Monthly Archives: September 2013

PayPal to Give Small Businesses Access to Working Capital in Minutes

Online payments company PayPal launched a lending platform today whereby small-business owners can apply for access to capital and be approved in minutes.

Called PayPal Working Capital, the funding tool allows business owners to pay back their loans based on a fixed percentage of sales. For example, if you opt to pay back your loan at a 10 percent rate, and you bring in $500 in total sales one day, $50 goes toward paying off your loan. If you bring in $5,000 in total sales the next day, then $500 goes toward repaying the loan. If you make zero sales on a particular day, you don’t make any payments on your loan.

The other unique aspect of the PayPal capital access product is that borrowers pay a single fixed fee for the loan. The faster a business owner opts to repay the loan, the smaller the fee. Many loan products have multiple, hidden fees associated with late payments, initiation, processing and even early termination fees. The PayPal loan product prides itself on being exceptionally transparent about the entire cost of the loan up front. Continue reading

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With Paylib, French Banks Work Together To Compete With PayPal

CreditCards

 

Three major French banks have worked together on a new payment system for the web called Paylib. With a Paylib account, users will be able to pay on the web using a simple login and password instead of having to enter all their credit card information. The user experience should be similar to paying with your PayPal account, and it will make even more sense on mobile. Multiple ecommerce websites are already on board.

BNP Paribas, Société Générale and La Banque Postale are the three initial banks, but it’s an open standard. They hope that more French banks will join them. In total, 23 million users can already pay using Paylib, compared to 7 million PayPal users in France.

When you first use Paylib, you have to select the credit card to link with your Paylib account. In addition to the login and password, users will have to enter a second code from the companion app on their smartphones. It’s very reminiscent of Google’s two-step verification process.

Paylib has worked with Voyages-sncf.com, Ventesprivees.com, PriceMinister and Leroy Merlin for the service’s launch. As those websites are very popular ecommerce platforms, the partnerships will be a major asset of the initial growth strategy.

While anybody can start processing payments through Paylib, the solution will remain restricted to the French market as only French banks are part of the initiative. One of the incentives for merchants is that the processing fee is lower than PayPal’s processing fee (usually around 3 percent in France).

Working together is the only way that French banks could come up with a compelling alternative to PayPal and soon-to-be-launched Stripe. Yet, French authorities are following Paylib very closely. The service could create antitrust issues.

If Paylib can partner with more banks, it could become a competitive payment processor in France, giving a lot of power to the major French banks.
With Paylib, French Banks Work Together To Compete With PayPal. 2013, September 17. By Roman Dillet. Retrieved from http://techcrunch.com/2013/09/17/with-paylib-french-banks-work-together-to-compete-with-paypal/.

Small business: Best practices for online credit card processing

Introducing a credit card payment option is a great way to enhance customer satisfaction. Most shoppers prefer using credit and debit card when shopping online. In America, people have become more dependent on credit cards.

Thus, for small business owners, integrating credit card processing is a huge advantage over competitors. Using credit cards is convenient and easy for both the business owner and the customer. However, if not correctly implemented, credit card processing could be risky for small businesses.

Needless to say, online credit card processing is highly vulnerable to the illicit acts of cyber criminals. Nevertheless, there are several ways on how entrepreneurs can effectively integrate a credit card payment option with their small businesses. Continue reading

Underreporting of Business Income

The IRS has been reaching out to small businesses that receive income via credit and debit cards inquiring if they are declaring all their business income in an effort to curb what is known as the “underground economy.”

The agency has sent approximately 20,000 Notification of Possible Income Underreporting to businesses requesting an explanation of why credit and debit card sales are a higher percentage of income than sales made by cash or check. I suppose this is an effort to close the tax gap – the difference between what is reported and paid to the IRS and what is actually owed.

The letters are accusatory, in that the first line reads: Your gross receipts may be underreported. This may cause fear and panic even to the most honest business owner.  David Kautter, a professor of taxation at American University’s Kogod School of Business, says it’s reasonable for Uncle Sam to want to close the tax gap.

“The biggest component of the tax gap is underreported cash transactions.” He called the letters a “research project” to help gather data on how to target future audits to determine unreported income.

“Whatever their purpose, it’s going to cause a lot of anxiety and be time consuming for small business owners. It’s disruptive, intimidating and will be expensive for the small businessperson to deal with.”

But don’t fear. Here’s what’s going on: Beginning in 2012, credit card processing companies were required to begin issuing Form 1099-K to participating businesses to declare annual income via credit and debit card payments. The 1099-K is broken down by month for ease in reconciliation with your own records.  Continue reading

Mobile payments study kicks off 2013 research series on consumer payment, banking trends

Mercator Advisory Group has released the first of eight studies in its CustomerMonitor Survey Series 2013 Insight reports — “Mobile Payments 2013: Young Adults and Minorities Take the Lead.” Findings are based on primary research gauging consumer behavior and preferences in regard to various payment methods and banking channels.

The survey included 3,003 consumers in a representative sampling of the U.S. census demographic profile of American adults. Surveys were conducted online between May 28 and June 6.

The inaugural report analyzes the changing demographics of Web-enabled mobile users, and looks at aspects of use, interest and satisfaction with mobile devices in terms of both payment acceptance and payment transactions in-store and online.

As suggested by its title, the study revealed that young adults and minorities are at the forefront of mobile payments in terms of both use and interest.

They are also the most likely of all segments to be mobile-enabled: 75 percent of young adults; 73 percent of Asians; 70 percent of Hispanics; and 64 percent of Blacks own smartphones. This compares with an average of 55 percent smartphone penetration within U.S. adult households overall.  Continue reading