Multiple Business/Merchant Accounts flags?

Anonymous · ‎02-21-2021

Hey guys,

I signed up because I figured this would be the best place to get accurate advice.

We have 2 companies. Company A and B. We often invoice company B from A for supplies and pay with wire transfer. Considering using a credit card belonging to B to pay the invoice from A instead of wire. However I was told this looks like manufactured spending and we could get our accounts closed.

Anonymous · ‎02-21-2021

I will be interested in reading responses to this. It would seem that company A would have to pay the merchant processing fees from company B’s payment. rewards to B would derive from the processing fee paid by A.

I don’t think it would serve the purpose of making a profit which is what MS is after. Maybe I’m wrong, this is definitely not my area of expertise. But unless you had a 3% or higher card, it seems like it would not make a profit because processing fees range from what 2.30% to 2.75%?

What is the percentage? Are you paying 2.75% to get 2% back?

Anonymous · ‎02-21-2021

We would have a minor advantage in terms of points. But fear the potential exposure. We like our cards

It's more convenient to pay with our cards. And if we get a points advantage its already more than our wires are getting. That gets nothing.

Anonymous · ‎02-21-2021

I don’t see why you could not because they are two separate legal entities and persons...Unless they are sole proprietorships or such, but definitely cannot give legal advice.

K-in-Boston · ‎02-25-2021

If company A has any ownership in common with company B, it's a violation of both your merchant processing agreement and your cardholder agreement and could result in both being closed.

While it may not be a huge rewards gain after the fees, MS isn't the reason for the policy, but rather that you are skirting cash advance policies by using one of your cards through your own merchant processor, which then deposits the cash into your bank account.

Anonymous · ‎02-25-2021

@K-in-Boston Great information. So as long as there’s no ownership by either in the other, then there would be no problem?

K-in-Boston · ‎02-25-2021

@Anonymous wrote:
@K-in-Boston Great information. So as long as there’s no ownership by either in the other, then there would be no problem?

With familial relationships there can also be potential issues if the card issuer makes the connection, but otherwise yes that's no different than you using your card at the neighborhood drug store to pay for your prescription, provided you are not a principal owner in the drug store.

My understanding of the OP's question is that they have two companies and wish to use a card issued to one company to make a charge on another's merchant account, and I am taking "we have two companies" to mean there is a common ownership link in both companies in which case that is forbidden by all merchant agreements and all card issuers.

Before someone asks... this applies only to private ownership (or subsidiary relationships and the like); you are not going to have your business credit card account for Acme Import and Export, LLC, closed for using it to buy computers from Apple simply because you own AAPL stock and you are an "owner."

mikeef · ‎03-19-2021

I'm a merchant account ISO/Agent. I used to specialize in high risk accounts so I'm very familiar with the fraud algorithms and the general policies related to risk. If one of the owners or their immediate family members credit card, and anyone with anyone deemed an insider of the company get caught making a large purchase on the company merchant account you will first have your account and settled deposits suspended while they launch an investigation to determine if you're doing what they consider an intentional cash advance on your credit card or an naive mistake like trying to get bonus points.

Regardless of your intentions, they'll either give you warning not to do it again or shutdown your account and freeze your deposits that hadn't cleared for 6 months to a year. Typically under a few hundred dollars they won't even investigate it, but $500 and above it's more like what they call cash advance fraud.

They don't usually care if its a

@Anonymous wrote:
Hey guys,

I signed up because I figured this would be the best place to get accurate advice.

We have 2 companies. Company A and B. We often invoice company B from A for supplies and pay with wire transfer. Considering using a credit card belonging to B to pay the invoice from A instead of wire. However I was told this looks like manufactured spending and we could get our accounts closed.

Tiberius800 · ‎03-21-2021

@mikeef wrote:
I'm a merchant account ISO/Agent. I used to specialize in high risk accounts so I'm very familiar with the fraud algorithms and the general policies related to risk. If one of the owners or their immediate family members credit card, and anyone with anyone deemed an insider of the company get caught making a large purchase on the company merchant account you will first have your account and settled deposits suspended while they launch an investigation to determine if you're doing what they consider an intentional cash advance on your credit card or an naive mistake like trying to get bonus points.

Regardless of your intentions, they'll either give you warning not to do it again or shutdown your account and freeze your deposits that hadn't cleared for 6 months to a year. Typically under a few hundred dollars they won't even investigate it, but $500 and above it's more like what they call cash advance fraud.

They don't usually care if its a
@Anonymous wrote:
Hey guys,

I signed up because I figured this would be the best place to get accurate advice.

We have 2 companies. Company A and B. We often invoice company B from A for supplies and pay with wire transfer. Considering using a credit card belonging to B to pay the invoice from A instead of wire. However I was told this looks like manufactured spending and we could get our accounts closed.

Great info.

Our staff routinely shop at our store. Is that considered "insiders" using our merchant, and somehow a violation? That seems crazy. Our staff are buying stuff at discounted staff rates almost daily.

SouthJamaica · ‎03-21-2021

@Anonymous wrote:
Hey guys,

I signed up because I figured this would be the best place to get accurate advice.

We have 2 companies. Company A and B. We often invoice company B from A for supplies and pay with wire transfer. Considering using a credit card belonging to B to pay the invoice from A instead of wire. However I was told this looks like manufactured spending and we could get our accounts closed.

I agree with the advice you have been given, and would avoid.