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Thread: HOLDING FUNDS!!!
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04-15-2008, 05:59 PM #1Newbie
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HOLDING FUNDS!!!
Folks: I was reading this today and I can empathize with frontier on this. USA today had an article on Frontier airlines being forced into bankruptcy because 1st data is holding funds for credit card purchases of their tickets.
This has happened to me several times, usually for processing sales over the limit during spikes and surges. Paypal, United Bank and Nova are good for this tactic. I thought it was only the small businesses that were victimized by this, but now, something as big as an airline. They really have businesses over the barrel. I find it apalling that they can have this much power. However, it is in their contract and legally upheld. What's the work around and does any credit card processor not have this power? How many credit card processors would go for an amended contact ,that is not so one-sided as these contracts are today?
thanx
bj
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04-16-2008, 10:39 AM #2Junior Guru
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Holding settlements can be a serious challenge for any business, big or small. And, unfortunately, the situation is often made worse by poor communication / lack of notice from the provider, but as long as the card associations' rules governing chargebacks remain unchanged, you probably won't be seeing too many processors changing that aspect of their merchant processing agreements.
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04-16-2008, 10:48 AM #3Newbie
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Dave; i see you offer a service for high risk. I have GSPAY now. so far so good. the problems that i can see with them is the 10 day trun around for settlement. also the have a $1500 max per transactions. some of my Radar equip runs from 3-5k in price. We have been using wire transfer. If you can help, let me know.
bj
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04-16-2008, 01:43 PM #4WHT Addict
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Yea i have worked for first data and highly recommend to avoid them. they have some very sneaky tactics and unfair even unethical tactics.
One of the most BS tactic they have which they dont want people to know about is approving people who shouldn't be approved then finding someway to terminate their contract so they can collect on early term fees.Last edited by Formpay; 04-16-2008 at 01:47 PM.
strip poker anyone?
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04-16-2008, 04:03 PM #5Newbie
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Most likely the airliner will sue 1st data to try to get some funds release
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04-16-2008, 04:30 PM #6Newbie
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one would think companies like ist data would want businesses to succeed. that is more percentage for them. this doesn't appear to be the case. Making money seems to be secondary to power and control of the customer base. Also it could be fear of NACHA, that drives them. If nacha was to pull off the covers, they might find some real questionable activity. Just think if Paypal was to become federaly regulated. Ah.. the stuff they would find , as we all know they are just one big skimming operation.
bj
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04-16-2008, 04:50 PM #7Junior Guru
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Read this it tell you why they dont want them to succeed and how they make money off of small merchants by doing what they did to frontier. http://www.avadyne.net
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04-16-2008, 04:58 PM #8WHT Addict
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ACS in Motion Inc.
Project Development and Risk Management
www.PaymentGuide.Org | www.ACSinMotion.com
Tel: (514) 739-6444 Toll Free: (877) 730-6444
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04-16-2008, 05:08 PM #9
And there's a PROBLEM with hiding whois info? Of course not. I do it myself. Why? It's a deterrent to spam. When you have a decent number of domains, you are at high risk for getting spammed via 'whois' info (information NOBODY needs to know). Since hiding the information, I've stopped a good deal of email spam, and paper spam, trying to swindle more money from me (ie: register your domain with us).
As far as funds being held, well, that's to be expected. They certainly processed a good bit of data, so the processor had to cover their own tail end.Tom Whiting, WHMCS Guru extraordinaire
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04-16-2008, 05:15 PM #10WHT Addict
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A merchant company has no right to hold that much like that. If you expect your company to hold your funds, i would highly recommend switching.
strip poker anyone?
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04-16-2008, 05:20 PM #11
Oh, yes they do
The 'merchant company' has every right to withhold funds that they think are at a risk for a chargeback. You GIVE them that right when you signup for service with them!
In this case, customers frequently order service months in advance due to discounts, then cancel, despite policies about refunds, and when they're hit with them, they go to the bank, which of course sides with their customer, and starts these procedures.
Thusly, holding funds like this is necessary in cases like this.Tom Whiting, WHMCS Guru extraordinaire
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Check out my WHMCS Addons
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04-16-2008, 05:27 PM #12WHT Addict
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Linux Tech:
You may be right. We have quite a few sites and we hide Whois for some due to spam. Anyways the above site was built with wrong intentions.
Regarding First Data and Frontier:
First Data has huge liability with Frontier and they will do everything in their power to minimize their exposure. What may seem like a huge amount First Data is holding may just be too little to cover the future chargebacks. I am sure both First Data and Frontier have high profile lawyers and financial analysts who are probably keeping themselves quite busy.
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04-16-2008, 10:20 PM #13Newbie
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First data should of been smarter than that. what they have done is expose themeselves on the media and invited the regulators in the front door, no matter who is right and who is wrong. Not only will first data be investigated but every other merchant processor in the USA. It will be interesting. they could of worked out a deal with Frontier privately. Make a reserve or holdback 10%, but not the whole bunch of money. So, I think first data has hosed themselves.
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04-16-2008, 11:21 PM #14CISSP-ISSMP, CISA
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Consider using electronic currencies such as e-Bullion or Liberty Reserve.
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04-16-2008, 11:52 PM #15WHT Addict
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Yes they can legally, but they really have no right to morally even statistically. Do you know what the actual chargeback rate is for airlines? how about refund rate and cancellation rate? it is no were near 45% that FD was holding. How they came up with 45% is way beyond me.
The actual cancellation rate is about 8-11% on airlines and chargeback rate is around 1.2%. How do you justify holding 45%?strip poker anyone?
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04-16-2008, 11:53 PM #16WHT Addict
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04-17-2008, 12:03 AM #17they really have no right to morally even statistically
Morals in business. Yeah, right. In financial institutions no less. Any more, business isn't about 'morals' or 'ethics', or 'doing whats right', it's about kicking your competition's *** and beating their bottom line. That's all it is. I'm not saying it's right, because it's most definitely NOT, but, unfortunately, you will be VERY hard pressed to find an ethical, moral business out there any more.
They have EVERY RIGHT to cover their own tail end. Blaming the processor for something they've done all along is just nothing but a petty excuse.Tom Whiting, WHMCS Guru extraordinaire
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04-17-2008, 05:01 AM #18CISSP-ISSMP, CISA
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04-18-2008, 11:32 AM #19Newbie
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e-gold
How does that work with websites and will the consumer approve of it.
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04-18-2008, 12:18 PM #20WHT Addict
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█ ...comming soon?
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04-18-2008, 09:36 PM #21Web Hosting Guru
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LOL Charge.com company he's referring in that post is no better than First Data. Read this
http://www.nopaypal.com/forums/showt...id=5&tid=12731Amirocms.com
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04-19-2008, 10:21 AM #22Newbie
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leksus: I read that post you are referring to. Also the link that is in the post refers me to 1st data. Is that the company you represent or do you represent another? I am very hesitant to go with 1st data in view of the Frontier airline issue. No matter who is at fault,(and I am sure both parties are), it is real stupid to air these problems on the media. It has probably cause a major stampede away from 1st data. you are right as far as reading the contract agreement. they are all terribly one sided, especially Paypal's, which was ruled unconscianable, (how ever you spell that) by a judge, I believe in georgia. At the end of the day, this whole thing really screws the business owner. Constant communication from processor to merchant can solve these type of things. It looks to me, that communications broke down between the two parties. I am on high alert with credit card processors now, and I am looking for alternative ways to process transactions on the website. Maybe i should get 2 or 3 processors, in case one craps out. However, I think that is against visa/mc rules. Just a guess. If you have any viable solutions, i want to hear about them.
bj