Company: ATLCL
Filing Date: 2025-02-06
Form Type: CORRESP
Source: 0001437749-25-002991
Chunk: 2

Company: Atlanticus Holdings Corp
Filing Date: 2025-02-06
Form: CORRESP
Chunk 2
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 agreements with our bank partners, we are required to purchase these receivables for amounts that may be in excess of fair value. In these instances, a fair value assessment that is less than the purchase price of the receivable can occur on the date we initially acquire the receivable, resulting in a loss on acquisition of the receivable. This negative fair value assessment is included in Changes in fair value of loans on our Condensed Consolidated Statements of Income.

In most cases where we acquire these below market receivables, we charge merchant fees to our retail partners to facilitate the transaction and ensure we earn adequate returns. These merchant fees are based on the value of the goods purchased from our retail partners, the consumer’s credit risk and the terms of our bank partner’s related product offering. These fees are recognized upon completion of our services, which coincides with the funding of the loan by our bank partners. These merchant fees often offset the negative impact of the initial acquisition of the underlying receivable. As such, it is not always necessary for us to collect the aggregate unpaid gross balance of the underlying receivable to achieve desired returns.

| 3. | We note your response to prior comment 2. Noting that you purchase the receivable from your bank partner and you analogize to ASC 310-20 and believe that merchant fees are loan origination fees, please tell us how you considered the guidance in ASC 310-20-25-22 and -23 which states that designation of a fee as an origination fee for a loan that is purchased is inappropriate because a purchased loan has already been originated by another party. |

Company Response:

While we used the term “origination fee” as an analogy for our merchant fee, we respectfully acknowledge the staff correctly points out that we are not the originator of the loans. However, we still believe the economics of the agreement with the retail partner, including the merchant fees, have been appropriately accounted for within our financial statements.

We partner with various retailers across the U.S. and are principally engaged in assisting our retail partners drive sales more efficiently by facilitating transactions between our retail partners and its consumers by connecting our bank partners with the retail partners’ consumers. We enter into separate agreements with our bank partners and retail partners to facilitate these services. We are obligated to purchase any receivables generated because of these programs from our bank partners. We separately negotiate and charge our retail partners a non-refundable merchant fee to facilitate these transactions. The merchant fee is derived based on the value of the goods