Archive for the 'Third Party Processors' Category

Amazon.com recently announced that they are entering the merchant services arena by offering their own in house payment system. Called Amazon Flexible Payments Service, or Amazon FPS for short, it is designed to be a direct competitor of Paypal and Google Checkout. An advantage it potentially offers over Google Checkout is through Amazon.com’s huge database of customers it already has billing information on file for a large portion of their potential user base. This can mean a quick and easy checkout. Unfortunately, like Google Checkout, your customer will need to go to the Amazon.com website to make payment.

Some of the features they offer include:

• Accept payments three different ways:
  • Credit Card
  • ACH
  • Amazon Payments balance transfer
• Accept one time, multiple, and recurring payments

The fee structure is very similar to Paypal and is listed below:

• For Transactions >= $10:
  • 1.5% + 1¢ for Amazon Payments balance transfers
  • 2.0% + 5¢ for bank account debits
  • 2.9% + 30¢ for credit card
• For Transactions < $10:
  • 1.5% + 1¢ for Amazon Payments balance transfers
  • 2.0% + 5¢ for bank account debits
  • 5.0% + 5¢ for credit card
• For Amazon Payments balance transfers < $0.05:
  • 20% of the transaction amount, with a minimum fee of $0.0025
• Qualified developers can apply for the following monthly volume discounts for credit card transactions:
  • 2.5% + 30¢ per transaction for monthly payment volume from $3,000- $10,000
  • 2.2% + 30¢ per transaction for monthly payment volume from $10,000 - $100,000
  • 1.9% + 30¢ per transaction for monthly payment volume over $100,000

On the surface this new service does not appear to differentiate itself from Google Checkout or Paypal in any meaningful way. It will be interesting to see its uptake by merchants and consumers.

You can read more about Amazon Flexible Payments Service on their website here.

A common question we see asked online is, “What exactly is a Third Party Processor”? Well, a third party processor allows other businesses to share their merchant account. This means the merchants who shares their account doesn’t have to apply with a merchant account provider. They apply directly with the third party processor.

The ramification of this are as follows:

1) You have to follow the rules of the third party processor. Because it is their account and they are responsible for it their rules are tighter then a normal merchant account’s rules. They can shut down your account at any time for any reason. Same goes for holding your funds.

2) Their name appears on your customer’s statements. Because it is their account their name is what will appear.

3) Their rates tend to be higher then a normal merchant account because they have to mark it up to make a profit. But other fees, like monthly fees, may be waived which is a good thing.

4) They tend to accept people that merchant account providers don’t. This includes people with bad credit or high risk products. Merchants who have had their merchant account closed can usually still use a third party processor.

To see how third party processors compare to true merchant accounts check out our article Merchant Account Comparison which compares Paypal, Worldpay, and 2Checkout to a true merchant account and gateway.

Technorati Tags: merchant account, third party processor, high risk, merchant account providers, Worldpay, 2Checkout, Paypal

From Digital Currency Business E-Gold Indicted for Money Laundering and Illegal Money Transmitting

A federal grand jury in Washington, D.C. has indicted two companies operating a digital currency business and their owners on charges of money laundering, conspiracy, and operating an unlicensed money transmitting business, Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney for the District of Columbia Jeffrey A. Taylor announced today.

The four-count indictment, handed down on April 24, 2023 , and unsealed today, charges E‑Gold Ltd; Gold & Silver Reserve, Inc.; and their owners Dr. Douglas L. Jackson, of Satellite Beach, Fla.; Reid A. Jackson, of Melbourne, Fla.; and Barry K. Downey, of Woodbine, Md., each with one count of conspiracy to launder monetary instruments, one count of conspiracy to operate an unlicensed money transmitting business, one count of operating an unlicensed money transmitting business under federal law and one count of money transmission without a license under D.C. law.

Subsequent to the indictment, the Department of Justice also obtained a restraining order on the defendants to prevent the dissipation of assets by the defendants, and 24 seizure warrants on over 58 accounts believed to be property involved in money laundering and operation of an unlicensed money transmitting business. The restraining order does not limit the E‑Gold operation’s ability to use its existing funds to satisfy requests to exchange E-Gold into national currency for customers of non-seized accounts, or its ability to sell precious metals to accomplish the same, once approval has been received.

According to the indictment, E‑Gold’s digital currency, “E‑Gold,” functioned as an alternative payment system and was purportedly backed by stored physical gold. Persons seeking to use the E‑Gold payment system were only required to provide a valid email address to open an E‑Gold account – no other contact information was verified. Once an individual opened an E‑Gold account, he/she could fund the account using any number of exchangers, which converted national currency into E‑Gold. Once open and funded, account holders could access their accounts through the Internet and conduct anonymous transactions with other parties anywhere in the world.

The indictment alleges that E‑Gold has been a highly favored method of payment by operators of investment scams, credit card and identity fraud, and sellers of online child pornography. The indictment alleges that the defendants conducted funds transfers on behalf of their customers, knowing that the funds involved were the proceeds of unlawful activity; namely child exploitation, credit card fraud, and wire (investment) fraud; and thereby violated federal money laundering statutes. The indictment further alleges that the defendants operated the E‑Gold operation without a license in the District of Columbia or any other state, or registering with the federal government, and thereby violated federal and state money transmitting laws. The indictment alleges that this conduct occurred at various times from 1999 through December 2005.

How this indictment will affect the company is unknown. But any merchant currently using E-Gold should consider switching to another processing provider while they sort this out. There is always the possibility they may go bankrupt and/or freeze or hold the funds of their merchants. If this occurs the odds of the merchant getting their money back is very slim.

Yahoo and Paypal have announced that merchants that accept Paypal as a form of payment will have a special shopping cart icon displayed with their listing in Yahoo Sponsored Search results. It will look like this:

This is similar in concept to Google’s display of a special icon in the Adwords listing of merchants who accept Google Checkout as a form of payment. Interestingly enough, the Paypal logo is a shopping cart that looks strikingly similar to the original Google checkout logo before they changed it to is current version.

Technorati Tags: yahoo, Paypal, Google Checkout

CCAvenue, one of the larger third party processors, has lost its ability to process MasterCard credit card payments. At least temporarily. Below is the notification they have sent to their merchants:

Dear Merchant,

For over 5 years, CCAvenue has been striving hard to get you the best of payments facilities and technologies that are available. You may be aware that the payments industry is a rapidly evolving one and there are new developments every day. There have been ups and downs and we have handled many challenges together by supporting each other.

One significant development that has occurred a few days ago is that MasterCard International has revised some of its rules and has implemented a program called the MSP (Member Service Provider) Program across all of Asia, Europe and the Middle East. Due to this development, all third party payment processors like CCAvenue in these regions will have to make certain changes in the work processes and meet certain norms before they can continue to accept MasterCard online. As per MasterCards new rules, the acquiring banks are required to stop the MasterCard payment facility to third party payment service providers with immediate effect till they comply with the new requirements.

Under the new MSP Rules, every sub-merchant has to enter into a tripartite agreement between the sub-merchant, the acquiring bank and ourselves. The MasterCard payouts will be done directly by the acquiring bank to the sub-merchants bank account. The sub-merchants website name will be reflected in the card holders statement and not CCAvenue (as it is currently happening). Please note this process is only for MasterCard and CCAvenue will continue to offer all other payment options and there will be no changes in the payout process for these.

Since the implementation of the MSP Program is going to take time, we regret to say that we are compelled to stop offering the MasterCard payment option for a few weeks. Therefore, as of January 15th, 2023 the MasterCard payment option will not be available on our gateway.

We are deeply aware of the loss to your business due to this action and we can’t say enough about how sorry we are for this. Do remember, as we are your partners, it severely affects our business too. We regret to say that this is entirely out of our hands and beyond our control.

On the way forward, our acquiring banks have already initiated the registration process of CCAvenue as a MSP. We assure you that we are trying our best to get the MasterCard payment option live again as soon as possible. However, as per the feedback from our acquiring banks, the process will take at least a few weeks. We have always believed in transparency and I seek your co-operation and support in complying with the new MasterCard Rules and Bye-laws.

What does this mean? If you are a CCAvenue user you no longer can accept MasterCard payments. As MasterCard is the second most popular credit card this can have a serious impact on your business. Assuming they do intend to do what is necessary to become MasterCard compliant again, you should find an alternative form of processing until they can accept MasterCard once more.

Technorati Tags: MasterCard, CCAvenue, Third Party Processor, MSP