When merchants request a POS device from banks, the banks check the merchant against the termination list and verify whether they can work with the merchant. If the merchant is on the termination list (a list fed by all banks, containing merchants whose merchant agreements have been terminated by banks), the banks either do not sign an agreement with that merchant or examine the merchant's current status in more detail before deciding whether to work with them.
So under what circumstances do banks terminate this agreement after signing it with a merchant?
Accepting Counterfeit Cards and Cards with a Cloned Magnetic Stripe:
Merchants that fail to exercise the necessary care and attention during card transactions, and that regularly accept counterfeit cards cloned without the knowledge of the genuine cardholder, are considered high-risk merchants.
A merchant that processes 5 counterfeit or cloned-magnetic-stripe transactions within 1 month, or that accepts a total of 2,000 TL in fraud transactions for this reason, has a chargeback window opened against it and its agreement with the bank is terminated.
Mail Order/Telephone Order and Internet Fraud:
For all fraud transactions that are charged back, the issuing bank is required to submit TC40 notifications to BKM (the Interbank Card Center) no later than 7 business days from the chargeback date. If the ratio of these fraud notifications to turnover exceeds 8%, a chargeback window is opened and the merchant's agreement with the bank is terminated.
The Merchant Being a Common Point of Purchase (CPP):
A termination notice is issued for merchants found to be involved in counterfeit card and magnetic stripe fraud, where, without the knowledge or consent of the genuine cardholder, and while the physical card remained in the cardholder's possession, the card's magnetic stripe data was found to have been copied, and against which legal action has been initiated.
Accepting Lost/Stolen Cards:
A merchant accepting a lost/stolen card through a physical POS is also grounds for termination.
A merchant that accepts 10 lost/stolen cards within 1 month, or that accepts a total of 2,000 TL in fraud transactions for this reason, has a chargeback window opened against it and its agreement with the bank is terminated.
Document Duplication:
A merchant issuing more than one document for a purchase, beyond the genuine sales receipt and without the cardholder's knowledge, is also grounds for termination.
Excessive Chargebacks, Credit Vouchers:
A merchant being subject to chargebacks far above an acceptable level, or regularly receiving a number of credit vouchers over a period of time that indicates cash was being used, is also grounds for termination.
Laundering Fraudulent Documents:
Issuing more than one document beyond the genuine sales receipt without the cardholder's knowledge, and passing these documents to another merchant for collection in a way that severs their connection to the original merchant, is also grounds for termination.
Termination Notice:
Being reported by the bank the merchant works with, using a Termination/Warning/Termination Cancellation Notification Form, is also grounds for termination.
Splitting a Sale:
Issuing more than one document for a single sale in order to avoid obtaining authorization is grounds for termination.
Using Cash:
A merchant making it appear that purchases were made with the cards of people it has a close relationship with, collecting the corresponding amount from the bank, and thereby creating low-cost funding, is grounds for termination. This situation is monitored by acquiring banks through sudden turnover increase checks.
Adding a Commission to Purchases:
A merchant charging the cardholder a commission (surcharge) on purchases made with a credit card is grounds for termination.
Unjustly Refusing to Accept a Card:
A merchant that, despite having a merchant agreement and having signed a contract to accept cards, fails to accept cards presented in accordance with the rules, either at certain times or on a regular basis, is grounds for termination.
Adverse Intelligence:
Receiving adverse intelligence about the merchant from banks or other third parties is grounds for termination.
The Merchant Going Bankrupt/Ceasing Operations:
A merchant ceasing its commercial activity for any reason and thereby becoming unable to accept cards is grounds for termination.
Suspicion That the POS Is Being Used for an Improper Purpose:
Suspicion that the merchant is processing transactions aimed at obtaining cash or paying off debt is also grounds for termination.
