The Executive Interview Series provides readers with exclusive insights from movers and shakers in the payments industry. The Payments Industry is under continuous transformation, as such this series provides diverse perspectives on everything from strategy to payments technology and to the future of the industry.

In this interview, TSG’s Market Intelligence team-members Jared Drieling and Alex Ferguson sat down with TSG’s Senior Associate Susan Horne to learn more about her and her thoughts around high risk verticals and merchant acquirer’s participation in these verticals.

BACKGROUND: Susan Horne is a highly skilled bank executive, proficient in presenting experienced and precise acquiring information to Board of Directors at banks on an executive management level. She assists banks, ISOs, processors and any other entity in the acquiring business with specific solutions to issues related to the payments industry. Other roles include specific expertise in areas of company and portfolio management, policies and procedures, contract research and review, ISO relations, bankcard operations, risk management, and ACH rules and management. Horne is the former President and CEO at Redwood Merchant Services/National Bank of the Redwoods where she created an in-house bank acquiring portfolio that grew to monthly processing volume of over $450 million. Under Horne’s leadership, Redwood Merchant Services was ranked as one of the top 50 merchant processing organizations in the United States. Additionally, Horne has interfaced directly with members of Visa USA, Mastercard International and OCC Regulators. Horne maintains extensive familiarity with acquiring membership standards as well as card association rules and regulations.

Q: TSG’s Alex FergusonHow did you get into payments?

A: Susan HorneI began my career in banking and within several years I was managing the operational center of a mid-sized local bank. The Bank was incredibly forward thinking for the time, and was interested in entering the merchant acquiring space, with ISO relationships and by building an internal program. After extensive due diligence, the bank converted an established high-risk merchant portfolio on to the recently signed First Data processing platform. That was the beginning of a merchant acquiring program that grew to house over twenty ISO relationships and an internal agent portfolio.

Q: TSG’s Alex FergusonWhat do you think has been your biggest personal contribution to the payments industry?

A: Susan HorneIn my position as Senior Associate for TSG, I find myself in many situations where I can help an acquirer, ISO, and/or a merchant be compliant with the card brand and/or banking rules, decrease chargebacks and fraud, or even streamline their program for increased efficiency. I’m extremely proud of the work I do and how it can help others.

Q: TSG’s Jared DrielingWhat do you think are the key questions that should be asked when evaluating risk and higher-risk verticals? 

A: Susan HorneWhat are the enhanced due diligence practices related to the specific merchant vertical?

Q: TSG’s Jared DrielingWhat do you feel is most overlooked when merchant acquirers are evaluating risk?

A: Susan HorneRisk should be evaluated based on the risk tolerance of the entity that will hold liability. Unacceptable high risk to one acquirer may be a reasonable risk to another.

Q: TSG’s Alex FergusonWhat is the most overlooked benefit acquirers gain by targeting high risk verticals?

A: Susan HorneBeing competent with due diligence and ongoing review to decrease the risk profile.

Q: TSG’s Alex FergusonDo merchant risk profiles shift?

A: Susan HorneYes, as the acquirer becomes increasingly educated regarding a specific high-risk business vertical and builds a relationship with the merchants within the vertical, the overall risk for that specific acquirer will decrease.

Q: TSG’s Alex FergusonCan a merchant risk profile shift from high risk to “normal” risk?

A: Susan HorneThe high-risk vertical will never become normal.   

Q: TSG’s Jared DrielingWhat do you think the higher-risk merchant landscape will look like in 5-10 years?

A: Susan HorneToday, there are more acquirers entering the higher risk vertical. That may change over time, as fraud and losses occur within acquiring companies that were not prepared for the anomalies within risk monitoring and management of the higher-risk vertical. High-risk has always been a niche business that falls in and out of favor.

Q: TSG’s Alex FergusonHas the process of portfolio risk evaluation changed over the past decade?

A: Susan HorneNew technology and risk exception systems have helped many acquirers within this vertical. However, each merchant account must be evaluated on their own merits and in many cases risk management results in a hands-on approach that hasn’t changed much over the past decade.

Q: TSG’s Jared DrielingDescribe the importance of a GARS review and the key results and use.

A: Susan HorneThe Visa Global Acquirer Risk Standards (“GARS”) are used to provide acquirers the proper risk controls to protect their companies and the Visa system from unnecessary financial or reputational harm or loss. Visa uses the GARS review as a tool to identify irregularities within an identified acquiring program and provide a solution to the non-compliant processes.  The result of a GARS review usually identifies any inconsistencies within the program that do not conform with the Visa Rules. The advantage is that once the acquirer remediates the identified GARS findings, the compliant acquirer is usually in a better position for growth and increased revenue.

Q: TSG’s Alex FergusonAs our final question, payments and work aside, what do you enjoy doing?

A: Susan HorneI enjoy running and have completed quite a few ½ marathons.  I enjoy hiking in the Sierra mountains near my home and spending time with my family.

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