Page 29 - GS210901

Education

The multifaceted restaurant market In response, I invariably suggest

For example, adding restaurants to your target group is they might not be offering what
common. However, in this group you have fine dining,
fast casual, sit-down dining (or basic restaurant), and fast merchants need. You see, right now
food. The lockdowns and subsequent new normal have many merchants are just trying
impacted each differently.
to survive, and even cost savings
Sit-down dining and fast casual changed course through doesn't guarantee that.
the lockdown. They added or improved their online pres-
ence (including adding an online ordering component and
offering curbside pick-up). As these changes added addi-
tional ways to generate sales, they are retaining those op- Excursions (defined as group or class trips as well as in-
tions—even if they are able to provide inside dining again. person camps or events) were normally identified as mid
risk, but became classified as high risk. This effectively
In contrast, fine dining found little success with online or- eliminated them as potential targets for many ISOs and
dering or curbside pick-up. Their offering includes an “ex- agents.
perience” component, and their dishes were often highly
specialized. Without inside seating they were extremely Merchants with future delivery (like furniture stores and
limited. appliances) were finding delivery times closely moni-
tored. Ecommerce merchants found an increased demand
These differences don’t necessarily disqualify a subcat- and higher volumes, while at the same time, supply chain
egory. But they do change how you approach them, and issues delayed deliveries. The subsequent increase in re-
can help you identify unique needs a subgroup may have funds and chargebacks resulted in their reclassification
today. You can complete this process with retail and its into high risk. As a result, they had to show greater finan-
subset as well. cial liquidity and inventory to meet processors' demands.
Shifts in underwriting The importance of research

Before identifying specific targets, it is prudent to under- This doesn't necessarily mean you should eliminate these
stand the changes wrought by the pandemic. This will di- merchant types from your target list. Just carefully con-
rectly impact your decision on whether to invest time in a sider the time necessary to document and gain approval
merchant group, as well as help you set expectations. for these types of merchants, and whether you want to in-
vest that time into the sale. After examination, you may
Merchants who were once 100 percent face to face may find that these merchants are more willing to talk and are
have added an online channel. The risk consideration is interested in what you have to say. You must set proper
greater with online sales. They now face questions about expectations on timelines and on required documenta-
delivery timelines after sale and refund policy reviews. In tion. If a merchant isn’t prepared for those requirements,
some cases, financial or banking information will be re- your selling efforts may be in vain.
quested.
Identifying your targets encompasses more than grab-
I spoke with several underwriters regarding the lock- bing a phone book or googling to get a list of restaurants
down's impact on underwriting requirements. I received if you're going after that vertical. You must do your home-
similar responses from them, so I'll paraphrase what they work on each merchant. Your time is too valuable to waste
said. One key point: the hospitality industry (defined as pursuing unlikely prospects you could easily eliminate
travel, lodging and excursions) was most impacted by the through research, most of which can be done online dur-
lockdown. At the beginning, travel restrictions created ing your non-sales time. Research will enable you to better
larger future delivery exposure. This led to banks and manage your sales efforts and concentrate on targets with
processors re-evaluating their exposure models. Thus, a higher likelihood of closing.
many merchants found reserves being held, or a reserve
requirement posted to keep their accounts open. Time is a non-replenishable asset. Use it wisely. Identify-
ing your targets is that important. This one step makes the
Along with increased reserves, refund and cancellation sales process far more effective. Stay tuned for discussion
policies were scrutinized. The financial stability of the of the next tenets, which will help you close the prospects
business owner was also closely monitored. In short, this you've identified.
group found what used to be classified as low to mid risk
was reclassified to high risk. In many cases, a high-risk Jeff Fortney is vice president ISO relations for Signature Payments. A
classification put them in the prohibited list for a proces- long-time payments industry executive and mentor, Jeff is focused on
sor. strengthening and developing partnerships and evaluating new busi-
ness opportunities. He can be reached at 214-458-1379.

29
29