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Mastercard Cuts Off Third Party Transactions
strredwolf writes "Mastercard has cut out third parties from charging on behalf of merchants. This affects folks paying their auctions and goods via Paypal, Yahoo! Paydirect, and potentially ebay's Billpoint. It may also affect Paypal's Mastercard-backed Debit Card, but there's no word from Paypal as far as I can tell." Word has it paypal is trying to negotiate a side deal with Mastercard.
I tend to believe her about this sort of thing, I'm not too worried. They're just moving for some more control.
Cheers,
Backov
In the law there is no overlap between theft and copyright infringement whatsoever.
OMG!!! What will we do??? Where will go??? Taco, does Slashdot accept MS Passport now that it's a gov't ID? :-P
^_^
Sounds like Master Card is hurting, and is trying to drum up some more business or something to cover the nut.
The information doesn't seem to have made their press release archive yet
"It is a greater offense to steal men's labor, than their clothes"
Note they are not "cut off" until May 1...
Anyways... Mastercards sucks... All the CC companies don't seem to care about the merchant at all.. Since internet transactions don't have a signature, there is little recourse for the merchant to do anything if a customer disputes a purchase, or is it easy to determine if a card is stolen in the first place. The whole system needs to be overhauled, but they make more money from chargebacks, so they aren't in any hurry...
Well, apparently it's a move to stop porn and gambling sites from committing credit fraud. Mastercard's attempt is a bit ham-handed (the true sign of an upper management decision). on a sidenote: I haven't been able to use paypal for years. I lost my password. They won't respond to my e-mails. C'est la vie.
With today's "everywhere accepts every card" world, the only 2 reasons I can think of to use any certain card are: convenience and APR. I don't see how inconveniencing most of Mastercard's internet-using customers is going to help their bottom line.
My blog can kick your blog's ass
So paypal cant'just accept a proxy transaction for someone...
but can I simply deposit money in my paypal account?
See, that's a business transaction between me & paypal, not between me and a merchant, which is how it SHOULD be.
Otherwise you get weird things happening, where MC can't deal with the merchant directly.
Remember, you have to be a bank to issue a debit card. And it's been established PayPal isn't a bank -- which is exactly why, if you turn over your PayPal credit card, it isn't issued by PayPal.
It's issued through a bank, and they deal with MasterCard. It's basically just another branded card, like a baseball Visa, or a leopard print Discover, or a Star Trek mastercard. Major League Baseball, forest animals, or Paramount don't manage your money -- the bank issuing the card does.
In fact, that card isn't even issued to you. It's like a business card. From the back: This card issued to X.com, through Bank One, Indiana, NA, pursuant to a license from MasterCard International.
And the "license from MasterCard International" has nothing to do with the recipient, but the bank offering the card. They have to be licensed to use the logo and the network -- about the only card you won't see that disclaimer on is an AmEx, because they issue their cards directly.
A company like Paypal, on the other hand, runs a sort of 'virtual currency' service, which is a true aggregator and a factor on the sellers side as well.
/. who like the service. It's convenient to be able to send money across the country without a wire service, and it's even convienient enough to send money to a friend that's buying me a theatre ticket. But usually those are small enough to just transfer it out of my bank account, for larger e-bay purchases I use a credit card and so this seems to be aimed mostly at micro-retailers. In NYC those are the ones that won't accept credit cards for purchases under $20 cuz they are charged $1 or $2 per transaction from CCBill type services, I'm sure things are similar elsewhere.
So they are just trying to get a cut of PayPal?
I'm prolly one of the few
The nice part about paypal is it lets you collect money without becoming a "merchant". Essentially, if someone wants to send $100 through paypal, they can use a mastercard and you won't have to sign a contract with various merchant services agencies to collect that money.
What I see: Mastercard could make a killing by cutting out the middleman (PayPal) and starting a new "personal merchant" program of sorts. Now, you can use your Mastercard Auctionman account to collect money from anyone around the world!
Makes sense....
Let's not forget that EVERY SINGLE porn site in existence uses a third party for billing. That is why the name on your credit card statement is always something like "California Billing". This means no more mastercard for porn sites at all. That will kill 50% of thier business. Porn sites probably make up the largest percent of online sales, so this doesn't bode well for e-commerce in general.
- This is not definite yet until May 1. PayPal, eBay, etc may be able to negotiate - as it says in the article
- This does not in any way affect any debit cards. Period.
DVD : $15
3 CD's: $35
Tickets for concert: $85
Unable to buy the stuff online with my mastercard........ PRICELESS!
You know who I think is crazy? All my ex-girlfriends!
I went and listened to what Mastercard had to say on the subject at the ETA conference in Orlando last week.
There is a very blurry line here for what they call aggregators. On the one hand they do not consider Ticket Master and Amazon aggregators but they do consider us to be. When asked why, it was basically no comment. At some point they may have to choose.
What they did make very clear is that they want to retain competitiveness with Visa. The adult industry, between top players mentioned in a previous post, process in excess of $1.2b every year not including Paypal. That kind of money can produce a lot of pursuading I can assure you.
What I can also tell you is that Mastercard is being very cooperative in finding a solution with all these players and we are confident of finding a solution. Certainly nothing drastic is happening for quite a while.
Robert
WebsiteBilling.com
Do we know that this is going to affect Kagi? (serious question)
~REZ~ #43301. Who'd fake being me anyway?
There's a longer version of the article at Yahoo (longer than the one on USA Today's own site - weird). There's a statement from MasterCard that I don't understand. Quoting the (longer) article:
I don't know how MasterCard would know the difference. What about the transaction would indicate to them who the PayPal user is and whether that user is selling things on an ongoing basis?
Maybe they are referring to the fact that you need a Business account or Premierre personal account on PayPal to accept credit card payment?
<sig>Guvf vf abg n frperg zrffntr
This has been prohibited for as long as I've had my merchant account (over 12 years). It's called "factoring", and it's there to prevent account kiting schemes among other nasty types of merchant fraud.
About time the CC companies started enforcing the policies they make every other merchant abide by, yet turn a blind eye when it comes to online transactions.
And thus alienate the millions of banks and financial services companies that rely on selling (expensive) merchant accounts for their very livelihood.
This business is multi-tiered, just like the alcohol-distribution business. You've got the Big Four at the top (Visa, Mastercard, Amex, Discover), the merchant account companies, the banks (who sometimes double as the merchant account company), and finally the merchant. You scratch my back, I'll scratch yours.
Intercarve Networks, LLC
Paypal currently has several thousand dollars of mine tied under a 'restriction', when all I tried to do was transfer the money from my account to one of my familly members. This worked perfectly with a small amount of money, but the larger amount has caused me extreme grief. Paypal has had the money for a week now, and they refuse to return it to the original account (mine), even though I have jumped through all the hoops they set out for me - some of them several times. They have sent me on a wild goose chase of busy fax machines and even busier phone numbers, so that I can 'appeal' their 'restriction' of my funds. They requested documentation be sent by fax, to prove I am the owner of the account, and I did - three times. Dozens of emails went unanswered. Finally one email arrived informing me that my case would be forwarded to the 'appeals' department within 48 hours. No word on how long it would stay there. In the meantime, Paypal has my money, and is collecting interest on it.
I believe that Paypal is intentionally going slow, and that much of the procedure they have imposed on me is merely a pretext to allow them to keep my money for a longer period, and collect interest on it. This is done under the guise of fraud protection, but I ask you, what harm would there ever be in returning money to its original owner, even if there was some suspicion that the money was not in fact transferred by the original owner. (In my case of course it was.) They collect the profits while I wonder if I will ever see my money again. It does not help to know that Paypal is not regulated as a bank, in fact, not regulated at all.
Will Paypal compensate me for my time and expense in retrieving my money? Will they ever give me my money back? You tell me. I do not know. At this point, I would like to sue Paypal, if I could figure out how to do it. Unfortunately, I am not a U.S. citizen, and so I can not join one of the class action suits currently in progress against Paypal.
I have only one more thing to say at this point: do not use Paypal.
Life's a bitch but somebody's gotta do it.
Having been the victim of credit card fraud, I personally think that this will be a "good thing".
I tried paypal for a few transactions then closed my account when I realized they have an uncontrolled access the my $$$.
So as far as I am concerned, Paypal is insecure, uncontrollable service and should be restricted from doing bussiness by Mastercard (which by the way has contractual aggrements to protect me and laws enacted to regulate their bussiness).
Money Orders still work. Just a bit slower.
Chris
I guess I don't understand why the established companies that are under threat by a new way of doing business don't offer those services themselves instead of trying to fight them.
Take the RIAA companies for example. If they made their own "Napster" that didn't suck (and didn't cost an arm and a leg for very little content), they would be in like Flynn. The same goes for MasterCard, Visa and the like. If they created their own "PayPal" that didn't suck, they would be ahead of the game because they're already established.Frankly, I'd rather use MasterCard's "PayPal" rather than PayPal because we all know that PayPal is kinda shady.
Speak truth to power.
As soon as I learned of paypal around 1998, I instantly saw the possibilities of kiting. Just transfer $1000 to a friend that has agreed to give you $990 of it back to you and keep the $10 for themselves, bam, instant cash advance, without the associated fees and lack of grace period. You could string up tons of interest free debt if you played your cards right doing that. I believe it's also illegal, so don't try it.
I've had enough abrasive sigs. Kittens are cute and fuzzy.
Right in the middle of a recession, lets beat up millions of small businesses! What a great idea! And because they're all working 17 hour days to find customers, they won't have time to do anything about it! Fantastic!
Hear that Congress? They just cut the legs out from under half the market for the companies that are going to put most of the unemployed people in this country back to work.
The big businesses win, and the small businesses pay. What a surprise.
I've about had it with the "we're only trying to prevent fraud and abuse" line. NEWSFLASH: There will ALWAYS be fraud. This is just an excuse to screw over customers and merchants while grabbing at more money and control.
\documentclass{letter}
\begin{document}
\address{Robert G. Ristroph \\
4533 Avenue A \#208 \\ ( no longer my real address, don't write me here)
Austin, TX 78751 }
\signature{Robert G. Ristroph}
\begin{letter}{ U.S. Bank National Association N.D. \\
P.O. Box 6300 \\
Fargo, ND 58125-6300 }
\opening{Dear Sir or Madam,}
I read with some interest an unsigned note appearing in a bill for my VISA card (Account No. 4190 0043 1516 9544) (don't worry, it's not a valid account anymore!) on February 7th, 2001. The note is titled in large letters ``IMPORTANT CHANGES TO THE CARDHOLDER AGREEMENT GOVERNING YOUR ACCOUNT ISSUED BY U.S. BANK NATIONAL ASSOCIATION ND''. The note states that the late payment fee is \$27.00 the first two times inside any twelve months, and \$35.00 for additional late payments. It also states the following, which I quote in full:
\begin{quote}
Illegal Purchases:
Your card must not be used for any unlawful purpose (for example, funding any account that is set up to facilitate online gambling). You agree that you will not use your card or account for any transaction that is illegal under applicable law.
\end{quote}
I don't want to disagree with this and thus cancel my account. Rather, I would like to agree with it and ask for the following clarifications:
\begin{enumerate}
\item Does the sentence ``Your card must not be used for any unlawful purpose (for example, funding any account that is set up to facilitate online gambling)'' mean that you are giving me legal advice that ``facilitating online gambling'' is against the law in my jurisdiction (or any other) ?
\item Is U.S. Bank National Association ND a law enforcement organization, a representative of a law enforcement organization, or empowered with any law enforcement powers ?
\item May I use this card and account to purchase insurance online ?
\end{enumerate}
I also read with intense interest the additional printing on the reverse side:
\begin{quote}
IMPORTANT CHANGES TO YOUR AGREEMENT
If you do not agree to the changes in terms, \emph{you must notify us in writing within 25 days of the effective date.} If you notify us that you do not agree to the new terms, your account will be closed but \emph{your balance may be paid off in full or under the terms of your existing Cardholder Agreement.}
If you do not notify us, you will have agreed to the these changes in this notice. By using your account after the effective date, you will have accepted the new terms, even if the notification period has not expired.
\end{quote}
I find it interesting that we can amend our agreement and that failure to object or use of the card constitutes agreement to the amendment. I am hereby notifying you of the following changes to our agreement, effective April 25:
\begin{enumerate}
\item[Illegal Activity] Reciprocal to the new terms you instituted that restrict me from using the Card Account for illegal activity such as online gambling, I restrict you by these new terms from using any moneys I pay to you for any illegal activity, including but not limited to bribery, undisclosed compensation of corporate officers, illegal tax avoidance schemes, illegal campaign contributions, payments to illegally hired workers, or any expenditure unproperly reported in your SEC filings.
\item[Account Limit] The account limit on this card is now set to \$200,000. This includes merchant purchases as well as cash advances.
\item[Yearly Interest] The yearly compounded interest on the account is now two percent.
\item[Minimum Payment] The minimum payment will never exceed \$1,500 regardless of the balance.
\item[Disclosure of Account Information] U.S. Bank Association ND will not disclose any information on this account, including but not limited to my name, social security number, address, purchasing history, or other account activity, to anyone, unless forced to disclose the information by a court order or search warrant; and should U.S. Bank National Association ND have to disclose such information, they will promptly notify me of the information revealed and the party receiving the information.
\end{enumerate}
If you do not agree to these terms, you must notify me within 25 days of the effective date (that is, 25 days after April 25, 2001). If you notify me that you do not agree to the new terms, the account will be closed, under the terms of the old agreement. If you do not notify me, you will have agreed to the these changes in this notice. By using the account (accepting a charge I make) after the effective date, you will have accepted these terms, even if the notification period has not expired.
\closing{Sincerely,}
\end{letter}
\end{document}
After I sent those guys this polite letter, you know what happened ? I got a note from them saying they were canceling my account "at your request" ! I think it is quite plain I didn't want my account to be canceled at all, and it was THEIR wish not to be bound by my new terms that lead to them canceling our aggreement.
As a VISA patron, what are your thoughts on these revelations ? I want to hear your opinion.
I agree that this move by Mastercard sucks but my neighbor happens to be a VP for them. He said it had to do with the number of charge backs they have been getting. Also, Mastercard is officially a non-profit corporation. Every dime they take in is spent within the fiscal year. I used to be a consultant at Mastercard and they were constantly starting up new software projects and doing charity promotions to insure that all the funds were spent Unfortunatly, the down turn in the economy has currtailed their efforts a bit. However, look at their website and check around. You'll see that they are a non-profit.
Regulating who should be given a merchant account and who shouldn't is crazy. They are in the business (Mastercard) to MAKE MONEY. If you force them to support everyone, then all that will happen is ALL Merchant rates will go up. For some small companies, they pay 7% to the merchant. For large companies, they pay 1.5%. Why is this? Because the large companies have a habit of getting customers who don't dispute their bills often, and don't give major headaches to the merchants account companies.
I am a small business owner. I pay more for my merchant account than I would if I collected money through paypal. I probably only collect $5000 a year through my merchant account. I got the account because I KNEW the merchant account companies eventually would do this. If you want to be in business, its not that hard to get a merchant account. Have a bank account for a year, with a positive balance. Have decent credit. Have a business plan. Go get merchant account.
This is NOTHING about big vs. small business. Those big businesses were once small also, and they had to go through WORSE hoops to accept credit and charge cards. Plus, when you see a tiny merchant on the Internet who accepts credit cards, what a lot of people think is "I may as well go for their cheaper-than-usual price, if I get screwed, the merchant account company will credit me back if I don't get anything." And that hurts all of us in added credit card overhead costs.
No thanks, Congress. Keep your noses where the Constitution tells you to, and let the free market handle the rest.
What a socialistic mindframe. Many big civilizations fell because they became Empire, and were too difficult to control.
Capitalism works because of Free Market premises -- in America, Capitalism has failed only because government has subsidized too many companies, and tariffed others. Get rid of ALL tariffs, subsidies, and embargoes, and the American capitalist system will succeed like no other in the world -- industries that rely on subsidies will fail, and those that have been embargoed and tariffed will blossom. That's what the laws of supply and demand dictate.
It's people like you that make me sick to be an American. You probably also love welfare, social security, and social engineering. Ugh.
Go read Why Government Doesn't Work and tell me you still want government taking care of this.
Regulating who should be given a merchant account and who shouldn't is crazy. They are in the business (Mastercard) to MAKE MONEY.
So are the small businesses. We have just as much right to MAKE MONEY as THEY DO. The difference is we don't have the opportunity to SCREW THEM OVER with some ARBITRARY BUNCH OF CRAP.
If you force them to support everyone, then all that will happen is ALL Merchant rates will go up.
I'd rather they just STAY OUT OF OUR CASH REGISTER. Thank you very much.
For some small companies, they pay 7% to the merchant. For large companies, they pay 1.5%. Why is this?
It's called price gouging. The small companies don't have the clout to fight it, so they pay extra. And it's not just the merchant accounts. It's everywhere. Simple as that.
. If you want to be in business, its not that hard to get a merchant account.
We already have our system set up. NOW they decide to screw over half our customers. So we pay TWICE because THEY decided to change. That is pure, unfiltered CRAP.
Have a bank account for a year, with a positive balance.
Try to do business, on-line, accepting money orders and checks, from all over the place. Oh, sure. Meanwhile back on Earth, the FACTS are YOU MUST ACCEPT CREDIT CARDS. Customers are not going to sit down and write out a check and mail it. It DOESN'T HAPPEN. If you're in business you already know this, so nice try.
Have decent credit. Have a business plan. Go get merchant account.
Excuse me, but NONE of that is Mastercard's
#%*&@$ BUSINESS. We pay our fees. Our service bureau should not be punished by some arbitrary decision.
This is NOTHING about big vs. small business. Those big businesses were once small also, and they had to go through WORSE hoops to accept credit and charge cards.
Oh, cry me a river. This is ALL about big vs. small business. Big business can afford to set up transaction processing on their own site. Small businesses can't. It makes no sense to set up a full e-commerce structure for a low volume company. Better to spend that money on building a better product.
This is a slap in the face to hard working small businesspeople, and Mastercard knows it. Anything else is spin.
Plus, when you see a tiny merchant on the Internet who accepts credit cards, what a lot of people think is "I may as well go for their cheaper-than-usual price, if I get screwed, the merchant account company will credit me back if I don't get anything." And that hurts all of us in added credit card overhead costs.
So we should just SCREW OVER the tiny merchant, and let some other company OVERCHARGE the customer so some third company doesn't have to pay extra. Yeah, that's the ticket. Beat up the little company, take the customer THEY EARNED and hand the money over to someone else.
Do you have any idea how completely screwed that point of view is? That is the ultimate in arrogance and exclusivity. Only the people with perfect credit and a bank balance are allowed to make a living, huh? That tiny merchant has JUST AS MUCH RIGHT TO THE MARKETPLACE AS ANYONE ELSE. It is UNFAIR for Mastercard to deny them access to their OWN CUSTOMERS.
and let the free market handle the rest.
Yeah. The free market as dictated by Mastercard. I feel better already.