Rewards: The Next Phase of Merchant Cash Advance Evolution

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Sky miles and 1% cash back are practically standard benefits of using your credit card, so why shouldn’t you get a little something extra with your Merchant Cash Advance (MCA)? I pay my credit card bill on time every month because I am a responsible customer. As a result, the bank continues to extend me credit when I need it. But that’s not all they do, they also send me a check for 1% of every purchase that I make. That’s pretty nice of them!

Sure, it’s a great way to encourage spending but it also promotes loyalty. I get a million credit card offers a year and I have no desire to switch. Isn’t that something?

The Merchant Cash Advance (MCA) industry could learn a thing or two from this. While funding small businesses is practically a blessing in that of itself, there is a lot of fierce competition between MCA providers. Once a business has used MCA, it seems everybody starts fighting over whose going to fund them next. It must be quite an experience for business owners who are by now used to banks tossing them around like an unwanted hot potato. In the MCA industry, everyone wants to fund the potato.

The truth is though, the terms won’t vary much between firms and even if they do, the transaction cost might not be worth it. Switching to a new MCA provider can result in any of the following:

  1. A termination fee on your existing merchant account
  2. The purchase or lease of new POS equipment
  3. The installation of new POS equipment
  4. An additional service fee on top of the cost of financing
  5. Unexpected issues with trust or the service

If you have found success with the company that financed you, we can both agree that it’s easier to stay with them. But without additional incentives, you may be feel like your business isn’t appreciated. That’s probably not true and sometimes our sense of entitlement gets the best of us. The thing is though, we believe a little reward is just what you deserve. What makes a great MCA provider great is their ability to become a true partner in your success, instead of just silently collecting their purchased receivables. That’s why we propose the following:

  • Cash back for hitting certain monthly sales targets
  • Rewards for hitting certain monthly sales targets (gift cards, free advertising, a small business makeover)
  • Access to free consulting (consultations from experts on how to best invest the money you receive)

Imagine the motivation you’d feel if your financing not only got approved, but led to a whole bunch of rewards if you invested that money wisely. We don’t have control over the nation’s MCA providers but we can plant the seed and wait for someone to do it first.

Let’s pretend that your business does $8,000 a month in credit card sales on average. One month, you hit $12,000. I think a little reward is in order! Send us an e-mail and tell us what you think.


– deBanked

Last modified: January 21, 2012
Sean Murray

Category: merchant cash advance, MPR Authored, Small Business

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