September 2011 First Data Merchant Cash Advance (FD MCA) · A merchant cash advance is NOT a loan;...
Transcript of September 2011 First Data Merchant Cash Advance (FD MCA) · A merchant cash advance is NOT a loan;...
First Data Merchant Cash Advance (FD MCA)
September 2011
First Data Learning Organization LB | Rev: 09/14/11
2|
Agenda
• Overview
• Merchant Eligibility and Review
• Portfolio Review Options
• Application and Approval
• Merchant Statements
• Agent Compensation
• Sales Information
• Support
• Appendix—FAQ
3|
Overview
First Data Merchant Cash Advance
4|
• A merchant cash advance is the sale of a merchant’s future credit card receivables
• First Data Merchant Cash Advance (FD MCA) purchases a set dollar amount of the merchant’s future MasterCard and Visa credit and non-PIN debit card receivables at a discount; in exchange, the merchant receives cash
• A percentage of the merchant’s daily credit card deposits are then remitted to repay the cash advance
• For example, PJ’s Bar and Grill processes $10,000 in MasterCard and Visa credit and non-PIN debit each month
• PJ receives $10,000 in cash from FD MCA
• PJ remits FD MCA 20% of the grill’s daily MasterCardand Visa credit processing dollars to repay the advance
• FD MCA collects $13,500 from PJ over 7 months
Merchant Cash Advance Defined
5|
A merchant cash advance is NOT a loan; it is apurchase of future processing receivables.
Traditional Loan vs. FD MCA
LoanRequires a fixed term.
Typically requires a fixed payment.
Requires repayment at an interest rate.
Requires perfect personal credit.
Requires a personal guarantee.
Shows as debt at credit bureau.
Generally requires 3 years in business.
FD MCANo term.
No fixed payment —FD MCA paid when the merchant processes MC/V credit and non-PIN debit.
There is no interest rate.
Perfect personal credit not required.
No personal guarantee.
Only an inquiry shows at credit bureau.
Requires only 1 year in business.
6|
Purchase Price
Not on MSA
The amount being advanced to the merchant—
typically up to 100% of average monthly MasterCard
and Visa credit and non-PIN debit processing
volume.
Purchased Amount
Advance Amt. on MSA
The total amount to be remitted, by the merchant, to
First Data Merchant Cash Advance.
Daily Retrieval Percentage
Split Percent on MSA
The percentage remitted daily to repay the
merchant’s purchased amount, typically 10% to
20%, of MasterCard and Visa credit and non-PIN
debit processing volume.
Estimated Duration
Not on MSA
The estimated time the merchant will take to remit
the purchased amount.
Factor Rate
Not on MSA
The rate multiplied by the purchase price to
determine the purchased amount, typically, 1.25 to
1.35.
Glossary
7|
Merchant
Eligibility and ReviewFirst Data Merchant Cash Advance
8|
Prohibited IndustriesAny merchant that is ineligible for FDIS merchant processing and/or the following is ineligible for FD MCA.
Advertising & Marketing Agencies (7310, 7311, 7399) Foreclosure protection/guarantees (6162-02)
Audio/Video text (3651, 3652) Gas Stations (5541, 5542)
Auto Dealerships (5511, 5521, 5571, 5592, 5598, 5599) High Risk Telemarketing (5962, 5966, 5967)
Airlines (4511) Home Based Businesses (5960)
Brokers or Agents for any service (6162, 6163, 6200, 6211,
6221, 6411, 6500, 6510, 6513, 6300, 6529, 6530, 6531) Home Interior Design (7389-02)
Cash advances (other than financial institutions) (6153)
Independent Contractors (1520, 1700, 1711, 1740, 1750,
1761, 1771, 1799)
Cell Phone Resellers (4899, 5999-89) Internet Based Only Businesses (5960)
Charities (6732, 6733) Mail order/Telephone Order Businesses ( 5961, 5964, 5969)
Check cashing (6099-03) Membership Clubs (7997,8699)
Commercial Art & Graphic Design (7370, 7371, 7372, 7373) Money transfer services (6099-04, 6099-10)
Computers (5734, 4816)
Personal Development Schools (8200, 8241, 8243, 8244,
8249, 8299)
Credit card protection (including identity theft protection)
(7322)
Personal Financial Services (6199, 6141, 6282, 7276, 7277,
8700)
Credit repair/Credit restoration (7299-27) Postal/Mailing Services (7330,7331,7338)
Cruise Lines (4411)
Social, Religious, Fraternal, Political or Professional
Organizations (8611, 8621, 8631, 8641, 8651, 8661)
Currency exchange (6099-01) Subscription Services (5968)
Dating services (adult or internet) (7273) Taxis, Limousines (4121)
Debt consolidation (6199, 7320, 7321) Theater & Ticket Brokers (7922)
Employment Agencies (7361,7363) Travel (4722)
Extended warranty companies (6351-09) Tour & Guide Services (7990, 7991)
Funeral Homes (7261) Travel Agencies ( 4724,4725, 4729)
Furniture Stores (5712, 5021,5700) Timeshares & Vacation Rentals (7012, 6513,6519,6531,6532)
9|
• AMI with First Data Independent Sales (FDIS)
• Unacceptable to solicit an FDIS merchant with an open AMI advance
• Acceptable to solicit an FDIS merchant with a closed AMI advance
• BFS with First Data Independent Sales (FDIS)
• Unacceptable to solicit an FDIS merchant with an open BFS advance
• Acceptable to solicit an FDIS merchant with a closed BFS advance
• AMI with Another First Data Sales Channel or Competitor
• Acceptable to solicit a merchant that has an open or closed AMI advance with another First Data sales channel or any competitor
• Any Other Provider and Any Competitor (non FDIS)
• Acceptable to solicit a merchant that has an open or closed advance with any other provider and any competitor (non FDIS)
Existing Cash Advance Considerations
10|
Merchants meeting FD MCA minimum criteria may apply for a First Data Merchant Cash Advance.
• FD MCA Minimum Criteria
• Approved First Data Independent Sales (FDIS) merchant processing account
• Minimum one year in business
• No open bankruptcies, tax liens or judgments
• Accepted SIC i.e. not on the prohibited merchant list
• Minimum $5,000 per month, MasterCard and Visa credit and non-PIN debit processing
Minimum Criteria
11|
Upon receipt of the FD MCA application, FD MCA performs a full risk review of the merchant’s business.
Risk Review Activities
• Personal credit review of the signer
• Business credit review
• Bank statement review
• Merchant processing statement review
• Landlord interview
• 9 months remaining on lease, preferred
• Site Inspection
• Anonymous inspection ordered and paid for by FD MCA
Risk Review
12|
• There is no fraud potential
• The business is open and does not appear to be closing
• The merchant shows recent, positive payment history with personal and business payments
• The merchant is processing all credit card transactions with FDIS on one merchant account
• The merchant is paying the landlord or mortgage as expected
• The business bank account does not have an excessive amount of NSF activity or days ending in negative balances
• The merchant shows no signs of negative trending in processing
Risk Review Considerations
13|
Knowledge Check
FD MCA requires a minimum of ______ in business.
A. 6 months
B. 1 year
C. 2 years
D. 3 years
14|
Portfolio Review Options
First Data Merchant Cash Advance
15|
• Upon request, FD MCA will review an agent’s portfolio checking merchant historical data, years in business, SIC code, etc. to identify strong FD MCA candidates
• For agents boarding significant new business, FD MCA is open to implementing recurring reviews on the portfolio’s new merchants
• E-mail the request along with the agent ID number and office name to [email protected]
• FD MCA reviews the agent’s portfolio then provides the agent with a list of merchants likely to qualify for FD MCA, including an estimated purchase price for each merchant
• New credit inquiries are not made during a portfolio review
• The agent uses the list to contact merchants, establish interest and follows the standard application process
Portfolio Review Options
16|
Application and Approval
First Data Merchant Cash Advance
17|
• Posted on ROLA Application Center
• Requirements
• Sales Rep ID = agent ID # and office name
• FDIS merchant ID
• Name and telephone number of applicant
• Requested advance amount
• Requested withholding percentage
• Intended use of proceeds
• Does merchant have an open cash advance?If yes, then
• With who?
• Balance
• Owner or authorized signer’s name
• Owner or authorized signer’s signature
FD MCA Application
18|
•The FD MCA application process is easy for agents
• Complete the simple, one-page application form and submit to FD MCA
• Prepare merchant for documentation requirements
• Whenever possible, FD MCA obtains required documentation from the merchant’s FDIS records
• FD MCA may contact the merchant and request any of the following
• 6 months processing statements
• 2 most recent business bank statements
• Copy of signer’s driver’s license or passport
• For advances over $75,000, tax returns and financial statements
• Property lease (preferred, 9 months remaining) or mortgage statement
FD MCA Application Process
19|
• Typical approvals are up to 100% of the merchant’s average monthly MasterCard and Visa credit and non-PIN debit volume, however, the merchant may request more or less
• The daily retrieval percentage may be up to 20% of the merchant’s net MasterCard and Visa credit and non-PIN debit deposits (gross less discount, chargebacks, etc.)
• Estimated duration of contract varies but typically runs from 5 to 7 months
• Factor rates vary but typically run 1.25 to 1.35
• Basic factor rate considerations include
• Competing offers
• Business and signer’s credit
• Expected remittance time frame
Pricing
20|
FD MCA provides a *cash advance calculator, in the product pack on MAO, to help agents estimate purchase price possibilities.
Cash Advance Calculator
*These calculations are an estimate and not a guarantee of an advance. Approval is subject to satisfaction of application requirements,
underwriting criteria and execution of merchant purchase agreement.
21|
FD MCA provides a *cash advance calculator, in the product pack on MAO, to help agents estimate purchase price possibilities.
Cash Advance Calculator
*These calculations are an estimate and not a guarantee of an advance. Approval is subject to satisfaction of application requirements,
underwriting criteria and execution of merchant purchase agreement.
22|
• Approval options are typically issued to a merchant for a daily retrieval percentages of 10%, 15% and 20% of the average monthly MasterCard and Visa credit and non-PIN debit processing
• Merchants with the majority of their business in credit cards (low cash volume) may only qualify for a lower daily retrieval percentage
• Continuing with the PJ’s Bar and Grill example, PJ averaged $10,000 monthly MasterCard and Visa credit and non-PIN debit processing, received 3 options and ultimately chose the $10,000 purchase price that had a 1.35 factor rate
• 20% daily retrieval %, funded at 100% = $10,000 purchase price
• 15% daily retrieval %, funded at 75% = $7,500 purchase price
• 10% daily retrieval %, funded at 50% = $5,000 purchase price
Approval Options
23|
Knowledge Check
During the risk review process, a credit bureau inquiry is done on the personal credit of theFD MCA application signer.
A. True
B. False
24|
Merchant Statements
First Data Merchant Cash Advance
25|
FD MCA remittances appear as Adjustments on the FDIS merchant statement.
Merchant Statement
26|
Agent Compensation
First Data Merchant Cash Advance
27|
• 3% upfront commission on merchant’s purchased amount paid weekly on Thursday/Friday for previous week
• $10,000 purchase price x 1.35 factor rate= $13,500 purchased amount x 3% upfront = $405 upfront commission
• 1% residual on merchant’s daily remittance to FD MCA paid monthly
• $350 net MasterCard and Visa credit and non-PIN debit x 1% residual= $3.50 residual for that day
• 2% upfront commission on a merchant’s FD MCA renewal paid weekly on Thursday/Friday for previous week
• Merchants are typically eligible for a renewal up to the original purchased amount once 60% of the original purchase price has been remitted
• PJ remits $8,100 ($13,500 x 60%) leaving $5,400 remaining on original FD MCA
• PJ can likely renew the FD MCA for an additional $6,000 purchase price with an $8,100 purchased amount, bringing the total purchased amount back up to $13,500
Agent Compensation
28|
Sales Information
First Data Merchant Cash Advance
29|
Any eligible merchant is welcome to apply for FD MCA.
These industries have proven successful for cash advance deals.
5946 Cameras
5948 Luggage
7231 Beauty Shops
7541 Car Washes
7933 Bowling Alleys
7996 Amusement Parks
7999 Misc. Amusement
5814 Fast Food
5261 Nurseries
5399 Misc. General Merch.
5441 Candy Stores
5499 Misc. Food
5611 Men’s Clothes
Target Merchants
5812 Restaurants
5813 Drinking Places
5251 Hardware
5331 Variety Stores
5411 Grocery Stores
5461 Bakeries
5531 Auto & Home Supplies
5621 Women’s Clothes
5641 Child’s Wear
5699 Misc. Apparel
5921 Liquor Stores
5942 Book Stores
5944 Jewelry
5632 Women’s Access
5651 Family Clothes
5912 Drug Stores
5941 Sporting Goods
5943 Stationery
5945 Toys & Hobby Centers
5947 Gifts & Novelty
5999 Miscellaneous Retail
7241 Barber Shops
7932 Pool Halls
7991 Physical Fitness
7997 Sports Clubs
8412 Museums, Art Galleries
30|
FD MCA provides easy access to working capital funds that can enhance and grow a merchant’s business.
Possible uses
• Expansion
• Remodeling
• Equipment upgrade
• Replenish inventory
• Web site development
• Investment in the business
Merchant Value Proposition
31|
• Streamlined application and approval process
• One stop shop for merchant’s business needs
• No hidden costs or fees• No fixed monthly payments and no application fees
• Recurring business growth opportunity• Opportunity to renew cash advance agreement for business needs
Merchant Value Proposition
32|
• Very competitive product offering compared to the marketplace
• Fast, streamlined process for existing FDIS merchants
• Minimal paperwork required—a single page application to start the process
Product Value Proposition
33|
• Robust compensation program
• Strengthens agent status as a business consultant
• Possible retention benefit—additional products enhance stickiness of the merchant relationship
• Portfolio review option—helps identify opportunities that are most likely to be approved
• Convenient, one-stop solution for all of the merchant’s needs improving the overall experience of the agent and merchant
Agent Value Proposition
34|
Features and Benefits
Features Benefits
• No monthly fees, payment is
remitted from each daily deposit
• Does not impact other opportunities
to apply for traditional financing
• Fast and easy application process
• Quick turnaround time for approval
and funding
• Dedicated customer service team
• Easy access to working capital
at a time when credit markets
are tighter
• Get value from future cash flows
now, and use them to invest in
the business
• Opportunity to expand merchant
business
• Simple renewal process for
additional funds
• Repayment flows with
merchant’s business
35|
• Convenient, one-stop shop
• First Data is the processor and the cash advance provider
• With existing FDIS merchants, there is no need for a merchant to switch processors in order to obtain a cash advance
• Application and approval process is simple and fast
• Minimal documentation required since FDIS already has established relationship with merchant through the merchant account
• Merchants are typically funded within 72 hours of receipt of all required documentation
• Single, consolidated statement
• Cash advance payments are reflected on the merchant statement for easy reconciliation
• Experienced sales and service teams
Competitive Advantage
36|
• Competitive pricing
• Quick funding timeframe
• Ease of application and approval process
• FD MCA does not show as a debt on credit history
• Split funding directly from merchant processing account
• No fixed payments or hidden fees—FD MCA gets paid when merchant gets paid
• Existing FDIS merchants have no need to change credit card processors
• Opportunity to renew FD MCA agreement for further business growth
FD MCA—Key Selling Points
37|
Overcoming Common Objections
Merchant Agent
“This product is
too expensive.”
Tie the advance back to a need the merchant has expressed. “This is not a traditional financing
alternative, so the cost is different. While most cash advances are very expensive, First Data’s cash
advance rates are very competitive. We can have the funds you need to expand your patio seating
to you in as little as five days, and you can quickly start earning additional revenue off the new
tables.”
“The advance
amount is not
high enough.”.
“While it may not be the full amount you were looking for now, please understand that your
business is eligible for renewal once you have remitted 75% of the current balance. With this
product, FD MCA can give you more in as little as 4-5 months without the hassle of having to
reapply.”
“I do not need
the money
right now.”
“You never know when that need for quick access to capital may come up. The great part of this
product is that we do not restrict how the advance is used in your business. Many of our merchants
use this simply to have working capital in their accounts—accessible when they need it.
“I have bad
credit.”
“That is not necessarily a problem. While FD MCA does review your credit history, it is not the sole
factor that qualifies you for an advance.”
“I have a
higher offer or
better rate with
another
company.”
“While we always try to stay competitive, there are additional features to our product that may make
it more beneficial to you. FD MCA does not require that FDIS merchants switch processors, so you
won’t have to pay an early cancellation fee and FD MCA uses split funding so they do not need
access to your bank account. FD MCA also provides the funds in as little as 3-5 days, where some
competitors take a week or more.”
38|
Knowledge Check
List the top 5 FD MCA features or benefits you could share with a merchant who states, “tell me about First Data Merchant Cash Advance.”
1.
2.
3.
4.
5.
39|
Support
First Data Merchant Cash Advance
40|
• Agents may request access to the FD MCA application tracking tool called urReporting
• urReporting Request form available in the product pack on MAO
Agent Reporting
41|
• Telephone
• (855) 205-6712, 8 a.m. to 5:30 p.m. Easternsales inquiressetup supportmerchant customer serviceurReporting questions
• [email protected] inquiresportfolio review requestsurReporting questionssetup support
• [email protected] customer service
Agent and Merchant Support
42|
• MAO
• Product pack
• ROLA Application Center
• Application
• Brand Center
• Sell Sheet
Agent Support Materials
43|
Knowledge Check
Portfolio Reviews are automatically generated and the results forwarded to agents on a monthly basis.
A. True
B. False
First Data Merchant Cash Advance
(FD MCA)
45|
• How does the cash advance program work?
• Once a merchant has been approved and funded for a cash advance, a daily retrieval percentage of the merchant’s MasterCard and Visa credit and non-PIN debit deposits are remitted to repay the cash advance. The estimated duration of the contract typically varies between 5 and 7 months.
• How long does it take to get approved?
• Merchants can be approved in as little as 3-5 business days
• What can the merchant use a cash advance for?
• The advance can be used for any legitimate business expense
• How will the merchant know that they are approved?
• An FD MCA representative will contact the merchant and inform them that they have been approved for the cash advance.
Appendix—FAQ
46|
• Why should a merchant choose a cash advance as a way to obtain cash flow?
• In today’s economy, it is sometimes difficult to obtain a traditional loan and if the merchant is approved for a loan s/he must provide financial items related to tax returns, personal financial statements, pay stubs, etc. The cash advance process is a quick and simple application process with minimal documentation requirements.
• How may a merchant find out how much they have left remit?
• Call the FD MCA customer service team at (855) 205-6712 or e-mail [email protected].
• How does the merchant make the remittance?
• Remittance is extracted from the merchant’s daily MasterCard and Visa credit and non-PIN debit processing deposits (up to 20%). The daily retrieval percentage is based on credit card volume and several other factors.
Appendix—FAQ