TPG's and Delivery Risk
japhi
Posts: 223
In my day job I work for a merchant acquirer. We set merchants up with card processing, and part of that process includes adjudicating credit. Credit risk is based on a number of factors, one of which is delivery exposure. The best example of a market segment with significant delivery risk is travel - you pay the merchant far in advance of when you travel. If the merchant goes teets up, your credit card issuer is on the hook to make you whole.
Which brings me to my point. TPG companies hit the credit card on the way out, so from an acquirers standpoint there is only a small time frame between payment and delivery, less than 2 weeks. Still riskier than a restaurant, but much safer than an airline. The risk in this case is carried by the cardholder, in that they deliver, in some cases, thousands of dollars of product to the TPG, and wait 15-90 days for that product to be returned. Once the card is charged you are covered, but prior to that you carry all the risk for the TPG going under and taking your cards with them.
I'm wondering if this keeps others up at night? I would say the risk is fairly low, but having looked at thousands of businesses financials you would be surprised how lean most companies run in this market. I would like to sub a large portion of my collection, but the threads about waiting months to receive slabs back have me worried.
Which brings me to my point. TPG companies hit the credit card on the way out, so from an acquirers standpoint there is only a small time frame between payment and delivery, less than 2 weeks. Still riskier than a restaurant, but much safer than an airline. The risk in this case is carried by the cardholder, in that they deliver, in some cases, thousands of dollars of product to the TPG, and wait 15-90 days for that product to be returned. Once the card is charged you are covered, but prior to that you carry all the risk for the TPG going under and taking your cards with them.
I'm wondering if this keeps others up at night? I would say the risk is fairly low, but having looked at thousands of businesses financials you would be surprised how lean most companies run in this market. I would like to sub a large portion of my collection, but the threads about waiting months to receive slabs back have me worried.
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stupid print dots
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I believe PSA just recently changed this policy.
Joe
Great original post by the way.