As a payments processor, Electracash is required by the various networks in which we participate to hold some measure of fiduciary and ethical responsibility for every merchant for which we process. Accordingly, we conduct extensive underwriting and monitoring procedures for every merchant applicant. In doing so, Electracash helps ensure the integrity of our services, and the longer-term viability of servicing our merchants.
Underwriting
Any merchant (and reseller) that applies for Electracash services is thoroughly researched using well-established business data bases, to ensuring the applicant is doing business legally and is financially stable. This is important to all of our merchants, as a few fraudulent entities have caused the downfall of substantial processors in the past, causing legitimate merchant customers to lose money as well as service.
The research Electracash conducts includes the use of:
- Business and personal credit checks from the established credit bureaus.
- Record checks from the Federal Trade Commission, the Better Business Bureau, and the Attorneys General.
- Legal record checks from Lexis/Nexis®.
- Internet searches of websites for which the merchant is seeking processing.
Electracash reserves the right to reject any merchant (or reseller) application based on information obtained through these and/or other sources.
Activity Monitoring
Electracash also has multiple activity monitoring reports that flag irregular behavior in number of transactions and dollar amounts submitted. Depending on the extent of any discrepancies, Electracash often contacts the merchant to identify the source and reasonableness of the discrepancy. Often, a managed period of time is provided for offending merchants to address the identified problem(s), and Electracash diligently follows up to ascertain the issue has been adequately resolved, or to discontinue processing. Electracash reserves the right to terminate any merchant exceeding set limits or otherwise breaching its contract with Electracash.
Deferred Contingent Holdback
Merchants are required to maintain a “Holdback” with Electracash at all times. These funds are maintained by Electracash in a separate account known as the Deferred Contingent Holdback Account, which may be commingled with funds of other merchants, and does not bear interest. Generally, the Holdback amount is set to be equivalent to approximately one month of average sales dollar volume for that specific merchant.
Merchants may choose between three methods of establishing an appropriate level of deferred contingency:
- A percentage of each sale transaction withheld until the target amount is reached.
- A bank Letter of Credit provided to Electracash in the target amount.
- A cash deposit provided to Electracash in the target amount.
Exposure Limits
The establishment of exposure limits is a technical requirement specified in NACHA and other banking regulations. Electracash has monitoring systems that warn of extreme spikes in usage. In the event such a spike occurs for any single merchant, Electracash's policy is to contact the merchant to ascertain whether the spike is an unexpected, questionable event.
The exposure limit requirement is specified in Electracash's Processing Agreement, based on (1) a combination of the highest volume conducted over a four-day period (to account for volume peaks), (2) a reasonable percentage of estimated uncollected items at any one time, and (3) the dollar amount of deferred contingencies -- on a per merchant basis. Electracash seeks merchant agreement on the amount set, and reviews as necessary to accommodate growth in the merchant's sales. Exposure limits are enforced in real-time.
If you have any questions regarding Electracash’s Merchant Risk Management, please contact an Electracash Sales Representative.
