Download Credit-Risk PPT.FI.TF.1208

Credit and Risk
1
Objectives
By the end of this module, you will be able to:
2
•
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
Reasons for Credit
48 Hour Payment
2 business days from settlement to deposit in Merchant’s DDA
Additional time between merchant receiving money and TransFirst
getting paid
Floating Interchange Costs
Issuing Banks Fees are taken out before TransFirst is paid
Only bill merchant once a month
Chargebacks
Cardholder or Issuing Bank is disputing a transaction
Card Not Present merchants more susceptible
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Liability
Liability for a Merchant account
Merchant’s credit is investigated for approval or denial
Financial responsibility assumed before receiving payment
Advocate for collection issues in a chargeback situation
Monitor potential fraudulent transactions
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Responsibility
If STW Holds Liability
Approve or Deny
Questionable Merchants
Handle collections
for chargebacks
Perform
Risk Assessments
and
Transactions Inquiries
5
Credit/Risk Grid
6 Risk Categories:

Low

Medium

High

Medium/High with
certain
characteristics

Government
Entities

Not for Profit
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4
•Smaller Ticket
• Merchant Application Packet
•Low Volume
•
• Premise
Contact Inspection
information
•Mostly
Smaller Swiped
Ticket
•Good
Lower Credit
Volume
More CNP
•Same as Medium
Future Delivery
•Almost all CNP
Guarantee
• Personal
501c(3) form
from IRS
• Marketing Materials
• 2 Trade References
• Most recent 2 years Business
Financials
SSN not required for:
business less than one year,
Not for Profit •In
Business Plan and/or pro forma
•High Volume
financial statements
Government Entities
•Future Delivery
• Proof
of Property
Publicly Traded
Corporations
•Future Delivery
•Large Ticket
•Specific SIC Codes
Underwriting
Gold Merchant Level
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
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4
Silver Program
Merchant Level Credit Program:
• Very high risk or negative credit
• Specific criteria is needed
• Stricter guidelines
• More Restrictive
• Addendum to Application
Rule of thumb:
Attempt Gold, Attempt Silver
Underwriting
STW Accept Liability
STW has the option to accept
liability for merchant approval
if declined by TransFirst
If no solution can be found, TransFirst
contacts the merchant and takes
responsibility for the decline
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Underwriting
Exclusion List
Merchants will not be set up
Prequalification Form
Inquiry for questionable
merchants
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Risk Department
TransFirst looks to Mitigate Risk
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.
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Chargeback/Retrieval
Chargeback
What is a Chargeback?
A dispute of a transaction
Who can submit a Chargeback?
Cardholder
Issuing bank
Who Notifies the merchant?
TransFirst
How?
Written Letter
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Retrieval
What is a Retrieval?
An inquiry of a transaction
Who can submit a Retrieval?
Cardholder
Who Notifies the merchant?
TransFirst
How?
Written Letter
Chargeback/Retrieval
The Difference is:
A merchant is debited the transaction amount on a
chargeback
A retrieval only requires a response with verification
of the transaction
Failure to respond will result in a Chargeback
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Review
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1.
Three reasons TransFirst does a credit
check on new merchant accounts?
48-hour payment
Floating Interchange Costs
Chargebacks
3.
What are two reasons a transaction is
reviewed by the risk department?
Higher than Average Ticket
Over Monthly Volume
2.
Name 2 of the Risk levels a merchant
can be classified as by Credit?
Low
Medium
High
Medium/High with certain
characteristics
Not for Profit
Government Entities
4.
How does TransFirst notify a merchant
of a chargeback or retrieval?
By Letter, mailed
Credit and Risk
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