Pay Systems

[poorme]

Why do Pay Systems hold responsibilty for matrix sites or other kind of ponzi?

[ebanana]

Most pay companies did not accept matrix websites, there were only a select few.

Remember that PayRequest was created SPECIFICALLY for matrix websites. Other merchant companies regarded matrix-websites as 'high-risk', so they either denied a site's application, or charged an excessive fee schedule (~10%) to provide a matrix site with merchant credit card services.

But as you have seen, it seems that this has been a losing business for pay companies.

[damion]

A losing business for pay companies?
I do not know about you, but I see Paysystems holding quite a bit of money making a lot of interest off it. Unless the lawsuit prevails against them, this has been one of the best business deals they ever did.
Let's see:
Process orders, hold 10% chargeback (holdback fee), charge 5-6% fees, and then on top of that - hold all the money they owe and make interest off that too...

The pay companies are sitting pretty right now. Their attorneys are (more than likely) on salary or prepaid for this type of work so they are making a bundle right now because they have an excuse to hold the money.

Damion

[hurley9192]

correct, the pay processors are making a bunch of money because they aren't assuming any risk on this. They won't grant a refund unless they withhold money from the seller and are making a killing on interest probably. That's assuming they have the right money managers.

[Arzel]

I seriously doubt that they are making much interest on the money that they are holding. With current interest rates around 2% and probably less than a million dollars being held a best case scenario would see them making about $1500 to $2000 a month at the most off interest on the money being held.

The merchants are just covering themselves.

[poorme]

If pay company lost the case as well, they can use those interest to pay customers.

[damion]

The going rate on large sums of money (which is how most banks invest) can be anywhere from 5.75% - 12.5% and possibly more on high-risk stocks which I am unsure how risky Paysystems is with the money.
I know they are holding (total) well over $400,000 just from the merchants I talked to (including what they are holding from EZ Expo).
Assuming these rates the following can be deduced:
@ 5.75% = $1,917 per month
@ 12.5% = $4,167 per month

These figures are done by taking total and multiplying by the percentage then dividing by 12 (for months).

I do not care what business you are - this is a good bit of money per month when you figure it is just free money gained in interest. They have to do no work for it other than reply to business owners telling them they will not get it until a court tells them to and email customers back and tell them they are not getting it either.

I would not mind running a business that I had to do nothing on and gain an extra $50,000 a year - must be nice.


Damion

[Arzel]

You should really check with a bank before making statements like that.

The best rate I found was 2.25% on amounts above $50,000. Plus the pay merchants can not be risky with that money, it is not theirs to be risky with. They are required to have liquid assests to cover their liabilities just like a bank. No credit card company would do business with them otherwise. The riskiest investment they could make would probably be a high yield CD, which still would be in the 2.5% range given the current interest rates.

I challenge you to show rates above 5%


edit-

After looking some more I did see some banks with rates up to 3.67%, but that was for a 5 year CD. The 6 month to 1 year CD which is what the pay merchance would be looking at is closer to 1.5%

[damion]

Check higher minimums. If Paysystems is holding just $400,000 in the few people I have talked to, imagine what they are holding total.

I have a friend that is an investment banker and while I do not get into it much he has told me that rates are as high as 12.5% on low risk investments of $5,000,000 or more which I am sure Paysystems has this much to invest at any one time based on numbers I have seen and a little deductive reasoning. I have not done any formal research on the net worth of Paysystems, but I, a gambling man, would be willing to bet that they have a minimum of $5,000,000 to invest which would put them in one of the top brackets of low risk investments.

I am not an investment banker myself nor do I deal in the stock market. I do not know much about investing other than what my friend (Jon) tells me. His advice for me - set up an IRA for retirement and buy CD's - generally 5 year bonds are the best for someone who does not plan on taking the money out prematurely.

Anyways - not trying to preach or anything - just thought I would throw my 2 cents in. Not a topic I know much about, more ranting from my slight knowledge based on the figures I have received.

Damion

[ebanana]

I'm not arguing that the pay companies are hurting for holding all the funds, if they don't refund this money to the customers, then they even have a right to retain that money, but depending on the outcome of the lawsuit, should the pay companies become liable for offering merchant services to matrix websites, that could have a devastating effect.

For startup matrix sites in the May-June timeframe, there should not be much of a problem with Ginix. They never released any funds to the sites, so they hold all purchases, in addition to earning interest on this money. I'm assuming that merchant services such as Ginix act as a middleman, and actually use a bank merchant to provide their own merchant services. So even if they are paying the standard 2.9%, with an interest rate of even 3.5% they are earning a good 'bonus' on top of all those held funds.

We'll see how these merchant companies handle refunds. Will they be willing to give up the extra 6-7% in processing fees they charged the matrix site for services, or will they be too greedy to give up that profit and stick the customers with the bill.

[damion]

From what we have seen of these merchant accounts, what do you think?
Greed...

There is no way the merchants will give up any portion of their money unless instructed to do so by a legal entity - period.

Damion

[poorme]

The pay companies possibly quotes that they have no idea what is going on. When they know it, they also help freezes fund.
They may also even blame the customers who do not dipute the charge in time.
Actually for me, I did exactly not know that Paypal has a dispute charge policy.
Poor me!

Anybody know about any ponzi scheme that the Pay company also loses the case?

Paypal with gambling companies will end soon? I heard just the headline news.

[AzYnOrCHiD]

Hey guys...

I'm extremely new here and now that a site that i invested in just kinda up and left without a trace, i'm trying to get my money back from its processor, Paysystems. The site, www.ljsendoftherainbow.com, has shut down about a month ago. Does anyone know if the money is being retained by paysystems? Also, what is a good excuse to ask for a refund? I have about $1250 invested in it, but I do have the receipts to try to get it all back if I ask for a refund for all of them.

Any advice would be greatly appreciated. Thanks guys!
~ Connie

[poorme]

I sent you the answer.
I think we should have a "way to get refund" included in the main menu for those new members.

Do you guy think it is possible for the lawsuit to win over the pay company?

[MaxPower]

AzYnOrCHiD...

No excuses are needed. Explain the exact problem. However, be sure to mention that you believe it is a scam, and also be sure to mention that you are aware of the lawsuit. Try through the website a few times. But be sure to CALL THEM! (this is very important). Also, they do have a six month policy... but you can get around that.;)