To understand the impact of changes such as Brexit, it is best to understand the mindset of how Merchant Services Providers (MSPs) view their risk position, which by default will always be the worst-case scenario.
When MSPs assess applications or review existing facilities there are many factors they look at, the main one being the level of chargeback risk. They are looking at the scenario whereby your business is unable to fulfil orders/services, leaving card holders in the position of seeking a refund via their card issuer. Depending on the way the card is taken, the buck stops with either the issuer of the card or the MSP, and ultimately, they will look to charge back the payment to the business via their merchant account. If the business is struggling and hasn’t processed enough new payments to cover the charge back or has ceased trading, the MSP will have to cover the loss.
Questions now being asked include where you source your stock or parts. MSPs may be concerned that if there are delays in the arrival of parts, or stock is sourced from outside the UK, this could impact the business by extending the delivery or fulfilment period. Where businesses have taken deposits or prepayment in full, this delay may well increase levels of refund requests and in some cases, they may not have the cashflow to enable the refund to be met. As a result, MSPs may ask for additional financials either upon application or they could be requested by your existing provider at any time as they assess their risk of having to cover any chargebacks themselves.
Will business pay the price for dealing with Europe?
Since the turn of the year, we’ve all been getting to grips with what Brexit means for us as individual businesses and here at acceptcards® we’re seeing first-hand the impact this is having on businesses accepting card payments for their goods and services.
We’ve seen a rapid increase in customers coming to us as they have been issued notices of security bonds of tens of thousands of pounds, delayed settlement and some customers being told their payment facilities will be terminated in as little as 14 days.
It seems Brexit has made risk underwriters very nervous and their solution in some cases is to simple jettison certain businesses that they feel Brexit will hit the hardest with little or no time at all to make alternative arrangements.
Businesses that trade heavily with Europe, be that where goods are manufactured or where stock originates from, are high on the MSPs hit list.
Delays at the borders
Survey of 185 UK and EU supply chain managers
- 60% say they have faced delays getting goods into the UK
- 45% have faced delays of more than two days
- 27% say paperwork is the main cause of delay
- 23% say they could run out of stock if the situation continues
Source: The Chartered Institute of Procurement & Supply
The above findings feed into the fear of some of the UK underwriters, but the good news is because of the way we uniquely work in the UK’s payment sector we have relationships with a wide range of MSPs all with varying appetites for risk, including many based outside the UK with an even higher appetite for risk. This means, with the vast majority of cases, we can help find alternative facilities without a change to terms and in some instances providing better terms seeing bills drop by up to 30%.
Has your current provider asked you any of the following?
- To do a review out of the blue
- Enquired about stock levels in the UK
- To provide details about your supply chain
- Length of time between payment and delivery of goods/services
- Provide a security bond
- Changes to the terms and settlement
- Increased pricing
If you have answered yes to one or more of these questions it’s time to take matters into your own hands, give us a call and we’ll make sure you secure a facility with a new provider.
Our experienced team have insight into the risk and appetite of all the UK Merchant Services Providers (MSP). As such we are uniquely based to help our customers navigate the application process and reduce the impact of any market changes.