First Data Termination of Merchant Account for Credit Card Processing Nationwide

First Data Corp has recently terminated thousands of Merchant Accounts for Credit Card Processing without notice to the Merchants in advance. When contacted, they state that they are positioning themselves for an IPO. A check of this reveals that they are owned by KKR Corporation, a company that is mainly in the oil and gas business and which is desirous to spin off First Data now that it has recently eeked out a small profit. KKr intends to use the money from the IPO to buy distressed oil and gas stocks/entities.

First Data has also used the "small print" language in their contracts to HOLD and NOT RELEASE up to several days worth of Merchant charges from between February 5, 2013 and February 9, 2013, all of which they allowed to be processed by Merchants without notice of the impending intent to shut-down several classifications of merchant types. The "HOLD" period is for up to six months according to their buried contract terms. Accordingly, it appears that they are using the held funds and any "reserve" (a percentage of the total sales they withold for security in case a Merchant closes their doors and disappears and incurs subsequent chargebacks) from the dienfranchised Merchants to pad their balance sheets in advance of the planned IPO to make their initial financials appear better for the offering.

There was NO prior notice provided to the affected Merchants and several are now unable to gain access to their funds and are in danger of facing imminent closure for lack of access of funds. (And yet, they unequivacally expect the Merchants to ship out and provide goods and services without being paid for such goods or services.) Several will face bankruptcy, many employees will lose their jobs when the businesses close, landlords will lose tenants and tax money will be uncollected.

If you do business with First Data (or they process your credit card receipts, BEWARE. You are likely to be next in line when they try to boost their book value for the IPO. This information can easily be found on line by researching KKR company and the CEO of First Data. Further, merchant credit card processors are one of the most UNREGULATED industries in the financial sector, and NOT SUBJECT to the myriad rules and regulations that apply to most other financial institutions.