Operating in an increasingly complex environment, payments-related businesses must understand and actively manage the multitude of counter-party risks including credit, fraud, compliance, legal, and reputation. We guide clients to achieve the optimal risk-reward balance based on our detailed and current understanding of commercial payments and merchant acquiring, particularly in the areas of merchant acceptance, credit policy, merchant underwriting, fraud management, and strategy development.
Client Profile
Our Commercial Risk clients consist of a variety of contributors to the transaction acquiring value chain, ranging between top registered member financial institutions to third-party service providers.
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Product & Program Expertise
Drawing on 15+ years of project experience, our Commercial Risk practice includes professionals who joined First Annapolis from public accounting and regulatory environments. Our value-add is specialized expertise – we are in the market, we bring a hands-on approach to projects, and we know best practices in identifying business risks and designing strategies/systems to mitigate those risks.
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Project Highlights
Our continually diverse Commercial Risk engagements enable us to sharpen our skills and stay current on the industry. A sample of our experience follows.
- Drafted the merchant credit policy for a top-5 U.S. financial institution.
- Engaged by a large regional U.S. financial institution that sponsors one of the largest ISO aggregators and approximately 100 ISOs to educate management on merchant acquiring risks, benchmark financial and non-financial terms of its sponsorship agreement, develop a go-forward strategy, and identify controls that, if implemented, would improve its risk-reward balance.
- Worked with several U.S. airlines on selecting merchant processors and negotiating merchant agreements.
- Performed risk assessments of merchant acquiring and ATM ISOs for one of the largest U.S. financial institutions.
- Evaluated the merchant acquiring and BIN sponsorship lines of business, performed risk assessments, and recommended go forward strategies for numerous regional and community banks.
- Developed a BIN sponsorship market entry strategy for a private bank.
- Engaged by a special purpose bank to review two of its ISOs for risk management capabilities and compliance.
- Engaged by a major, special-purpose chartered bank with a $5 billion volume per year acquiring business to independently validate compliance with Card Association operating regulations and benchmark risk management processes to industry best practices.
- Selected as one of Visa’s preferred vendors to independently conduct Acquirer Risk Program Compliance Reviews and have conducted the majority of these Reviews since the program’s inception in 2004.
- Engaged by a special purpose bank to review two of its ISOs for compliance.
- Engaged by several private equity firms to evaluate the risk and compliance issues associated with investing in ISOs.
- Engaged by several BIN sponsor banks to evaluate risk and compliance issues associated with sponsorship, assisted in determining whether they should remain in the business, and developed go-forward strategies.
- Engaged by a card issuer that processes billions in sales annually to perform a risk management review of existing practices on the acquiring side of their business and to develop enhanced risk management processes that are in line with industry best practices. This effort was in preparation of expanding acceptance of their card brand for payment outside of existing channels.
- Engaged by ten top-50 bank acquirers to provide an evaluation on overall management and performance of the merchant programs. Evaluations were conducted on individual merchant profitability, loss and chargeback levels, sales performance, sales growth, credit review processes, fraud management practices, third-party contracts, and key customer service metrics.
- Served as an advisor on the sale of over fifty merchant portfolios and alliances. In this role we conducted the due diligence for understanding the merchant business and drafting the offering memorandum that describes the business.
Insights
First Annapolis has published numerous articles regarding payments-related commercial risk and compliance issues. Our recent articles include a “Special Edition Risk Alert” that discusses the potential implications of a double-digit increase in acquiring exposure and an “Acquiring Risk Retrospective” that provides a compilation of our past risk articles.
Leadership
Our Commercial Risk and Compliance specialization is headed by Ray Carter, a principal at First Annapolis whose professional experience is rooted in risk mitigation and industry compliance. A diverse team of managers, consultants and analysts assists Ray with client engagements and research initiatives, contributing a range of perspectives from each of the company’s core practice areas.
For more information on our Commercial Risk team, please reference the following biographies:
