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Winning & Losing with Cash Advance |
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While cash advance programs are the latest breakout idea for brick-and-mortar retailers, not everyone is convinced they’re a winning strategy. Some view cash advance as a get-rich-quick scheme that builds little long-term business. Others say that with careful planning and attention to key relationships, cash advance can boost merchant portfolio valuation.
Cash advance is hardly a new concept: In the late 1970s, American Express began advancing money to merchants in the hospitality industry. The practice gained momentum as entrepreneurs realized this specialized program didn’t have to be limited to one market and seized upon an opportunity to provide financial benefits to a variety of industries. It quickly picked up steam and started attracting a broader range of merchants Its impact on the industry, however, has not been widely documented.
Today, decreasing margins and increasing competition have attracted the ISO community to cash advance to replace lost income. And ISOs also need a product offering to retain merchants lured away by companies offering funding.
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