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Credit Card Activities Manual
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Appendices - Appendix B

Merchant Processing Examination Tools

Portfolio Profile Worksheet

  Prior Year-EndCurrent Year-to-Date
Sales Volume   
Number of Transactions   
Number of Merchants/Outlets   
Average Ticket Size   
Number and Dollar Reserves   
Major Third Parties and Services Provided   
Top Three Concentrations by Geographic Distribution   
Top Three Concentrations by Industry   
Top Three Concentrations by Volume   
Charge-back Percentage of Sales   
Charge-back Loss Volume   
Fraud Loss Volume   
Operational Loss Volume   
Niche Market   
Net Income/Contribution   
Percent Electronic vs. Paper   

The portfolio profile worksheet can be used to summarize the profile of merchant portfolio at each examination and track changes in the profile from one examination to the next.

Income and Expenses (Sample Only)

Volumes (000's) Expenses
Total Sales Volume External Data Processing
Total Transactions Internal Data Processing
Average Ticket Research and Development
 Terminal expense/depreciation
Income Personnel
Gross Merchant Discount Telephone Expense
Interchange (-) Occupancy Expense
Assessments (-) Travel & Entertainment
Net Merchant Discount Supplies
Interest Income Professional Fees
Transaction Fees Fraud and chargeback losses
Terminal Fees Miscellaneous Expenses
Miscellaneous Fees  
Total Income Total Direct Expenses
Total Income Per Transaction Total Allocated Expenses
Return on Total Income  
Return on Total Expense Total Expenses
Direct Expenses Per Transaction Net Contribution Before Tax
Total Expenses Per Transaction (Unit Cost)  

This sample list of income and expenses associated with a merchant processing operation can be used in evaluating the bank's profit analysis of the merchant processing activity.

Merchant File Review Worksheet

Merchant Name     
Merchant Application     
- Signatures     
- Business Type     
- Description of Product and Services     
- Average Ticket Size     
- Volume Information     
- Social Sec. #/Tax ID     
- Trade and Bank References     
- Processor     
- Time in Business     
- Proper Approval     
Site Inspection     
- w/Photo     
- Inspected By     
Financial Information     
Credit Bureau Report     
Evidence of Previous Merchant Activity     
Check MATCH     
Purchase/Lease Equipment     
Discount Rate     
% Swiped Transactions     

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Last Updated 06/18/2007 supervision@fdic.gov