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First Data Corp. says it is prepared for potential merchant bankruptcies and put aside $8 million more for such contingencies in the first quarter, Michael Capellas, First Data CEO and chairman, told analysts last week during a conference call to discuss earnings for the quarter. First Data had approximately $4 million in credit losses during the quarter, Capellas said. A First Data spokesperson tells CardLine sister publication ISO&Agent Weekly the first quarter saw "an increase in merchant failures, particularly small and midsize merchants." Overall, First Data reported about $12.7 million as a credit loss for the quarter, including the $8 million allotted for reserves against future losses. The Greenwood Village, Colo.-based company has about 350 employees who review merchant viability, Capellas said. Typically, when signs emerge that a merchant is in trouble, First Data's contracts with a merchant enable the processor to increase its collateral stake in the merchant, he said. Generally, First Data will ask for collateral when it spots ailing merchants, but Capellas acknowledged the processor has some exposure to loss if a merchant declares bankruptcy.

 

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