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Credit and Risk

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• Explain the components of the credit approval process

• Utilize the Risk Acceptance Grid to identify necessary paperwork for approval

• Identify the difference between a Chargeback and a Retrieval Request

Objectives

By the end of this module, you will be able to:

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Reasons for Credit

48 Hour Payment2 business days from settlement to deposit in Merchant’s DDAAdditional time between merchant receiving money and TransFirst getting paid

Floating Interchange CostsIssuing Banks Fees are taken out before TransFirst is paidOnly bill merchant once a month

ChargebacksCardholder or Issuing Bank is disputing a transactionCard Not Present merchants more susceptible

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Liability

Liability for a Merchant account

Advocate for collection issues in a chargeback situation

Merchant’s credit is investigated for approval or denial

Financial responsibility assumed before receiving payment

Monitor potential fraudulent transactions

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Responsibility

Approve or Deny Questionable Merchants

If STW Holds Liability

Perform Risk Assessments

and Transactions Inquiries

Handle collections for chargebacks

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Credit/Risk Grid

6 Risk Categories:

Low

Medium

High

Medium/High with certain characteristics

Government Entities

Not for Profit

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• Merchant Application Packet

• Premise Inspection

• Personal Guarantee

• Marketing Materials

• 2 Trade References

• Most recent 2 years Business Financials

•In business less than one year, Business Plan and/or pro forma financial statements

• Proof of Property

SSN not required for:Not for ProfitGovernment EntitiesPublicly Traded Corporations

•Smaller Ticket

•Low Volume

•Mostly Swiped

•Good Credit

Smaller Ticket

Lower Volume

More CNP

Future Delivery•Same as Medium

•Almost all CNP

•Future Delivery•Large Ticket

•High Volume

•Future Delivery

•Specific SIC Codes

• Contact information

• 501c(3) form from IRS

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All merchant applications submitted

through the Gold Merchant Level

approval process

In some cases, due to poor credit or other red flags the merchant will

not qualify.

At this point all hope is not lost

Rule of thumb: Attempt Gold, Attempt Silver

Gold Merchant Level

Underwriting

Silver Program

Merchant Level Credit Program:

• Very high risk or negative credit

• Specific criteria is needed

• Stricter guidelines

• More Restrictive

• Addendum to Application

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Underwriting

If no solution can be found, TransFirst contacts the merchant and takes

responsibility for the decline

STW has the option to accept liability for merchant approval if declined by TransFirst

STW Accept Liability

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Underwriting

Exclusion ListMerchants will not be set up

Prequalification FormInquiry for questionable merchants

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All transactions processed by our merchants come in large files to the Risk department every morning.

A Risk investigator is assigned to look over the batch for inconsistencies and fraudulent transactions.

One way TransFirst mitigates the risk is by rejecting transactions that should not have been processed, prior to payment to the merchant.

Risk Department

TransFirst looks to Mitigate Risk

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Chargeback/Retrieval

ChargebackWhat is a Chargeback?

A dispute of a transaction

Who can submit a Chargeback?CardholderIssuing bank

Who Notifies the merchant?TransFirst

How?Written Letter

RetrievalWhat is a Retrieval?

An inquiry of a transaction

Who can submit a Retrieval?Cardholder

Who Notifies the merchant?TransFirst

How?Written Letter

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Chargeback/Retrieval

A merchant is debited the transaction amount on a chargeback

A retrieval only requires a response with verification of the transaction

The Difference is:

Failure to respond will result in a Chargeback

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Review

1. Three reasons TransFirst does a credit check on new merchant accounts?

48-hour paymentFloating Interchange CostsChargebacks

2. Name 2 of the Risk levels a merchant can be classified as by Credit?

LowMediumHighMedium/High with certain characteristicsNot for ProfitGovernment Entities

3. What are two reasons a transaction is reviewed by the risk department?

Higher than Average TicketOver Monthly Volume

4. How does TransFirst notify a merchant of a chargeback or retrieval?

By Letter, mailed

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Credit and Risk