What is Merchant Account Load Balancing

Today, for your business to reach a wider audience, you need to have an online presence. On top of the business website, you also need to have a merchant account in order to accept payments from various payment methods. However, maintaining a merchant account is also a challenge because of fraud, chargebacks, and other uncontrollable circumstances that lead to having the merchant account suspended.

That said, many businesses use load balancing to avoid the possibility of account suspension.

Load Balancing Explained

The term load balancing refers to the practice of spreading transactions across multiple accounts. This strategy is to reduce the chance of any account incurring high chargeback rates. Load balancing avoids the risk of exceeding the chargeback ratio threshold.

The merchant will spread the transactions to different merchant accounts to attain a chargeback ratio below the threshold. The threshold varies depending on the payment processor, merchant account provider, card company, and type of business. Generally, the chargeback to transaction percentage should be below 1%.

Going beyond the chargeback threshold for your merchant account means paying additional fees and penalties or worse having the merchant account suspended, affecting the ability to process payments. Because of this limit, online merchants choose to practice merchant account load balancing.

Why Merchants Practice Load Balancing

The use of merchant account load balancing may be beneficial at first glance to keep the merchant account chargeback ratio low. The practice is somewhat effortless because it does not require deep analysis and the use of prevention techniques to fight fraudulent transactions and chargebacks.

eCommerce merchants, unfortunately, are prone to high chargebacks due to a number of reasons. Even friendly fraud is hard to combat and detrimental to a merchant’s account. High-risk merchants use load balancing to avoid amount or volume caps. Also, high-risk merchants use load balancing because of previous account termination.

Many merchants resort to load balancing so that they can protect their business. The practice is high-risk merchants’ quick fix of avoiding restrictions or worse account termination.

The Risks of Load Balancing

Load balancing may be beneficial at first glance but is actually not. The practice of load balancing to save the business and merchant account is considered unethical. It is interpreted as a way to conceal your chargeback ratio and fraud transactions.

Acquiring banks, card companies, and payment processors are aware of account load balancing, hence the availability of services that monitor load balancing.

If these organizations prove that a merchant is engaging in account load balancing, the merchant account will highly likely be terminated. Also, your business will be put on industry blacklists. Add to that the penalties and legal repercussions your business will face from the Federal Trade Commission.


Some merchants may think that account load balancing is the answer to the rising chargeback ratio but is actually a violation of terms, particularly for credit card companies. Like many quick fixes, load balancing will not solve the issue at all.

Instead, merchants should identify the root cause of where these chargebacks are coming from. And of course, talk to an experienced merchant account provider for safer and more effective ways to manage chargebacks.