Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

News Now

CU System
CUNA Lending Council White Paper Discusses Merchant Lending
MADISON, Wis. (11/18/13)--With merchants and consumers mainly relying on credit cards with terms credit unions can easily beat, the market opportunity for indirect merchant lending is plentiful, according to a new white paper from the CUNA Lending Council.
 
Through indirect merchant lending, credit unions can provide members with loans when and where they need them, expand their lending portfolios and acquire new members, according to the white paper, "Indirect Loan Opportunities."
 
From an operations perspective, the components of merchant lending are familiar to credit unions. Back-end processing is the same as with unsecured personal loans. Members or potential members will still be price and payment sensitive to varying degrees. A different kind of risk does exist when acquiring loans from a merchant; credit unions replicate much of the risk protection practices from indirect auto lending, the paper said.
 
Merchant lending is unique in several ways:
  • The loans are often small. While big-ticket items aren't out of the norm, more partners deal in smaller dollar products. As a result, programs plan for a higher volume of smaller loans or for merchant lending to be a smaller part of their lending portfolio.
  • The merchants also tend to be smaller and potentially less stable. This increases the need for good due diligence, but don't overdo it, the paper advised. The risk is ultimately with the person making the payments.
  • The competition isn't another lender offering similar terms. It's usually some kind of credit card. This significantly reduces the competitive rate environment.
  • Credit unions have an opportunity to educate--and even "wow"--potential partners. Retail stores and service providers are often unaware of how much a credit union can help their business and their customers. They might not offer financing. They might dislike the financing they do offer and wish they had an alternative, the report said.
 To download the whitepaper, use the link.
RSS





print
News Now LiveWire
Watching #SuperBowlXLIX this Sunday? Look for regional #creditunion #commercials @CltMetroCU @BECU @golden1cu #Seahawks #Patriots
4 hours ago
Philadelphia's American Bakery Workers FCU liquidated by @TheNCUA; @trumarkonline assumes shares
5 hours ago
More branch shutterings by @Citi: 4th-largest bank to close 10% of #Chicago area branches HT @CrainsChicago http://t.co/2vAvgucLY5
5 hours ago
56% struggle with subprime credit scores says @cfed survey HT @washingtonpost http://t.co/RHmMvuhNtw
6 hours ago
How to use social media for crisis communications Feb. 10 webinar from @SBAgov, @AgilityRecovery http://t.co/d16t8RHr7n
6 hours ago