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Credit and Risk

Credit and Risk. 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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Credit and Risk

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  1. Credit and Risk

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

  3. 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

  4. 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

  5. Responsibility If STW Holds Liability Approve or Deny Questionable Merchants Handle collections for chargebacks Perform Risk Assessments and Transactions Inquiries

  6. Credit/Risk Grid 6 Risk Categories: • Low • Medium • High • Medium/High with certain characteristics • Government Entities • Not for Profit • Smaller Ticket • Low Volume • Mostly Swiped • Good Credit • 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 • Contact information • 501c(3) form from IRS Smaller Ticket Lower Volume More CNP Future Delivery • Same as Medium • Almost all CNP • Future Delivery SSN not required for: Not for Profit Government Entities Publicly Traded Corporations • Large Ticket • High Volume • Future Delivery • Specific SIC Codes 4

  7. Silver Program • Merchant Level Credit Program: • Very high risk or negative credit • Specific criteria is needed • Stricter guidelines • More Restrictive • Addendum to Application 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 Rule of thumb: Attempt Gold, Attempt Silver 4

  8. 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

  9. Underwriting Exclusion List Merchants will not be set up Application • Prequalification Form • Inquiry for questionable merchants ? ? ? ? ?

  10. 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.

  11. 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 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

  12. 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

  13. Three reasons TransFirst does a credit check on new merchant accounts? 48-hour payment Floating Interchange Costs Chargebacks 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 What are two reasons a transaction is reviewed by the risk department? Higher than Average Ticket Over Monthly Volume How does TransFirst notify a merchant of a chargeback or retrieval? By Letter, mailed Review

  14. Credit and Risk

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