A Revival of the Merchant Cash Advance Industry
A larger number of acquirers are offering Merchant Cash Advances (“MCA”) than in previous years. In a recent study, First Annapolis found that 50% of acquirers are now offering MCA, up from 42% in 2007 and 43% in 2009. The upward trend may have been fueled by increased merchant demand for alternative sources of working capital given the tight financing market of the last three years.
Some acquirers also saw increased commissions for initial deals, suggesting that MCA players are starting to compete aggressively again for productive deal sources. Renewal commissions, though, remained relatively unchanged, with 50% of acquirers earning below 4% for renewed deals and a small percentage of acquirers seeing higher commissions.
The two indicators together (i.e., increased number of acquirers offering the product and larger initial commissions paid to acquirers) might signal a revival of the MCA industry, which saw large losses and numerous MCA provider business failures during the last economic crisis.
1 – 2011 First Annapolis Merchant Acquiring Pricing Study.
Source: First Annapolis Consulting research and analysis.
For more information, please contact Janinne Dall’Orto, Senior Manager specializing in Merchant Acquiring, firstname.lastname@example.org
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