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Nov 11th, 2008
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Making transactions on behalf of other businesses

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Hi there -- hoping this community can help.

We are starting a business that provides e-commerce services to small businesses. The businesses we are targeting are extremely small and have little to no online savvy.

Most shopping carts online require small businesses to register for a merchant account and a payment gateway to transact. We are considering offering individual shopping carts to these merchants, but just using our merchant account and payment gateway to transact on behalf of the small business.

Then, on a regular schedule (weekly or biweekly), we would transfer the accumulated value of the transaction into the individual small business' bank account, minus our transaction fees.

Couple of questions about this:
1. Are there legal or tax implications to making transactions on behalf of small businesses like this?
2. Is there a software package or API out there that makes it easy to automate transferring money between accounts, en masse, on a semi-regular basis?

Thanks so much for any help you can provide!
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ksolaro is offline Offline
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Nov 19th, 2008
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Re: Making transactions on behalf of other businesses

Don't even think about doing this.

You would be the responsible party on the transaction, very likely owe all the taxes, and its just bad practice to get into.

David
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nimitz1061 is offline Offline
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Jan 28th, 2009
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Re: Making transactions on behalf of other businesses

You would be better off becoming a reseller for a reputable merchant account provider. Then instead of just reselling accounts, you could actually add value by setting up the form and payment system for your users.

I wouldn't get into processing the payments yourself if I were you. It is too risky and it might even be against PCI rules.
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vectro is offline Offline
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Feb 3rd, 2009
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Re: Making transactions on behalf of other businesses

Sounds like a great idea to me. I would take it a step further and castrate all of them too, this way they won't be found in bed with inters either.

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freebee is offline Offline
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Feb 4th, 2009
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Re: Making transactions on behalf of other businesses

Well it has nothing to do with PCI regulations but rather with the Visa and Mastercard regulations, you are not in any way allowed to do any aggregated processing also called 3rd party processing if you haven't got sponsored by a bank!

You Merchant Account will be terminated once they catch you, your money will be frozen and you will face huge penalties!

It is indeed a good business idea, many have tried it and still do it, since there is a lot of money in it, in fact companies like ccbill and epoch systems are multimillion corporations while doing it, however, this is another story.

Don’t do it, get your own merchant account for your own website and stick to that.
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fionix is offline Offline
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Feb 11th, 2009
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Re: Making transactions on behalf of other businesses

Click to Expand / Collapse  Quote originally posted by vectro ...
You would be better off becoming a reseller for a reputable merchant account provider. Then instead of just reselling accounts, you could actually add value by setting up the form and payment system for your users.

I wouldn't get into processing the payments yourself if I were you. It is too risky and it might even be against PCI rules.
I think vectro is right, it can get you into a big trouble. Being a reseller would be a good option.
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Robdale is offline Offline
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Feb 18th, 2009
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Re: Making transactions on behalf of other businesses

i think the business is very risky due to tax reasons.
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Jen0608 is offline Offline
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Feb 21st, 2009
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Re: Making transactions on behalf of other businesses

I think vectro has given a good idea to resell the merchant account that will legalize the transaction.
Last edited by bobchrist; Feb 21st, 2009 at 8:17 am.
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bobchrist is offline Offline
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This thread is more than three months old

No one has posted to this discussion for at least three months. Please let old threads die and do not reply to them unless you feel you have something new and valuable to contribute that absolutely must be added to make the discussion complete. Otherwise, please start a new thread in this forum instead.
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