Opening Up Bankcard Restrictions
We've all experienced it: You sell an account but the bank rejects the account and you lose the sale and the time invested. Even if you do find someone to take it, you may still lose the account due to the delay. Well the following information could be an answer for you.
LMA Underwriting Agency, Inc. (LMA) has introduced the Merchant Bankcard Bond, a bond designed to open up the restricted merchant market and allow ISOs to place Visa and MasterCard accounts at merchant locations which fall outside present underwriting requirements.
LMA says the bond frees the merchant and the ISO from processing restrictions and indemnifies the processor against uncollectible chargeback losses. The bond is secured by an AM Best "A" rated insurance company and differs from other LMA bonds in that it doesn't require documentation from the processor to be covered. The merchant fills out an application and LMA processes an "A" rated bond to present to the processor.
According to LMA, The Merchant Bankcard Bond offers benefits to merchants, banks, and ISOs. Merchants benefit because their capital is freed up, they don't have to tolerate volume restrictions, and their account appeals to a wider range of processing banks. Banks benefit because they maintain an adequate limit of indemnity without burdening the merchant with large cash reserve requirements. And ISOs benefit because they receive $75 every time they refer a merchant account that is underwritten in addition to increased residual income that bonded merchants represent.
Premiums are indexed to the merchant's Visa and MasterCard volume and are contingent upon the bond's limit of indemnity, processing volume, and type of merchant being covered. For more information about the Merchant Bankcard Bond contact Christopher Kittler or Eric Odegard at LMA Underwriting Agency at (612) 332-6200.
