual is truly the same as the one for which the inquiry was generated. If so, the acquirer must contact the listing bank to determine why the business or individual was added to the file.

If a previous acquirer listed your business or your name, that does not mean you are prohibited from obtaining merchant processing privileges in the future, however, being on the Terminated Merchant File makes it VERY unlikely that you will be approved for a merchant account with most merchant service providers. The new acquirer is to base its approval decision on complete investigation and to use the Terminated Merchant File as an informational tool in the decision making process. Some acquirers will issue an approval conditioned upon having the listing removed by the prior processor while others will review the circumstances surrounding the listing and make an informed decision.