[mcg168]

You aren't missing anything, and this is a practice that is not at all understood by those outside of the space, as well as many inside the space. I fully agree this is a bad practice that should, at the very least, be disclosed to merchants (but isn't) -- by our internal calcs, "double dipping" adds approx. 15 factor points to EACH renewal on a six month 1.35x. So if we offer a 1.35x at 6 months that renews (no double dip), that is the equivalent of a 1.20x from many of our competitors (renewal with a full double dip) if the loan or advance renews.

That being said, some funders/lenders in the space are going away from this practice. We (breakout) never double dip. OnDeck, Rapid and others have gone or are going away from this. TBB has been a pioneer for a long time on this concept and has a fantastic video on their website that goes through this. I do think this is a practice that will come under intense scrutiny if/when regulatory oversight comes into place.

Unless I am being misled, OnDeck absolutely still makes the merchant pay the original balance down (double dip). They have a line of credit program, but thats a something completely different and the commission is so low its not really worth selling.

I dont have much experience with TBB, but they are relatively new to this industry so I wouldn't say they are the pioneer of this concept. I would give that label to BFS, whose been doing renewals this way for 10 years.