Withheld Funds
A hold on funds generally refers to the procedure by which a processor withholds X amount of a merchant's processing volume due to "suspicious" transactions. Once held, those funds will not be deposited to the merchant's checking account, and can be held indefinitely pending an investigation. Moreover, funds from open authorizations (i.e. recently processed transactions) may be withheld as well.

A hold may occur in unison with a processing freeze (see below), but not in every case. Sometimes the processor may allow the merchant to continue processing new transactions, so as to prevent them from having to shut down their ability to accept credit cards completely.

Freeze on Processing
Simply put, a processing freeze is when the processor temporarily shuts down a merchant's payment processing abilities.

Termination (Closure)
This is pretty self-explanatory. Commonly, a processor will terminate an account if they deem a merchant to be in clear violation of their terms.

Stay within your average monthly volume and ticket.
An unusually high processing volume or average ticket is one of the fastest ways to get your funds held. Although it sounds strange, as a merchant you can actually be punished for making too much money! That's not to say you should start turning customers away once you hit your service agreement quota. But, simply notifying your provider of an expected busy month or unusually large transaction can keep a hold from happening. Be especially careful around the holiday season, when sales usually spike. If you receive an unusually large order, call your provider to let them know before running the transaction. Often, with an abnormally high sales volume, your provider will hold your funds until customers receive their credit card statements and an adequate amount of time has passed for them to review and relay any disputes or chargebacks. In this single aspect, keeping the lines of communication open with your provider is your best defense against a hold.

Sell what you said you'd sell.
Your provider looks at the items sold as another security measure against your merchant account. Using your account to sell strange goods could violate your MSA, resulting in a hold, freeze or termination. For example, if you are in the business of selling pool supplies and they start seeing transactions for patio furniture as well, that is an immediate red flag.

It's also important to keep your bank notified of items being added to, or removed from, your inventory. The same can be said of businesses selling services. Furthermore, new merchandise/services often come with new prices, and thus new sales figures. Meaning a changing inventory can also change your average ticket and average processing volume.

Give yourself more wiggle room by providing a generalized product description in your MSA. For example, instead of saying "diet pills" say "nutritional supplements," which covers a broader area of diet pills, powders, vitamins, and herbs.

One account per business type.
The absolute quickest way for a merchant account to be fully terminated is if it is being used for a different business altogether. As a multiple-business owner, it pays to have separate merchant accounts for each business. If you are running a fitness center Monday through Friday, but also running a weekend business providing surf lessons, each business should have a separate account.

Minimize chargebacks.
Chargebacks, although inevitable, should always be limited. Whether won or lost, an excessive number of chargebacks is a red flag to a provider, which can result in a hold and pending investigation of your business. For more information on chargebacks and limiting them please refer to the chargeback article.

Use appropriate merchant account types.
Merchant accounts come in all different types, but one specific determinant to pay especially close attention to is card-present (retail) and card-not-present accounts (internet). A card-present account means that both the customer and their credit card are present at the time of the transaction, like any standard swipes done at a mall department store. A card-not-present account means neither card nor person are present at the time of transaction, like doing holiday shopping on Amazon.com. Obviously card-not-present accounts retain a higher risk, thus higher fees and stricter rules. However, if you are a business involved in a large number of both types of transactions, you must inform your processor about it. They'll then suggest that you open both a retail and internet merchant account. A large number of card-not-present transactions on a card-present account, or vice versa, can result in a hold or termination of your account.

Minimize fraud.
Any other sort of processing behavior your provider deems as suspicious will result in an account hold. In our modern digital age, identity theft has become the fastest growing crime. Credit card fraud runs rampant, so providers monitor their clients transactions for any signs of fishy behavior. If fraud is suspected, your account will be frozen pending an investigation.

There are dozens of fraud prevention tools and services out there. Both Visa (Verified by Visa) and MasterCard (SecureCode) have come up with great fraud fighting tools that can be used by any merchant, starting today.