How to Build Effective Merchant/Acquirer Relationships

April 8, 2012 by  Filed under: Credit 

Merchant acquisition is a tedious process, but with the right combination of risk mitigation, account monitoring, and effective communication, a profitable and a great relationship between the merchant and acquirer can be established.

Risk mitigation is important throughout the entire lifetime of the merchant account. Especially when the account is initially being underwritten, the acquirer must thoroughly understand who is behind the merchant account. Depending on how well-founded the business is, this could include pulling information on the business’ credit history (if enough information is available) or pulling information on the principal’s credit history (if business information is lacking). In this phase of merchant underwriting, acquirers look at how long the business has been running, what industry the business is in, and the volume of business the merchant has. These three factors all contribute to the overall risk of the merchant and when properly investigated, can give the acquirer a clear, accurate view of the risk they are taking on. This can prevent them from underwriting risky merchants and leads to a more transparent relationship for each account they underwrite.

To establish deeper relationships, merchant acquirers should also monitor accounts throughout their lifetime. By analyzing trends, acquirers can more readily notice out of the ordinary circumstances that may lead to costly consequences if ignored. Sometimes, if a merchant is overwhelmed, but already has the revenue in hand, they will take the money and disappear because they see no way of getting out from under the situation. However, by identifying these situations early, acquirers can effectively communicate with the merchant to work through any inventory or supply issues that may be occurring. This positions the acquirer as a strategic partner to be trusted when problems arise.

In order to communicate concerns with their merchants, acquirers must establish effective channels of communication before a problem arises. After initially underwriting the merchant, acquirers should contact the merchant regularly and act as a strategic partner, not simply a technology vendor. Depending on the nature of the relationship, the acquirer can even help the merchant identify trends that may be indicative of a future problem.

Merchants and their acquirers should have an open, transparent relationship. By underwriting accounts based on accurate information, acquirers have a correct view of who they are in business with and by acting as a partner throughout the lifetime of the account, acquirers are trusted by their merchants. For merchant acquirers, this means they will be more readily available to help in any situation and (hopefully) face less chargebacks and losses from their merchants.

Kelty Wallace is a SEO specialist and copywriter for Zoot Enterprises in Bozeman, Montana.

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