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Here is my take:
Most companies run into the problem of using this weeks money to pay last week's bills. Then it is this weeks money to pay two weeks ago bills, and float the week in the middle... then float two weeks, three weeks, etc... until they are pretty much at the limit, and then they stay there.
Then all of a sudden an interruption in cash flow. For Paymonde, it was the loss of their mastercard accounts. Suddenly they have less money in, the reserves are probably lost at that point (or tied up forever in a philipines pending pile) and they are suddenly very short of funds indeed - doubly so if they have been running as I suggest some companies might in the top paragraph.
They manage to choke a few checks out for a couple of weeks using only the Visa money, but they are falling farther and farther behind, plus thier buisness expenses are built on having visa and mastercard firing, and not mastercard is gone... and some of the accounts are trying to move off to ccbill or paycom or anyone else... you start to lose the volume of transactions to support your state of business...
Then the Visa gets kicked as well - or the Visa people figure out you aren't solvent and get scared about future chargebacks and hold 100% of your funds to "build the reserve".
You are now a dead processor. Done properly, the owners have about enough money in their pockets to up and leave town before people track them down. Another country is good, making it much harder to be able to ever really figure out what happened.
The good news (in theory) is that there are reserve funds out there that will be available to get dispersed one day. The bad news is there will likely be enough chargebacks and bullshit to make all that money go away.
It is only a guess, I have absolutely no facts or insider information to back any of this up, but you can see how easy it is to happen.
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