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  1. #1
    Join Date
    Dec 2003

    Need advice and rules question

    Im new on WHT, and yes Im new too in Business i need advice in Rules, (My country: It's blacklist by Paypal *i shame on this*)

    Im planning starting a webpage that gave free eStore to the member, Where right here member (Seller) cannot receive the money from the user Directly (paypal/cheque/creditcard/etc). All of the money is send to eStore(example) account. and seller got charge xxx% of their Transaction as Transaction fee.

    Why i start this business? here is several reason:
    - User dont trust Seller
    example case: bidding on eBay, Win Bid, Transfer Money, All it's okay, but item never send.

    - Seller dont trust User
    Well... you know...

    - Banking Problem
    Currently bank in Indonesia wont allow you Login via Script or other Automation tool like that. So right here 1x24 is the Fastest way to process our Transaction

    - Not everyone Connected to inet
    So not everyone can receive "alert" there is an Invoice waiting.

    But too bad, im not Business-Man, i dont know rule about Holding Money, please Gimme advice about the rule, and will this eStore Working?

    toModerator: Please move this Post to the right Place if im in wrong topic

  2. #2
    Join Date
    Jul 2003
    Castle Pines, CO
    It sounds like you want to do third party processing, e.g. you want to take money for one person & then give it to the other person. Starting this type of business is very difficult because Visa/Mastercard frown on it.

    When a processor gets a new merchant account - their value goes up by about $2,000 (approximate). So let's take that into consideration as well. You found a processor & their value just went up $2,000. Now if you sign up ten merchants under you to use your merchant agreement - you just took away $20.000 from a processor's value.

    Now you could do what is called factoring, which is very similar to a third party processing & which is usually against your merchant agreement. “Factoring” means letting someone use your merchant account (and/or point-of-sale device) to process transactions for his or her business. Merchants run the risk of losing their Merchant Account when they agree to factor for another party. This type of transaction processing violates Visa and MasterCard guidelines. The greatest problem with factoring is that cardholders may not recognize the charges on their billing statements and, although you have no control over what services are being provided, you will be liable for any chargebacks. Remember: It’s your merchant account, and you are liable for all sales that are processed. Factoring is a risk merchants should not take.

  3. #3
    Join Date
    Aug 2003
    Chesapeake, VA
    Factoring is also illegal in many U.S. states and certain countries.

    It is also grounds to be put on the TMF/MATCH list which means that you will effectively be blacklisted when you try to setup another merchant account under the same company legal, DBA or principal name.

    So - definitely something that you'll want to avoid doing. There is a temptation on the part of some merchants to do it since it seems so "easy" but there is a huge cost and a huge liability for doing so.

    There are "payment aggregator" companies like PayPal, etc. who basically do a form of factoring, per se, but it is done under a different classification which is considered "ok" at least in certain cases.

    My advice is to be extremely careful and not to get involved in that kind of business model unless you really have a strong understanding of risk management as this is extremely important. - Trusted Merchant Account Solutions since 1998
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