My Merchant Account Blog

Draft Laundering

Wednesday, March 23, 2011

When a merchant processes sales through his or her merchant account on behalf of another merchant. Laundering violates the terms of merchant agreements.Also called draft laundering and factoring. Credit card factoring, also known as credit card laundering, or even money laundering, can exist in many forms. The most basic form of factoring would be a business processing transactions for another business. Another common case of factoring is when a business opens a branch, DBA, or sub-business and attempts to process through the central company’s merchant account. This case is often seen when a business starts a website, and tries to process credit card transactions without opening a separate merchant account for their website.

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