[mfs01]

The only reason merchants ask if there is a pre-pay penalty is because some sales offices always include that line in their pitch. In fact, no funder penalizes a merchant for prepaying. The correct pitch should be: "we offer a prepayment discount if you wish to pay off your advance earlier".

If salespeople didn't bring up the pre-pay penalty, the merchants would never know what the term meant.

This is true, but it also helps the agent retain the merchant by making them think that there some sort of prepayment penalty, like in other conventional loans (such as mortgages)