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Education

Risk is not the enemy Risk is not the enemy. Don't play games to help businesses
attain approval. MLSs looking only at the short-term goal
of new residuals open their ISOs to the possibility of severe
losses – and their own loss of complete residual streams.

I recently helped an agent close a roofing company. We
showed the company how to improve volume and average
ticket with an invoicing solution for commercial clients
to get money in days rather than months. The day I
installed the merchant, my agent forwarded an email from
Risk, which imposed a hold because the merchant's first
transaction was almost $20,000.

I immediately emailed the marketing materials, application,
and three statements submitted for the merchant, along
with a list of recommendations to the merchant to increase
transactions and volume. The following morning, I was
thanked for the response time and depth of information,
and was told the hold was pulled.
By Bill Pirtle Build trust for the long term
Clearent LLC
Agents love $20,000 transactions and $5 million in volume.
hen you work as a merchant level salesper- These transactions cause concern for ISOs and Risk. Say
son (MLS), your ISO's risk department will the agent charged 50 basis points profit. The total profit
reject the occasional account. Agents often on the transaction would be $100. If the MLS makes 70
W lament these rejections. The job of the risk or percent, the earnings for the ISO would be $30 for a $20,000
underwriting department (Risk) is to protect the acquirer, transaction. What happens if the transaction is fraudulent?
and ISO, from loss. Things they evaluate include volume, What if the merchant did 10 or 100 such transactions before
average ticket, chargeback history, credit score and sea- fraud was detected? If a merchant cannot repay this, the
sonal sales cycles. ISO is on the hook.

Let's say you sign a restaurant in June. You have three Ask merchants good questions. Ask about seasonal sales
months of statements and determine the average ticket is and things your ISO requests. If you observe something
about $150 with highs of $2,000. The average per day is troubling, mention this on the application. Promptly reply
about $5,000, which is $150,000 per month. In November, to Risk's requests. Give more information than requested
Risk notes volume, average tickets and highs are if you know it.
increasing. Then, fearing fraud, Risk places a hold on the
account after a weekend with three $20,000 transactions. Once your ISO and Risk know you are thorough and
The restaurant, assuming it is still being paid, continues will provide information knowing it might cause them
to accept large-dollar transactions. A week after the first to reject an application, you'll have their trust, which can
such transaction, the restaurant realizes it is bouncing mean the difference between a no on an application and
checks to suppliers and employees. By early December, the being contacted for additional information that can get the
restaurant goes under. merchant approved.

The more unknowns, the greater the risk Recently, I received a call from an underwriter who
So, what happened? The MLS failed to ask the restaurateur informed me a million-dollar client I'd signed showed a tax
about seasonal sales increases. Several regulars threw their lien. I found out the tax was paid and got the merchant to
work Christmas/holiday parties at the restaurant – 200 send in the receipts. The underwriter could have emailed
people with open bar. Risk didn't know about the seasonal me, and it could have taken days longer to resolve. But the
parties and reacted to protect the processor. Agents have underwriter knew I liked to be thorough and complete.
a choice. They can whine about perceived lost residuals or
they can work with Risk to provide complete information, Next time you hear from Risk, treat it as an opportunity to
whether it results in an application's rejection or approval. preserve your residual stream and a chance to build trust
and goodwill for future applications.
Risk bases decisions on information it has on hand. If Bill Pirtle is the author of the training book Credit Card Processing for
an agent works to understand, gather and share the Sales Agents. He is the district manager for Clearent in the Detroit/Ann
information Risk needs promptly, rejections or holds can Arbor/Toledo market. His email is bpirtle@clearent.com. He can also be
be avoided. reached at 248-444-8009 or on LinkedIn.

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