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Risk Policies and Procedures Purpose Bankcard Associates, LLC. (Bankcard Associates) Underwriting Guidelines set the standards under which Merchant applications are approved. The objectives of the guidelines are: To grant Merchant relationships based on the experience, product or service, sales methods and financial condition of each Merchant. To ensure the level of risk is clearly defined, evaluated and accepted by Bankcard Associates. Criteria Our Underwriters analyze each account to assess the overall risk level by reviewing the following criteria: 1. Length of time in business: The length of time in business is an indication of the Merchant’s financial stability. If it is a well-established place of business, the risk of Bankcard Associates sustaining a loss is significantly less. If a Merchant is new in business, the chance of the Merchant staying in business is less, therefore the risk of sustaining a loss is greater. 2. Previous processing information: This information gives ratios on chargebacks and returns, and confirms the average ticket and annual volume which the rate was quoted on. 3. Personal Credit of Signatory: Credit reports will be obtained on the principal of the business whose signature appears on the application. An applicant’s personal credit is a reflection of their commitment to financial responsibilities. If a Merchant has no personal credit, or the subject is not found, Bankcard Associates requests a driver’s license of the signatory to confirm the social security number and the age of the signatory. Our Underwriters review the principal’s established credit history, and evaluate any serious financial distress such as excessive slow pay, serious delinquency, charge-offs, unpaid liens or judgements, repossessions, foreclosures, or bankruptcy. 4. Title and Ownership percentage of Signatory: If the nature of the business is High Risk, we require the signatory to have a minimum of 51% ownership. The lowest percentage of ownership acceptable for any account is 30%. 5. Annual Volume: The annual volume allows our Underwriters to assess the level of risk this account will pose in terms of processing dollars. This also determines what level our Risk Analyst will set their expected volume parameter at in their risk monitoring software. 6. Average Transaction Size: The larger the transaction size, the greater the risk factor to Bankcard Associates, LLC. This also allows our Risk Analyst to have a guide on what normal activity should be for this Merchant when monitoring the transactions. 7. Type of Sale: Is the card present and swiped, present and not swiped, or not present? If the card is not present, and is hand-keyed, this represents a greater risk for chargebacks. 8. Bank Reference: If the Merchant falls into a high risk category, has been in business for several years and has never accepted credit cards, BluePay, Inc. may request a reference from the Merchant’s bank. 9. TMF Match: If the Merchant’s business name, address, owner’s name, social security number, or business partner’s name or social security number, is entered on the MasterCard Match file we will not process the Merchant Application. 10. Nature of the business: Different industries, products and services carry different levels of risk. The nature of a business will help determine the amount of risk involved and what, if any, risk plan is required. 11. Business Financials: When financial statements are required, the principal or corporation should have sufficient adjusted net worth to support the estimated risk. There should be no adverse trends that would lead to the depletion of the stated net worth, such as several years of losses, pending litigation, etc. 12. Geography: If a Merchant Account is located in a proven high-risk area of the country, the account will be reviewed for authenticity carefully by our Underwriters. High-risk areas include: Los Angeles, CA, Brooklyn, NY, Miami, FL, and Austin, TX. Risk Monitoring Bankcard Associates monitors every Merchant’s activity on a daily basis. Our Risk Analysts review for the following types of transactions or activity: Even Dollar Amount Balances Even Dollar Transactions Large Credits Credits with No Corresponding Sale Large Keyed Transactions Large Swiped Transactions Large Dollar Batches Large Transaction Batches Split Sales Multiple Sales to One Card Decline vs. Approval Ratios Incoming Retrievals Incoming Chargebacks Actual Volume vs Projected Volume Potential Merchant Keying Errors Excessive Keyed Transactions on a Retail SIC Code Foreign Transactions If the Risk Analyst diverts funds, the Merchant is notified and asked to provide additional information regarding the activity. In many cases, the transaction is verified with the card issuer.
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