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  • #991074
    anshu
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    Hi All,

    I am planning to develop a mobile application for IOS & Android users. we will act as a middleman and we will be charging seller a commission fee for our services.
    My initial model was –

    Buyer will place an order->we will process->process the payment ->settle the payment in our account->transfer payments after commission to seller

    All the banks say because we dont actually sell the product they cant give us a merchant account facility. without merchant account, i am unable to settle money processed via payment gateway.

    My question – if thats really the case, how does companies like Menulog.com.au do their business. How do they process payments?

    Any help will be appreciated.

    #1179816
    LucasArthur
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    anshu, post: 209641 wrote:
    Hi All,

    I am planning to develop a mobile application for IOS & Android users. we will act as a middleman and we will be charging seller a commission fee for our services.
    My initial model was –

    Buyer will place an order->we will process->process the payment ->settle the payment in our account->transfer payments after commission to seller

    All the banks say because we dont actually sell the product they cant give us a merchant account facility. without merchant account, i am unable to settle money processed via payment gateway.

    My question – if thats really the case, how does companies like Menulog.com.au do their business. How do they process payments?

    Any help will be appreciated.

    Anshu

    This is a common issue in the financial world and merchant facilities come under fire many times.. In fact, look at Taxis, this is another industry that struggles with merchant facilities and banks do not touch due to high fraud and other issues that occur… sorry got distracted…

    Moving on, as you do not offer a ‘product or an actual service’ they will not touch you as the risk of disputed funds increases significantly.. There are some differences between what you wish to offer and menulog, for example, that you may not be seeing – and i do understand why so please dont be offended…

    Its really going to come down to the fact you are not a financial institution although are offering a financial service without being bound by the regulatory bodies. Although this has not been said to you, this may be your bigger hurdle.

    Another will be acting as a middleman in this case is not seen as desirable as there are already many methods out there that offer such a service – be it banks, merchants or others such as paypal and the likes… Trusted brands too…

    Also, your charges will appear on customers (end users) statements as your business name and this can confuse end clients (as you didnt do or provide the service/goods) which can raise an inordinate amount of credit card disputes which will in turn cause the banks a higher administrative cost that they will not want to burden.

    Another important thing to note is that MenuLog IS PROVIDING a service and food… What happens is that you order food from menulogs online menu (as opposed to yourself people arent ordering from you) and you get a charge on your credit card from menulog (trust me my wife uses them.. LOL.. no seriously this is important as they are deemed the provider of the food) and then your food is delivered from one of their partners that you want food from ( who they have an arrangement with to pay them as a customer of the restaurant and not you pay the restaurant)..

    Ultimately it may come down to the fact you are not providing the actual product or service – merchant facilities tend to be between 2 parties and not 3.

    Sorry, got distracted by a client mid typing.. hope all makes sense..

    Cheers
    Jason

    ps. not trying to burst your dream, just look outside the box – maybe someone else has a solution i am unaware of.

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1179817
    Anonymous
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    Hi Anshu,

    I hope that Jason’s comments help to shed some light on the situation for you, and that you’re able to come up with a solution that solves the problem.

    In the meantime, welcome to Flying Solo, and thanks for joining us,
    Jayne

    #1179818
    anshu
    Member
    • Total posts: 4
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    HarryLuke Logistics, post: 209644 wrote:
    Anshu

    Also, your charges will appear on customers (end users) statements as your business name and this can confuse end clients (as you didnt do or provide the service/goods) which can raise an inordinate amount of credit card disputes which will in turn cause the banks a higher administrative cost that they will not want to burden.

    Another important thing to note is that MenuLog IS PROVIDING a service and food… What happens is that you order food from menulogs online menu (as opposed to yourself people arent ordering from you) and you get a charge on your credit card from menulog (trust me my wife uses them.. LOL.. no seriously this is important as they are deemed the provider of the food) and then your food is delivered from one of their partners that you want food from ( who they have an arrangement with to pay them as a customer of the restaurant and not you pay the restaurant)..

    Ultimately it may come down to the fact you are not providing the actual product or service – merchant facilities tend to be between 2 parties and not 3.

    Sorry, got distracted by a client mid typing.. hope all makes sense..

    Cheers
    Jason

    ps. not trying to burst your dream, just look outside the box – maybe someone else has a solution i am unaware of.

    Thanks for your reply. So its all in how you present your business. Instead of saying that I am a middle man, I should have said that we have partner agreements with other businesses who will supply the product but us (as a company) will accept your orders and payments.

    Does that change the scenario from banks perspective even though nothing has changed behind the scenes?

    Sorry I am just trying to understand the whole concept.

    #1179819
    LucasArthur
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    • Total posts: 3,171
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    anshu, post: 209670 wrote:
    Thanks for your reply. So its all in how you present your business. Instead of saying that I am a middle man, I should have said that we have partner agreements with other businesses who will supply the product but us (as a company) will accept your orders and payments.

    Does that change the scenario from banks perspective even though nothing has changed behind the scenes?

    Sorry I am just trying to understand the whole concept.

    Hi Anshu,

    No i do not believe your ‘positioning’ will alter the process behind this.. The shift from the banks mind, potentially, will come from you becoming the ultimate supplier and not a middle man.

    Lets keep it short, if i can, for a moment and refer back to menulog example you used.. THEY ARE THE SUPPLIER.. you buy from MenuLog not from the restaurant. So all charges are menulog, website is menulog, contact details are menulog and so forth..

    If you merely say we have a ‘partner agreement’ in place without altering your sales or ordering channel nothing has changed other than the word ‘partnering’. The clients will still be ordering from your ‘partner’ and not you although charges are coming from you as a ‘middleman’

    Something you may be overlooking, anything to do with finance, credit cards and so forth is very temperamental and any business model that wants merchant facilities and the likes needs to offer a direct physical service or product as themselves…

    Lets go back to menulog again, they are fundamentally a wholesale agent… They take and order themselves and then fulfil the orders with their supply chain… Your model does not appear to run similarly.

    Let me know if that makes a little more sense, although sorry i was not as short as i wanted to be..

    Cheers
    Jason

    ps. once again, dont let it kill your dream.. just tackle it sideways…

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1179820
    anshu
    Member
    • Total posts: 4
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    HarryLuke Logistics, post: 209672 wrote:
    Hi Anshu,

    No i do not believe your ‘positioning’ will alter the process behind this.. The shift from the banks mind, potentially, will come from you becoming the ultimate supplier and not a middle man.

    Lets keep it short, if i can, for a moment and refer back to menulog example you used.. THEY ARE THE SUPPLIER.. you buy from MenuLog not from the restaurant. So all charges are menulog, website is menulog, contact details are menulog and so forth..

    If you merely say we have a ‘partner agreement’ in place without altering your sales or ordering channel nothing has changed other than the word ‘partnering’. The clients will still be ordering from your ‘partner’ and not you although charges are coming from you as a ‘middleman’

    Something you may be overlooking, anything to do with finance, credit cards and so forth is very temperamental and any business model that wants merchant facilities and the likes needs to offer a direct physical service or product as themselves…

    Lets go back to menulog again, they are fundamentally a wholesale agent… They take and order themselves and then fulfil the orders with their supply chain… Your model does not appear to run similarly.

    Let me know if that makes a little more sense, although sorry i was not as short as i wanted to be..

    Cheers
    Jason

    ps. once again, dont let it kill your dream.. just tackle it sideways…

    Thanks Jason. I understand what you are trying to say. It looks like I didn’t explain my business model enough. we will accept the orders on our website, customers will see our name on their bank account statement. However, customer has the option to pick up the end product and they can do it through one of the business that we have agreement with.
    As far as the business model is concerned, I don’t think we are different from menulog and that’s why I mentioned them.
    That’s the reason I am really surprised that how do they do business.

    Uber is another example and I understand that they are really big companies and can have exclusive facilities available to them but they were a startup at one stage too. If its not possible then how did they start.

    Sorry I didn’t mean to offend you or argue but I still cant get my head around.

    #1179821
    LucasArthur
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    Hey Mate,

    Didnt take offence to anything mate.. all good..

    Personally, i have to advise your best rebuttal to anything you have grievances with and require answers from will come from the replies the banks give you.. If they reply with the why nots, within that reply will be your salvation. Ask them why not, how to overturn it and how can it be structured in such a way to offset their concerns.

    And to be really honest, you comment about being the same as MenuLog or Uber is not founded.. Many reasons why, but primarily would come from the assumption that you are making that they are what you and i see from a front end perspective, neither of us (unless you know more than explaining) are understanding the intricacies of said businesses.. MenuLog is the complete provider of the food with a unique proposition nationally to deliver take away food and Uber is as you say a giant attached to GOOGLE (from what i am aware) and unless you also understand how they facilitate the merchant agreement it is an impossible conclusion to draw that you are similar :( sadly to say.. Not being argumentative, its just human nature to assume something is the same but in reality you truly cant make that statement stand unless you know the complete story.

    Its a but like humanity, we think we know what others are thinking although in reality we never do. People will discuss things of interest to them, thinking others also enjoy it although sadly this is not always the case unless you actually ask them…

    Furthermore, i am not aware of your product offering.. this will be another massive piece of information from a forums perspective to actually give you more sound advice…..

    One other comment about the offerings to try and highlight differences, if you are a middleman and are offering a product/service that is not unique nor different in some way to what is largely available on the market at present (eg you are selling washing machines for example) this is not a comparison to a business model that is completely unique in its delivery and forward thinking such as the 2 companies you referenced. And as such, and as they are leaders in the drive of the business, merchants can sometimes be willing to assist the front runners as they want to ride the next trend and not miss their revenues that would end up in a third parties hands should the not move with the times.. Hope that makes sense..

    Again, lots of info.. i could be wrong, i am no expert i am just rational (most of the time)… so its not an objection, just observation.. Key advice, listen to why the merchants have declined you… Ask them the question on how to overcome.. it may be quite insightful..

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1179822
    anshu
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    I agree with you completely. every business is unique and if they are market leader, they already have a credibility attached to their name and we don’t have any goodwill as yet.

    Lets go back to the original issue. How do I get a merchant account? Or are they any payment processors who are not as strict as Big 4s or Securepay.

    #1179823
    LucasArthur
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    anshu, post: 209686 wrote:
    I agree with you completely. every business is unique and if they are market leader, they already have a credibility attached to their name and we don’t have any goodwill as yet.

    Lets go back to the original issue. How do I get a merchant account? Or are they any payment processors who are not as strict as Big 4s or Securepay.

    Anshu,

    Go through the online sales section and there are a few searches re merchants and will bounce back Stripe and others.. There are a few on here, and outside but cant recall the names directly.. Sorry…

    Question is, from a business perspective, if the banks are unwilling to back you is it worth considering why? What is it that they are seeing that is risky as opposed to what you are not seeing? This is not a negative, just thought provocation..

    Hope someone jumps in with alternate suggestions, and sorry if i hijacked this into another direction.. My humblest apologies.

    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1179824
    chrisdahl
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    • Total posts: 10
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    Hi Anshu,

    (Chris from Pin Payments here)

    It comes down to satisfying the payment processor (whether that be a bank or a 3rd party processor) with regards to risk exposure. As others have explained a typical response to this scenario (where you collect funds into your account prior to disbursement) is to decline your application.

    At Pin Payments we’ve worked with a number of merchants to solve this exact problem, and there are a couple of ways we can do that. Last year we launched our Payouts feature (https://pin.net.au/payouts) specifically to support splitting payments, collecting commissions, etc.

    Feel free to shoot an e-mail to us at [email protected] and we’d be happy to find some to time chat. Even if you don’t use our product, happy to shed some more light on this for you.

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