Dear Friends,
Checking the 'about us' info in some sites like PaySystems, 2CO I found out that most of them currently do not employ more than 100 people and they started bussines with a fraction of that.
I also found that most have started bussiness not long ago (2000), yet they managed to climb up rapidly.

The questions are:
1) How much capital do you actually need to start, excluding advertising?
2) Do you start this bussiness by approaching a Bank or Visa directly and asking them to allow you billing?
3) What credentials do you need to convince them of your integrity, a large deposit maybe :D ?
4) Do you know of any banks that are friendly for starters?

Thanx in advance.

I dont think just anyone can start it. Look at HostCharge as a perfect example of someone thinking what your thinking.

You need backing from a good bank. Worldpay give one of the best services and I believe they are the Royal bank of scotland?

Try speaking with a banks business manager to see if they have any advice.

I think it's going to be tough, you'll need lots of credit history, lots of collateral. Credit card acceptance is risky, is it not?

You'll need good lawyer .. cuz you'll need it I'm sure.

:) :)

Originally posted by HostBeWanna

The questions are:
1) How much capital do you actually need to start, excluding advertising?
2) Do you start this bussiness by approaching a Bank or Visa directly and asking them to allow you billing?
3) What credentials do you need to convince them of your integrity, a large deposit maybe :D ?
4) Do you know of any banks that are friendly for starters?

Thanx in advance.

1)Hundreds of thousands AT LEAST.
2) Talk to a lawyer
3) Collateral and credit worthiness (both business and personal, depending on the company's legal status - talk to a lawyer)(spelling?)
4) Starters of Third Party Processors? NO banks will be friendly, however somebanks will be friendlier than others.

My advice. Turn back now. Way too much liability here...
It seems that you are just beginning to do research. If you do plan on going though, make sure of you have planned for all worst case scenarios.

Thanx for your replies.
Akash you claim that hundreds of thousands $ is required for starting. Can you analyse it a bit further?
Except for advertising, all I can think of is expenses for colocating securely a good server, SSL encruption certificates + some dedicated-secured phone lines from your company to your server and partener bank. Aditionaly you will also need a small computer network inside your company and 2-3 staff. This of course is only for the beginning, but I cant think of x00,000$.

It's not exactly that hard... In this case the thread starter is stating third pary credit card service providers - not exactly a "merchant" provider.

All you need is a merchant account to provide third party billing services off of your site.

Yes it is not that hard only if one has the right business sense and knows perfectly what he/she may be doing.....

I guess the minimum investment/emergency cash etc could not be less then $100,000. I would recommend you to contact ABN-AMRO Bank...

Originally posted by HostBeWanna
Thanx for your replies.
Akash you claim that hundreds of thousands $ is required for starting. Can you analyse it a bit further?
Except for advertising, all I can think of is expenses for colocating securely a good server, SSL encruption certificates + some dedicated-secured phone lines from your company to your server and partener bank. Aditionaly you will also need a small computer network inside your company and 2-3 staff. This of course is only for the beginning, but I cant think of x00,000$.

Liability protection: should something go wrong, you'll want the cash on hand. This type of business has a high liability rating, therefore business insurance will be higher, and all other costs associated will be higher. You'll need a server that can handle the large amount of traffic you'll get, plus you'll want to securely store the data and probably pay a network security expert to make sure it's not vulnerable.

Network uptime, and staff; how do you plan on paying your staff if you don't have any cash reserves?

and let's not forget taxes.....on and on the list of fees ok go....

Actually there are two answers to your original question. First, I need to know which type of "credit card billing company" you mean:
1) An organization like Total Merchant Services that offers merchant accounts, or
2) Company like paysystems which allow you to process credit cards but don't actually have a merchant account. These are typically called aggregators because they aggregate the volume that a bunch of small merchants do and process this through THEIR merchant account.

If you let me know which one you mean, I can tell you the deal (I used to own both types)

Originally posted by khanson
Actually there are two answers to your original question. First, I need to know which type of "credit card billing company" you mean:
1) An organization like Total Merchant Services that offers merchant accounts, or
2) Company like paysystems which allow you to process credit cards but don't actually have a merchant account. These are typically called aggregators because they aggregate the volume that a bunch of small merchants do and process this through THEIR merchant account.

If you let me know which one you mean, I can tell you the deal (I used to own both types)

tell us more...Please

i dont think backing from a bank has anthing to do with this . You need to apply for iso status , and pay craploads of money to visa/mc and the other cc providers around the globe . Not to mention , you'll have to pay even more to intergrate on a banking platform like FDR Type 7 , Vital , or even VISANET . Starting up something like costs upwards to the hundreds of thousands of dollars ..... not to mention there are already like a million honest companies doing a great job at it

yes true but man the fees and the start-up costs
Paysystems takes 2 weeks to post your money in your bank account.

yes true but man the fees and the start-up costs
Paysystems takes 2 weeks to post your money in your bank account.

Focusing on the Total Merchant Services model, they did have to become a registered ISO which involves an intensive review by the sponsoring bank/processor (in their case, Global Payments) and then a cursury review by the associations (V/MC). In order to become a full liability ISO (and have some control over approving merchants and loading these on to the platform) you must be able to show underwriting/risk experience and the infrastructure to support the sales model. With regard to the actual costs - the processor only required a $30K deposit into a reserve. All other "costs" (not sure what case was mentioning) are only billed out when transactions run through the system and are netted out of final settlement to the ISO

I use my own merchant account. I can tell you places like mentioned here providing a service has to charge high percentages or they would be out of business fast. I can image the overhead and man power to run a company that process cards like they do. There again I may be wrong;)

khanson thanx for the explanation!
I mainly started this topic out of curiosity. I had in my mind starting a company like paysystems (aggregators).
If I understood correctly the aggregators open a merchant account in a bank (?) and then they charge their customer'sxcustomer's cards, as if they were buying goods directly from them(aggregators). Correct so far?

Yes - you are on track with what an aggregator does - of course in addition to accepting the charges of their client's customers, they also take on all liability for losses that those transactions represent.

So, if an aggregetor charges 5% on every transaction and his bank charges him, lets say 2.5%, then there is only 2.5% left for him.
You mentioned that:
they also take on all liability for losses that those transactions represent.

Let's take an example:
One client submits to his aggregator a CC billing request. The aggregator forwards the request to his bank. The bank approves the request and transfers the money(-percentage) to the aggregators account. The aggregetor keeps his percentage and forwards the rest to the client.
First question: How long do the aggregetors normally wait until they forward the money to their clients?

Now the owner of the CC rejects the transaction as fraudulent.
Questions: How much will the aggregator have to pay? Can he(aggregator) claim that his client is fully responsible?

Any links where I can find good info?

1) If the aggregator has his master merchant account with a domestic bank (US), the settlement is generally sent within 48 of a transaction posting. If the aggregator is with an offshore bank, settlement may take up to 7 days. The decision on how fast to then send this settlement out to the "client" is up to each company. Some will hold this settlement longer in order to capture more interest on the deposits.
2) In addition to the transaction amount, the aggregator will have to pay a chargeback fee. These can be negotiated as low as $4 per chargeback. Of course, if an account has a high level of chargebacks, Visa and or MasterCard impose their own penalty fees on each chargebacks - these can reach as high as $100 per but generally are not imposed unless the aggregator is exceeding chargebacks equal to 1% of transactions (US) or 2.5% offshore.
2a) In the bank's eyes, it doesn't matter if the aggregaotr has recourse with his clients - the banks contract states that their recourse is directly to the aggregator.