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A slowing economy is prompting many independent sales organizations to take a harder look at merchants to spot problems with payment-card transactions and to monitor the health of the ISO's customers. Whether merchants are an existing clients or new ones, ISOs are prodding them for more-detailed information about their payment transactions and their business models, says Henry Helgeson, president and co-CEO of Merchant Warehouse Inc., a Boston-based ISO. "We're going to have to scrutinize merchants that have been in good standing for years, but it may require a little bit extra scrutiny than we would normally give in good economic times," Helgeson tells CardLine sister publication ISO&Agent Weekly. ISOs' incomes are affected when merchants see reduced consumer spending, especially if the merchant provides a luxury-driven product or service. Anything with a future-delivery service, such as subscriptions, bridal shops or cabinetmakers, face increased risk, Helgeson says. If spending drops enough and the merchant goes out of business, the ISO not only faces losing the merchant's business, but it also must contend with scores of charge-backs from goods bought in advance but not yet delivered. Merchant Warehouse has not experienced an immediate impact from this fall's economic turmoil, Helgeson says. Though he is waiting for detailed data about September and October transactions, Helgeson sees a greater uncertainty for December. "There's a lot of fear out there about what this December is going to look like," he says. The National Retail Federation this year predicts U.S. consumers will spend $470.4 billion on holiday purchases, a 2.2% increase from $460.1 billion spent during the 2007 holiday season. That rate is below the 10-year average holiday sales-growth rate of 4.4%, the federation says.
