By Ken Musante
Eureka Payments LLC
I recently came across a merchant level salesperson who mentioned that using an agent to obtain a merchant account is better than going direct for several reasons. Among the reasons cited was that an agent can help a merchant decide what to submit and what to withhold from an underwriter. Although I believe a merchant can receive stellar service from an agent because agents have fiduciary responsibility to ensure the underwriters know all the potentially negative information an agent has about a merchant account, I thought this individual needed guidance.
Let's presume this individual was not suggesting any pertinent information be held back from an underwriter but was instead suggesting some items are superfluous to an underwriting decision and would increase the size of the file without providing additional material useful in rendering an opinion. A telemarketing script is likely appropriate to submit with a MO/TO merchant file. Fulfillment procedures are likely not appropriate.
For full disclosure, I am the President of a registered ISO. I believe that, as an agent, we can better assist by placing the merchant with the bank that can offer the merchant the best terms over the life of the account. Moreover, by sometimes placing a merchant with two banks, we can ensure redundancy of a critical service as well as provide other benefits such as increased processing limits and lowest reserves.
When placing a merchant at a second institution, however, it is important for that institution to know of an existing account if one exists. That allows the underwriter to fully understand the magnitude of the merchant's activities. If we have statements from a prior processor within a relevant time period, we must provide them to the underwriter ‒ even if that information does not cast the merchant in the best light.
An agent's job is to fully explain negative information about the merchant and present that information at the time of the underwriting. We have much greater credibility with the underwriter, and the underwriter is far more likely to approve a merchant, if we present past issues, as opposed to the underwriter finding that information independently. When providing the information, we can explain what caused the situation and what the merchant is doing (or has done) to remediate the problem. As we gather application information, one of the questions I like to ask is, What negative information might the underwriter find independently? Playing catch up once that information is discovered rather than disclosed is a far more difficult task.
Trust takes many interactions and time to build, but it can be lost in an instant. Gaining the trust of an underwriter or underwriting team is invaluable to our business. It allows us the opportunity to have conversations regarding files that would not otherwise be considered. But when submitting any file, we must recognize that trust is continually being tested. Withholding critical information is not only a violation of our fiduciary responsibility; it's just plain wrong.
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