by Matt Rej
Getting an email or notice from your processor’s underwriting team requesting recent financial statements and other information about your business may seem like a cause for concern, especially if you’ve been using the same provider for a while.
While this is a normal part of the initial merchant account onboarding process, most businesses don’t expect this type of financial review years into the processing relationship.
This is known as periodic review.
And though it can feel like something is wrong, periodic reviews are a standard part of how processors manage their risk. But the way you respond is crucial, and the outcomes aren’t always in your favor. Here’s what you need to know.
What is a Periodic Review?
A periodic review is a routine re-underwriting of your merchant account. It applies to existing accounts that have already been approved, sometimes years after the initial account setup.
When you first signed up, your processor assessed factors like your business model, transaction volume, industry, and financial health before approval. Your rates and account terms were based on the information given at that time.
Periodic reviews allow processors to confirm that the info is still accurate and determine whether your current activity changes your risk profile. If they find inconsistencies, inaccurate information, or significant changes about your business model or volume, they may adjust your account terms to manage their own risk tolerance.
The term “periodic review” is commonly used industry-wide. But the exact phrasing can vary by processor:
- Account review
- Risk review
- Business verification
- Periodic risk review
- Account verification
- Periodic review of your merchant account
- Merchant underwriting review
Regardless of the name being used on the merchant account review notice that you received, all of these terms refer to the same thing.
Why Processors Review Existing Merchant Accounts
Payment processors and acquiring banks carry real financial liability for merchant accounts. If a business goes under with outstanding refunds or chargebacks, the processor can be left holding the bill.
Periodic reviews exist to ensure the processor isn’t caught off-guard by a business that has changed significantly since it was approved.
For example, let’s say your business started as a local retail shop selling household decor in-person. Items like vases, candles, and throw pillows, all less than $50. But your operation eventually expanded to selling furniture and large appliances online, with fulfillment times 3-6 months out.
This would significantly change the risk for your processor. As a customer could pay $2,500 today for a couch they may not receive for months.
Processors conduct account reviews to make any adjustments based on your risk profile to ensure your terms align with their risk tolerance.
Why Your Account Was Selected for Review
The exact reason why your merchant account was chosen often falls into one of two categories. It was either routine or triggered by something specific. Here’s the difference:
Routine Reviews
Some processors review accounts on a predetermined schedule based on the merchant’s risk profile. This ranges anywhere from quarterly to annually, but the language in your contract likely gives your processor the right to conduct a review as frequently as they want to.
Low-risk accounts may go 3-5 years without a full re-underwriting.
Whereas a high-risk merchant account may get reviewed every six months for the lifetime of the account.
Reviews Triggered by Account Activity
Your processor may also review your account because its internal monitoring system noticed a specific change that was flagged. Examples include:
- Higher chargeback or refund activity
- Sharp increase in monthly processing volume
- Longer delivery timelines
- Unusual transaction patterns
- Changes to products and services you’re selling
- Transactions that exceed your average ticket size
- New recurring or annual billing practices
- Change in ownership
- Processing in new countries or markets
- Concerns about the financial health of your business
Not every processor will disclose the exact reason for the trigger. But you should ask whether the review is routine or whether a specific trigger caused it.
This distinction is important, especially if the processor attempts to add a reserve or restrict the account. That could be justified if there’s a genuine change, but it’s not normal for scheduled reviews with no noteworthy changes.
How to Respond to a Periodic Review
Verify That the Request is Legitimate: Make sure that the request is actually coming from your processor before you send anyone financial statements and bank records. It’s best to log into your merchant account portal directly as opposed to clicking an unexpected email link. You can also call the number on your latest statement to connect with the underwriting team and verify the request.
Gather All Required Documentation: Don’t send statements sporadically. Gather everything that was asked for first, and then send it all at once. There’s no reason to overshare here either. Only send what was requested in the processor review notice.
Make Sure Everything is Consistent: Your financial reports, website, and processing data should tell a consistent story. If your bank is using a different name and address than what’s on record with your merchant account or if your website says you sell something different than what you told your processor, it’s going to lead to additional questions and make the review more complicated.
Respond Before the Deadline: Act fast, and ensure you get everything in before the deadline. If you’re having trouble gathering documentation or need extra time, you can always request an extension. But any response is better than no response, as ignoring the request altogether could lead to an account freeze or funding hold.
Explain Anything That Looks Unusual: Don’t make the processor guess why something about your business changed. New locations, new products, extended fulfillment timelines, or changes to your billing model should be explained concisely. These explanations can often justify whatever changed about your account that triggered the review initially.
Upload Everything Securely Through the Processor’s Dashboard: If possible, upload documents and communicate directly through a secure portal provided by your processor. You’re dealing with sensitive information that you may not want to send via email.
What Happens During the Review
The re-underwriting process is typically straightforward. It starts with a periodic review notice requesting documentation, such as:
- Recent bank statements
- P&L statements
- Balance sheets
- Tax returns
- Processing statements
- Supplier invoices
- Customer contracts
- Fulfillment or delivery information
- Refund and chargeback records
- Updated ownership information
- Explanation of expected growth
The exact documentation varies by processor and the reason why your account was selected for review.
But once you’ve submitted everything that was asked of, your processor’s underwriting team will assess whether your risk profile has changed. If not, you’ll continue processing as normal. If something material has changed, they may impose changes to your account terms.
What Merchants Should Pay Close Attention To
While periodic reviews are normal, processors shouldn’t be using them to change your account terms when nothing has changed about your business.
After the review is complete, watch out for:
- New reserve requirements
- Rate increases
- New fees or risk assessment charges
- Processing gaps or category restrictions
Don’t automatically accept these terms without pushback.
If you have a stable processing history and low chargeback ratio, there should be no legitimate reason why your processor’s underwriting team would suddenly require a rolling reserve. Your rates shouldn’t go up, either. And there should be no fixed monthly or volume-based fees imposed as a result of the review.
Sometimes this stuff can be justified if something major has changed and you actually present a higher risk to your processor.
But it’s still in your best interest to question any account changes. And it’s likely worth consulting with a professional to see if those changes are justified. Our team here at MCC can review your account for free to determine if your processor is being reasonable or if they’re using this as an excuse to pad their margins.
How Periodic Reviews Can Work in Your Favor
Re-underwriting isn’t always a bad thing. Especially for businesses that aren’t doing anything wrong.
If they can use a periodic review to potentially increase your rates and restrict your account terms, you can use that same logic in your favor.
While it’s unlikely that your processor will automatically remove reserves or lower your rates as a result of a periodic review, you’re well within your right to request those things.
This can be one of the best times to negotiate better terms on your merchant account because it’s something that your processor initiated.
It helps to have an advocate who can handle these negotiations on your behalf. And that’s exactly what we do here at Merchant Cost Consulting.
Final Thoughts
A periodic review is a routine underwriting check on your merchant account. Make sure you cooperate and respond promptly.
For most merchants with clean accounts, the review will be completed without any meaningful changes to your account.
But if the review comes back with new costs or restrictions that don’t align with any change to your actual business, don’t treat those decisions as final. There’s likely room to negotiate.
Other Payment Processor Account Review FAQs
Is a periodic review normal?
Yes, periodic account reviews are normal in the payment processing space. Nearly every processor conducts them, although some do so more frequently than others.
Are periodic reviews only for high-risk merchant accounts?
No, any business can be subject to an account review or re-underwriting. While they are more common and more frequent on high-risk accounts, they can happen to anyone.
What if nothing about my account has changed?
If nothing about your merchant account or processing history has changed then the review should be fairly straightforward. Just submit the requested documentation and wait for a response. The most likely result is that nothing will change and you can continue processing as normal.
Why am I being selected for another account review again?
If you’ve already gone through a periodic review in the past you may be wondering why this is happening to your business again. It’s likely one of two reasons. Either you’re automatically scheduled for another review because a certain amount of time has passed (ex: 1 year) or something about your account activity triggered a review.
What happens if you ignore a processor review notice?
Do not ignore your processor’s request to review your account. Failure to respond can result in account freezes and funding holds.
Can you still accept credit cards during an account review?
Yes, you should still be able to accept card payments while your account is being reviewed. Though the exact terms depend on your processor. Certain providers may impose temporary restrictions during the review period.
Will periodic reviews impact your funding?
A periodic review shouldn’t impact your funding if nothing has changed. However, significant changes to your account that increase the risk for your processor can result in longer funding release times or reserve accounts. But these types of account changes should be negotiated.