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American Express Co. and Discover Financial Services transactions create a relatively higher risk for merchant cash-advance providers that advance funds to merchants in exchange for future card receivables, industry observers tell ISO&Agent Weekly, a CardLine sister publication. Such providers prefer purchasing future MasterCard Worldwide and Visa Inc. receivables because processors deliver merchants' cash-advance repayments directly to them. With Visa and MasterCard, cash-advance companies get "paid from the split-processing of the bankcard settlement," says Jeremy Brown, president and chief operating officer of RapidAdvance, a Bethesda, Md.-based cash-advance provider. A few processors work with Discover transactions, he notes. For Discover and AmEx transactions, merchants typically receive funds directly from the brands. "It is good for the merchant to include American Express and Discover, but it is a risk factor for the cash-advance company to include them because it is at the merchant's mercy" for repayment, says John Martillo, president and CEO of SignaPay, an Irving, Texas-based payments processor and provider of merchant cash advances. Most merchant cash-advance companies "stick with what the processor will settle," Brown adds.

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