Lending versus factoring

[A] credit card lending program is a good product that will fit certain merchants' needs, with the added benefit that it is less expensive than a credit card factoring product.

However, it is important for ISOs considering a financing offering for their customers to understand the difference between credit card lending and factoring. Credit card factoring by its nature is designed to be accessible financing to the largest possible merchant base. More flexible approval standards, which are at the core of the credit card factoring product, mean higher risk to the financing company and thus a higher cost to the merchant.

For the ISO, a factoring product should provide a higher penetration to their merchant base compared to a lending product. A higher penetration rate will mean that the ISO meets a larger percentage of their merchants' needs, creating more customer satisfaction for the ISO and more commissionable revenue to the ISO compared to a lending product.

Jeremy Brown, President RapidAdvance LLC

Looking for an interchange chart

Is there any place that I may find an interchange chart along with a real world explanation of the categories? For example, on things like Debit Tier I, II, etc. I'd like to see a chart that explains what each of those categories are and when they would apply.

jtmerch (GS Online MLS Forum member)

Jtmerch:

On GS Online we provide a list of the most recent interchange rates, as well as access to the "Interchange Untangled" article series, a response to numerous reader requests for definitions of the various interchange levels. You will find these at:

www.greensheet.com/mlsportal/industryfaq.html

Also, Robert Carr contributed an excellent article on interchange as part of his "Knowledge Is Power" series: "Unqualified, Mid-Qualified and Non-Qualified Interchange Levels," By Robert Carr, The Green Sheet, April 20,1998, issue 98:04:02. You will find this article at:

www.greensheet.com/Secured-/KnowledgeSeries/10.html .

Editor