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09-18-2020, 10:33 AM #1
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Fundkite's new MCA product, thoughts?
My rep Egor Gagarin got me on a video call with Fundkite yesterday pitching their new product. Seems to be a game changer when it comes to an MCA with the current COVID 19 landscape. From my understanding it acts similar to a Processing Split which they would underwrite the file under the new program guidelines. If the businesses are impacted in any way they would align their holdback percentage based on the businesses current revenue to prevent smothering a business when their revenue drops because of unforeseen circumstances that would occur due to COVID. Even though it has some similarities to reconciliation clauses, there seems to be a proactive approach and benefits for both the ISO and the merchant. One being that the merchant has peace of mind that they are not stuck with prior payment commitments when they are forced to close or limit the amount of customers they can do business with and for ISO's you are protecting your customer which leads to renewals.
I would like to know your thoughts, My company provides an array of working capital options, our MCA book has been over 1M+ a month even through COVID. It seems to me if you can get them qualified through Fundkite , this actually may be one of the better MCA choices for certain papers. What are your thoughts?
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09-18-2020, 10:48 AM #2
Thank you for the vote of confidence Roger,
If anyone has any questions about our new product or any pre-existing ones please feel free to shoot me an email or give me a call.
Happy Friday everyone!Egor Gagarin
ISO Relations Rep, FundKite
Direct: 929-443-3300 | Email: egor.g@fundkite.com
Web: fundkite.com
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09-18-2020, 11:45 AM #3
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How does the reconciliation/split component work?
Is it a monthly or weekly "true up", similar to what Pearl was try to do? Or?
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09-18-2020, 11:51 AM #4Egor Gagarin
ISO Relations Rep, FundKite
Direct: 929-443-3300 | Email: egor.g@fundkite.com
Web: fundkite.com
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09-18-2020, 03:06 PM #5
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Would you consider the merchant as a "slow pay" or in "default" while adjusting down their remit %? And would this affect their chances at renewal with you?
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09-21-2020, 10:40 AM #6Egor Gagarin
ISO Relations Rep, FundKite
Direct: 929-443-3300 | Email: egor.g@fundkite.com
Web: fundkite.com
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09-21-2020, 10:43 AM #7
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09-21-2020, 11:00 AM #8
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how would you be able to split this daily or weekly? it sounds like the merchant will have to give Fundkite account authorization and then Fundkite will have to service this daily or weekly or will the bank automatically do that.
I am asking because of the comparison to a CC split, which most times requires cooperation from processing companies.
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09-21-2020, 11:08 AM #9
That's exactly why we're calling this new program ACH Split, the amount we pull depends entirely on the merchants deposits and performance during the reconciliation that was agreed up, day, week, or month.
If you have any deals in the pipeline that this may help with feel free to give me a call or shoot me an email.Egor Gagarin
ISO Relations Rep, FundKite
Direct: 929-443-3300 | Email: egor.g@fundkite.com
Web: fundkite.com
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09-21-2020, 11:24 AM #10
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09-21-2020, 11:36 AM #11
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I am under the assumption that it does not require a lockbox or a switch of accounts. My impression is that it acts like a Split where it is taking a percentage of revenue, but does not have all the headaches of switching accounts. For example if the MCA was underwritten based on the revenue of 100K a month and hold back was 18%, then company revenue drops to 50K they will adjust the payment of 18% holdback on 50K.
Can you please clarify this Egor?
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09-21-2020, 11:43 AM #12
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that sounds nice but it's not possible unless Fundkite has some sort of authority over the account, which would only happen if the bank signs off and approves it prior to funding, and even then they would need to login everyday and adjust it accordingly (or have some sort of software doing it)
The only way this makes sense to me is with some sort of lockbox, not that there is anything wrong with that idea, but it is something we need to know before considering for our clients.
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09-21-2020, 11:59 AM #13Egor Gagarin
ISO Relations Rep, FundKite
Direct: 929-443-3300 | Email: egor.g@fundkite.com
Web: fundkite.com
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09-21-2020, 01:35 PM #14
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For those that have been in the industry long enough, when all we had were CC splits in 2007 - 2008, then some ach products came out in 2009 - 2010, they were set up exactly like this. Merchant signs up via decision logic, or provides view only access to their bank account or any other type of access for the funder to see daily deposits, then funder debits the agreed upon % based off of the daily rev, just like a CC split but all rev is included.
We tried this back in 2008, it was a lot of work (manually) at the time but I am sure there are algorithms and software available now that could make this a lot easier.
This method also keeps it as a true MCA, as you are debiting based off of % of revenue and not a set daily payment which most look at like a loan rather than MCA.
If Fundkite has the system to handle this, then good for them. I would think weekly and Monthly repayments would be much easier to handle but daily can be done.
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09-21-2020, 02:16 PM #15
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09-21-2020, 02:41 PM #16
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Our company uses Decision Logic to create a better experience for our merchants when getting the month to date and other benefits we use regarding data and analytics. Decision Logic does allow a refresh daily of the account up to 90 days in some instances.
We have seen Plaid being used by many of the Fintech companies because it provides a more in depth history. But these are the only two I know that truly work when having access to an account.
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09-21-2020, 02:53 PM #17
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09-22-2020, 10:43 AM #18
Thank you for the vote of confidence. We have built an entire process, technology, and systems around this to ensure it is quite seamless for the merchant and our team.
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09-24-2021, 11:58 AM #19
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09-24-2021, 01:54 PM #20
Speaking from personal experience as an ISO rep at Fundkite, majority of our merchants are happy to work with our reconciliation and believe its beneficial to their business cash flow. As opposed to a fixed payment in which the merchant may worry about making payments when business is down.
Reconciliation allows merchants payments to be flexible according to their sales, so yes, a 6 month term could end up being 4 months or 8 and we're fully prepared for either scenario.Egor Gagarin
ISO Relations Rep, FundKite
Direct: 929-443-3300 | Email: egor.g@fundkite.com
Web: fundkite.com
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09-24-2021, 02:04 PM #21
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Dave Lambert, Business Development
dave@fcbankcard.com
Merchant Services Consultant
High Risk Merchant Payment Solutions
SBA 7(a) Loans & Short-Term Funding
T/VM: 727-291-7890
Office: 727-233-1111
Skype: fc-financial
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09-24-2021, 02:17 PM #22
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IMO - This product will go a long ways to reducing-eliminating defaults
Dave Lambert, Business Development
dave@fcbankcard.com
Merchant Services Consultant
High Risk Merchant Payment Solutions
SBA 7(a) Loans & Short-Term Funding
T/VM: 727-291-7890
Office: 727-233-1111
Skype: fc-financial
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09-24-2021, 02:22 PM #23Egor Gagarin
ISO Relations Rep, FundKite
Direct: 929-443-3300 | Email: egor.g@fundkite.com
Web: fundkite.com
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09-24-2021, 02:44 PM #24
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My credit card split - we do not require any change to processor - our funding is the same day
as soon as funding call is completed.
A few differences between the products - as you stated in a previous post - you are returning to the roots of the MCA Business.
It should be well accepted by merchants.Dave Lambert, Business Development
dave@fcbankcard.com
Merchant Services Consultant
High Risk Merchant Payment Solutions
SBA 7(a) Loans & Short-Term Funding
T/VM: 727-291-7890
Office: 727-233-1111
Skype: fc-financial
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09-24-2021, 10:37 PM #25
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This seems like an absolute nightmare from a logistics standpoint. You would need countless staff to do a daily reconciliation and then you're getting banged out with even higher same-day ACH fees. On top of that, once a merchant realizes that they simply do not have to make a deposit in order to not pay or pay an extremely reduced payment, the abuse will run rampant.
On days that they make large deposits, and you come in and take the specified % they're going to throw an absolute fit when it's multiples of what they thought they had to pay.
I get the idea, and I'm sure merchants will when being sold, but logistically, it just doesn't make any sense IMO.
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