MADISON, Wis. (11/18/13)--With merchants and consumers mainly relying on credit cards with terms credit unions can easily beat, the market opportunity for indirect merchant lending is plentiful, according to a new white paper from the CUNA Lending Council.
Through indirect merchant lending, credit unions can provide members with loans when and where they need them, expand their lending portfolios and acquire new members, according to the white paper, "Indirect Loan Opportunities."
From an operations perspective, the components of merchant lending are familiar to credit unions. Back-end processing is the same as with unsecured personal loans. Members or potential members will still be price and payment sensitive to varying degrees. A different kind of risk does exist when acquiring loans from a merchant; credit unions replicate much of the risk protection practices from indirect auto lending, the paper said.
Merchant lending is unique in several ways:
To download the whitepaper, use the link.