Credit Policy Flashcards
What are the two types of risk managed by FD?
Credit Risk (80%) - When a merchant is unable to fulfill obligations to its customers
Fraud Risk (20%) - When the merchant process transactions that are unauthorized by the cardholder or not as agreed
What is Credit Policy?
Powerful tool for controlling and managing risk while growing our business
Governs the way we do business
*Note: IS SPECIFIC FOR EACH ALLIANCE.
What term increases the Risk Exposure to our business?
Chargebacks
Define Chargebacks.
Is a customer dispute, not resolved by the merchant, which is returned to the merchant by a card issuing bank
What is Kiting?
Merchant uses his own card to obtain cash advances or to make credits.
What is Factoring?
Fraudulent merchant processes through an established merchant.
What is Credit Master?
Similar association member BINS or ICA’s used to make counterfeit cards.
Unauthorized MO/TO?
A signed POS merchant with intent to process mail or telephone orders through their processing account.
The credit department manages credit and fraud risk in the 8 following manners…
Credit Policy - Sets the rules for the CDept. to function under.
Credit Initiation - Evaluates the “Credit-worthiness”of new merchants.
Security/Fraud - Monitors base and looks for “Fraud” or other unusual business activity
Mid Risk Management (MRM) - Manages both Credit and Fraud Risk depending upon the business segmentation criteria.
Periodic Review (PR) - Analyzes the larger merchants within the portfolio to ascertain their credit profile
Collections - Recovers money due from merchants
Credit Financial Control (CFC) - Manages merchant collateral
Global Credit Systems - Responsible for strategy, design, management, and operations of all credit systems that support the Global Credit Organization.
How do Target Market dictate the processing service?
Target Markets provides the Sales Force which industries are ACCEPTABLE for processing services.
Define Negative Files
Negative Files are used as a means to alerts= a potential acquirer that the account or its owners were previously cancelled/terminated for cause.
Describe the two types of Negative files.
MATCH - Member Alert To Control High-Risk (Merchants) is maintained by Mastercard
GNF - Group Negative File is a propriety in-house database maintained by FDMS
What is the timeframe if a merchant is found on MATCH?
Within 5 days of indication of verification.
*Note - We could be liable if he is signed on to other processors if we do not notify
Things to know about Additional Outlets
If the outlet has the same owner and the same legal name, it is an additional outlet
If the outlet has the same owner and a different legal name, can be submitted as an additional outlet or new account.
The Federal tax ID may or may not be the same for each outlet.
