What are the hidden costs of manual COA management for high-risk merchants?

Manual COA management creates significant hidden costs beyond document storage. Teams spend countless hours organizing, submitting, and tracking COAs instead of focusing on revenue-generating activities. Products sit idle during verification, creating storage costs and expiration risk. Verification delays slow product launches and e-commerce listings. And when documentation gaps are discovered during payment processor or regulatory audits, the consequences — account termination, product removal, or regulatory action — can cut off a business's ability to accept card payments entirely.

How do payment processors audit high-risk merchants for product compliance?

Payment processors conduct both document reviews and mystery shopping — sending auditors to pose as customers online and in physical stores to verify that merchants are only selling disclosed, compliant products. Merchants who attempt to hide products from processor review while showing them to registered customers face severe consequences when discovered, including immediate account termination. Automated COA management through MyCOA ensures all products and their current lab documentation are always visible and compliant, eliminating the risk of discovery during mystery shopping audits.

What happened to Fresno First Bank and what compliance lesson does it teach?

Fresno First Bank and its payments division were subject to regulatory action after auditors determined they were not maintaining adequate product-level compliance documentation for the high-risk merchants in their portfolio. Despite being established players, their inability to prove proper compliance document handling during the audit led to serious regulatory consequences. The case served as a wake-up call for the entire industry — prompting banks and payment processors to demand more detailed COAs, implement longer review times, and enforce stricter product-level compliance documentation requirements.

How does MyCOA's direct lab connection prevent COA fraud?

MyCOA establishes a direct connection between the merchant and their analytical laboratory through LIMS integration, ensuring COAs are transmitted directly from the testing equipment — bypassing any opportunity for human manipulation or selective reporting. Every COA received through this pipeline is immediately hashed and anchored to a blockchain registry, creating a tamper-proof record that proves the lab result has not been altered between generation and submission to banks, processors, or regulators.

Why should high-risk merchants be transparent with their payment processors?

Payment processors — like lawyers or doctors — can only protect merchants they have complete, accurate information about. Merchants who hide products, undisclose inventory changes, or omit compliance documentation from their processors are eliminating the processor's ability to defend the account during audits. Transparency, supported by automated COA management that keeps all product documentation current and verifiable in real time, is the most effective strategy for maintaining stable, long-term payment processing relationships in high-risk industries.

How does digital COA management accelerate product launches for CBD and supplement brands?

Manual COA verification can delay new product launches by days or weeks while documentation is assembled, submitted, and reviewed. MyCOA's automated pipeline — combining direct LIMS integration, AI-powered OCR, and instant blockchain anchoring — allows businesses to build a complete, verified product compliance database in real time. This enables immediate product listing and e-commerce activation rather than waiting for manual approvals, directly accelerating revenue generation while maintaining full regulatory compliance.

How can a business with hundreds of products manage COA compliance at scale?

For merchants with large product catalogs, manual COA management becomes operationally impossible — particularly when each SKU requires a current COA, expiration dates must be tracked, and any product change triggers a new verification cycle. MyCOA handles high-volume COA management through automated lab integrations that simultaneously process hundreds of reports, AI-powered extraction that structures unstructured lab data, expiration tracking with proactive renewal alerts, and a centralized Q-Trust registry that gives processors and regulators instant access to the full compliance record for every product in the catalog.

Digital COA Management: The Business Case for Automating Product Verification

Automating Product Verification: The Business Case for Digital COA Management

Category: Business Learning Center Videos

Author: Joy

Date: February 26, 2025

During a recent Qredible Live broadcast, Noah Fitzgerald revealed a critical insight about COA management that's changing how high-risk businesses operate. "If I'm a merchant and I have a hundred products, I have to get all my COAs validated...that process significantly impacts business operations," he explained. As Chief Revenue Officer at Qredible and a veteran with over 30 years of fintech experience through leadership roles at First Data, Chase Payment Tech, and WorldPay, Fitzgerald offers unique insights into the challenges and solutions in the digital COA management space.

The Hidden Costs of Manual COA Management

What many business owners don't realize is that COA management extends far beyond simple document storage. The current system creates significant business challenges through lost revenue opportunities, as teams spend countless hours organizing, submitting, and tracking COAs instead of focusing on growth activities. Products often sit idle while waiting for verification, creating storage costs and potential expiration concerns.

Real-World Impact of COA Challenges

Noah Fitzgerald has witnessed firsthand how COA management issues can derail otherwise successful businesses. "I had a merchant tell me that they have this feature on their website called 'hide product,'" he shares. "They believed they could hide certain products from payment processor review while showing them to registered customers." This approach, while seemingly clever, illustrates a common misunderstanding about how product verification actually works.

The consequences proved severe. Payment processors conduct mystery shopping, both online and in physical stores, to verify product compliance. When they discover hidden products or undisclosed items, the results can be devastating for the business. "If you're selling online or in retail, and you lose your ability to accept card payments, you've just cut off your lifeblood," Fitzgerald explains. "Unless you have cash buyers, you're stuck."

The True Cost of Non-Compliance

The ripple effects of poor COA management extend far beyond simple documentation issues. One notable example Fitzgerald shares involves a major player in the space: "Banks and payment processors have learned the hard way that when an audit happens, if they don't have everything in order, they're at risk of being shut down. That's exactly what happened last year with Fresno First Payments and Fresno First Bank."

Despite being established players doing what seemed to be a solid job, they weren't keeping up with product level compliance requirements. When regulators conducted their audit, the inability to prove proper compliance document handling led to serious consequences. This case served as a wake-up call for the entire industry, prompting payment processors and banks to demand more detailed COAs, implement longer review times, and enforce stricter compliance document measures.

A New Approach to Digital COA Management

"Think about verification as the foundation of trust," Fitzgerald emphasizes. "When you automate this process, you're not just saving time - you're building credibility with every transaction."

The foundation of modern COA management starts with direct lab connections that enable immediate data transmission and eliminate manual entry errors. Through intelligent verification, the system automatically processes documentation while maintaining compliance standards across all connected platforms.

The Technology Solution in Action

Modern COA management systems address these challenges through intelligent automation. "Through MyCOA, users establish a direct link with their analytical lab," Fitzgerald explains. This direct connection ensures that COAs come straight from the testing equipment, minimizing the risk of fraudulence or human error.

The system's real-world applications are particularly evident in multi-product businesses. When a merchant has hundreds of products, each requiring current COAs, the automation handles what would be an overwhelming manual task. The system monitors expiration dates, tracks updates, and ensures all documentation remains current and compliant.

Create Business Value Through Integration

For CBD, hemp, and supplement companies, COA automation connects directly to the bottom line. "Businesses can build an entire product database instantly," Fitzgerald explains. "You can start selling immediately rather than waiting for manual approvals."

E-commerce acceleration becomes possible through immediate product listing capabilities and automated compliance checks. This system creates a framework for enhanced customer trust. According to Fitzgerald, "Transparency with your processor is like transparency with your doctor - it's essential for success." This same principle applies to customer relationships.

Build a Compliance-First Business Model

"The product rules are going to be changing constantly," Fitzgerald notes, highlighting why manual systems can't keep pace. Modern businesses need continuous monitoring that includes regular updates to compliance requirements and proactive alert systems. This approach ensures businesses stay ahead of regulatory changes while maintaining efficient operations.

Success Through Systematic Compliance

Fitzgerald emphasizes that successful businesses approach COA management systematically. Rather than treating it as a bureaucratic hurdle, they integrate it into their core business operations. One successful approach he's observed involves businesses maintaining open communication channels with their processors about new products before adding them to their inventory.

"Think of your payment processor as your lawyer or your doctor," Fitzgerald advises. "If you hide stuff from them, all you're doing is shooting yourself in the foot so they can't actually serve you properly. Be transparent."

Make the Transition: Practical Steps

The transition to automated COA management requires careful planning. Fitzgerald recommends businesses start by examining their current pain points:

Document Management: How are COAs currently stored and accessed?

Verification Timelines: How long does it take to get new products approved?

Communication Channels: What is the current process for sharing COAs with processors?

Compliance Tracking: How are expiration dates and updates monitored?

Understanding these challenges helps create a targeted implementation strategy that addresses specific business needs while ensuring regulatory compliance.

Future-Proofing Your Business

As regulatory requirements are continuously changing, particularly in the CBD and hemp industries, businesses need systems that adapt. The advantage of digital COA management lies in its ability to scale with business growth while handling increasing product volumes and supporting new market entry. These systems can quickly adapt to regulatory changes, modifying compliance checks as needed without disrupting business operations.

Take Control of Your Digital COA Management

The future of product compliance isn't about managing more paperwork - it's about implementing intelligent systems that support business growth while maintaining compliance. Qredible's automated compliance document management solutions provide the tools needed to thrive in today's complex regulatory environment while preparing for tomorrow's challenges.

Ready to transform your COA management process? Contact Qredible today to learn how our automated solutions can help your business succeed in the high-risk marketplace.