Subject: Re: payment aggregator service?
From: "Russell Nelson" <nelson@CRYNWR.COM>
Date: Mon, 07 Feb 1994 21:39:29 EST

On Mon, 7 Feb 94 12:37:24 PDT, "L. Peter Deutsch" <ghost@ALADDIN.COM> wrote:
> Re <2d567363.crynwr@crynwr.com>:
> 
> > I'm thinking that I could start a business to aggregate (collect
> > together) small payments.
> 
> I looked into having a bank provide this service for customers paying with
> credit cards.

Oh yes, credit cards.  You can't factor with credit cards.  The
person doing the credit card billing MUST be providing the service or
goods.  I'm told that people who factor get blacklisted for life.
Factoring competes with the credit card company itself. Plus, credit
cards are somewhere between hard and impossible to get for the
typical free software developer.  Plus, the "discount" (their cut)
for small amounts (<$15) goes sky-high.

900 numbers are also a joke for the small software house.  You're
lucky if you get to keep half of the take even IF you can find a
provider that wants to talk to you.  Most of them are too busy
selling sex/psychic/sports lines.

> Their charges are very high.  I don't remember the exact numbers,
> but as I recall, a company doing only a few hundred dollars' worth
> of business a month in units of $30 per transaction (this was my
> situation) would wind up paying the bank about 15-20%.  And they
> (allegedly) have economies of scale.

Banks also have to impress people with their wealth and stability if
they expect their customers to trust them with their life savings.
TinyPay can operate on a very low overhead, as a part-time business.

> Using e-mail to report transactions seems to me to have all the problems
> of fraud that other EFT mechanisms do, and more.  At the very least, I
> would think some good form of digital signature would be necessary, and
> transactions would have to be signed by both the provider *and* the
> client.  This might make the whole thing too awkward to be feasible.

I agree.  Whenever two parties have a large enough amount to
transfer, they can just do the purchase-order/invoice/check thing.
TinyPay only makes sense for small, pocket change transactions, in
which the honor system should work.

> I know it would make it infeasible for my business of supplying
> Ghostscript copies on diskette, since nearly all of the orders I
> receive are one-time-only orders from people who don't have e-mail.

I could probably work with clients by FAX.

> It might, however, help my consulting business, if it let me
> invoice people for time spent on their work with less bookkeeping
> on my part.

Right.  The idea is to cover transactions which aren't worth billing
on their own, but in the aggregate, form a day's pay.

Specifically, I'm thinking of the Linux support market.  A client
might work with a dozen people in the course of a month.  The system
is complicated enough that no one person could be expected to know
everything.  Plus, if you can talk to the author of a package (and
make it worth his while), you can get your question answered quickly,
efficiently, and cheaply.

-- 
-russ <nelson@crynwr.com>      ftp.msen.com:pub/vendor/crynwr/crynwr.wav
Crynwr Software   | Crynwr Software sells packet driver support.
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