cyrnel

It's the bank's way of ensuring they won't lose a dime. You're responsible for the charge until the merchant funds reverse to the bank's account and enough time passes for it to clear all settles. If anyone - customer, merchant, or transaction processor - defrauds them then it's in your lap with interest from day zero.

I've been involved in three merchant account negotiations and that's been part of every contract. You're right it isn't true in every case but I expect that's part of larger agreements (ours never moved > $250K/mo). It could also be for large accounts working directly with a bank, without middlemen who increase chance for error/fraud, or even situations where the merchant guarantees funds for the bank in the name of customer service.

The banks and merchant service companies have smaller merchants and consumers over a barrel. Don't like the policies? Don't use or accept cards. If you haven't noticed, banking has turned to usury or fee-rape over the last decade. Use a card attached to your assets or you're at their whim.

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There are a vast number of people who are uninformed and heavily propagandized, but fundamentally decent. The propaganda that inundates them is effective when unchallenged, but much of it goes only skin deep. If they can be brought to raise questions and apply their decent instincts and basic intelligence, many people quickly escape the confines of the doctrinal system and are willing to do something to help others who are really suffering and oppressed." -Manufacturing Consent: Noam Chomsky and the Media, p. 195