Forum Moderators: buckworks
These will be card not present; however, users will be required to log in to site with SSN#, address and user/pass.
Thanks for any advice...
Where the credit card companies get a little touchy is when the customer uses the card and gets cash or a cash equivalent back in return, in a transaction that's not a cash advance.
users will be required to log in to site with SSN#, address
Off topic. This line implies the storage of these pieces of personal information, which are two very improtant parts of ID theft. If this is what you are considering, I hope that your server is very, very secure.
Personally, I would have grave doubts about supplying any ecommerce site my SSN, and this would only be magnified if my SSN were part of a log in routine.
But then, I have been through the joys of ID theft.
WBF
Credit card funds are not "guaranteed" until 6 months after the date of purchase (read your merchant agreement if you don't believe me). You may get the money in your bank account 2 or 3 days after the purchase but the card-issuing bank still has the right to reverse the charge and take the money back for up to 180 days.
Since collections agencies often deal with people going through a bankruptcy who elected to continue to pay on some of their debt instead of charging off everything, credit card acceptance for them is a really BAD move. Lets say I had a loan through Company A that had gone to collections but I wanted to settle it instead of having it charged off during a bankruptcy. I could pay for this loan with a credit card, receive the statement saying the loan was satisfied, and then charge-off the credit card I just used as part of my bankruptcy.
When that happens, the credit card company will take the money back from the person I paid with the card (the bank would initiate the charge-back). I still have the "satisfied" letter in my hand, the collections agency has signed off on the account, and there is NOTHING they can do about it.
They're screwed ... the credit card company took their money back, and if the collections agency ever tried to re-open the item on my credit report they would get slapped with a fine by the credit bureaus once I faxed over my letter from them saying the loan is satisfied. This is a loop hole that happened quite frequently before collections agencies stopped accepting credit cards. I've never personally dealt with a collections agency (and hope I never have to) but a family friend used to own one and prior to that had worked in upper management for a few others.
I'm sure there may be a few agencies out there that still take credit cards, but they are quickly declining - I wouldn't expect any long term business out of this idea. You also ABSOLUTELY DO NOT want to middle-man the transaction for them or you will get screwed over and over and over. I mean, the very nature of who you're dealing with should be enough of a deterrent - you are dealing with people who either CAN'T or AVOID paying their bills. That's a market I want to stay far away from.
However, the point is well taken on the potential risks of the CC processing given the customer pool. We will be insisting on a large reserve fund to cover chargebacks and treating this as "high-risk"...probably 10% rolling reserve. And, we will have auth to debit collection agency account to cover payouts to customers and cb's/refunds to the banks.
If anyone sees other risks, please feel free to list...always interested in learning what we don't have covered/thought through.
As far as factoring - there is a fine line & it depends on your business model. If the company that has not been paid sells you the debt - then no, it does not seem like it would be factoring. We actually set something up similiar to this recently for a client & so far there has been no problems.
Corey
I work for a UK housing association and we take CC from people often just before their eviction is due, quite often while Im at the door with teh baliff.
We have never had a charge back on a CC.
We did debate the moral implications of swopping one debt i.e rent arrears for another i.e credit card debt but it was agreed that while we'll put you on teh street for non payment CC dont.
