International Duh Moments – Is This a Payment?

When you do business internationally, there are ways of paying that you might never have heard of when doing business solely in the USA. Some methods require extending credit. Pursuing payment when something goes wrong is more difficult than when you are entirely in the States, too. Avoiding payment problems is far better than needing to resolve such problems across a combination of distance, different legal systems, and in some instances political or economic issues–so how to pay or be paid becomes a crucial choice as soon as you begin doing business across borders.

This article outlines the most common methods that may be new to you. Among these, the least commonly used methods are toward the end. When negotiating an international contract, choose a method where each party is comfortable with its level of risk.

Payment In Advance

Payment occurs: Before shipment.

Usually done via international wire transfer from one bank account to another or bank-to-bank wire transfer (regarded as safer), which takes only a few hours to a few days. Can be done via credit card or telegraphic transfer. Note that it is possible for an imposter to collect payment at telegraphic transfer offices, and documentation via that method is limited. Check clearing time can be as long as two months, so checks are not commonly used.

Highly insecure for buyers, but very comfortable for sellers. Payment transfer services incur fees.

Documentary Letter of CreditThis comes in a variety of forms:

  • confirmed – sight
  • confirmed – date or time
  • unconfirmed – sight
  • unconfirmed – date or time

A letter of credit is a bank-to-bank guarantee to pay the seller (beneficiary) upon presentation of specific documents that comply with terms set by the buyer (applicant). The documents convey title to goods by showing that specific steps have been taken, or as of a maturity date, or a designated period of time after an event. Terms of payment must be specified clearly and completely to avoid confusion and delay.

International Chamber of Commerce (ICC) publishes “Uniform Customs and Practices” (document number UCP600) to govern letters of credit. Globally, more than 90% of banks honor these rules. There are revocable and irrevocable letters of credit, although UCP600 only accommodates irrevocable (terms and conditions can only be changed with explicit consent from all parties). If unconfirmed, the payment guarantee is by the buyer’s bank, and the letter of credit must be irrevocable. If confirmed, the guarantee is by the seller’s bank.

Banks charge a percentage of the transaction amount as their fee, which is usually but not always paid by the buyer. If fees are charged by both banks in the transaction, price quotes and the letter of credit should specify which party pays each fee.

Sellers tend to like letters of credit as a secure way to get paid. Buyers tend to be less keen about this because of the expense (typically one to eight percent) and processing can take up to a month, delaying order delivery. As parties become more comfortable dealing with each other, payment is likely to change to less expensive payment methods such as drafts.

Confirmed – Sight

Payment occurs: Typically linked to time of shipment.

Example clause: “$15,000 US net 15 days from shipment.”

Seller has risk with the confirming bank and documentary risk. Buyer must trust seller to make certain goods are delivered after payment is transferred.

Confirmed – Date or Time

Payment occurs: At maturity.

Example: “$15,000 US net 15 days from acceptance.”

Seller has risk with the confirming bank and documentary risk. Buyer must trust seller to make certain goods are delivered after payment is transferred.

Unconfirmed – Sight

Payment occurs: Typically linked to time of shipment.

Example clause: “$15,000 US net 15 days from shipment.”

Buyer has assurance that shipment occurs, but must trust seller to ship the goods described in the document.

Unconfirmed – Date or Time

Payment occurs: At maturity.

Example clause: “$15,000 US net 15 days from acceptance.”

Seller has risk with the issuing bank and documentary risk. Buyer has assurance that shipment occurs, but must trust seller to ship the goods described in the document.

Documentary Draft (Bill of Exchange)

This comes in a couple of forms:

  • against payment – sight
  • against acceptance – date or time

A draft is like a foreign buyer’s check. As with a domestic check, there is a risk that it might not clear. It differs from a domestic check in that title does not transfer to the buyer until the draft it paid (or at least legal steps are taken to ensure that it will be paid when it is due).

Documentary drafts fall under the category bills for collection. In some markets (particularly in Asia), these methods are favored as a cost-effective way to satisfy Exchange Control Regulations. ICC publishes “Uniform Rules for Collections” (document number URC522) to govern these. Globally, more than 90% of banks honor these rules.

The documentation requesting payment is sent from seller’s bank to buyer’s bank, instead of directly from seller to buyer. The banks can sometimes help resolve any disputes that arise and threaten to disrupt the transaction. If the buyer fails to meet conditions specified in the documents, in some situations the seller can keep title to the shipment and may be able to recover the goods.

Drafts are often used when buyer and seller regard each other as trustworthy, there is no doubt about the buyer’s ability and willingness to pay, no constraining foreign exchange controls need to be dealt with, and the buyer is in a politically and economically stable nation.

Against Payment – Sight

Payment occurs: When draft is presented to buyer (often a verbal notification).

With a sight draft, the seller keeps title for the goods until they reach their destination and payment occurs. If shipment is by sea, the ocean bill of lading is endorsed by the seller. Then the seller’s bank sends it to the buyer’s bank, along with the sight draft and supporting documents such as invoices, consular invoices, certificates of insurance or packing lists. The buyer is notified when these documents arrive. When the draft is paid, the bank turns over the bill of lading so the buyer can claim the shipment. (Air bills of lading and railway or road transport have less rigorous requirements before the buyer can take the shipment, so a sight draft brings more risk if shipment is not by sea.)

The buyer could have a change of mind between the time when the goods are shipped and the time when the draft is presented for payment. The bank is not obligated to pay in this case, or in a case where governmental policies change and interfere with delivery. When such problems lead to the buyer not paying for or not receiving the shipment, the seller is stuck with the problem of what to do with the goods.

Against Acceptance – Date or Time

Payment occurs: At maturity.

A date draft stipulates a date on which payment is due.

A time draft stipulates that payment is due by a specific amount of time after the buyer accepts the time draft and receives the shipment, such as “20 days after acceptance.” (When the buyer writes “accepted” on the draft, that is trade acceptance.)

Open Account

Payment occurs: As agreed.

Goods are shipped. Seller sends a bill to buyer and buyer is expected to pay under agreed firms. This is much like having an open account for a customer within the States. Some large companies will only buy this way. There are markets, notably Europe, where buyers often expect Open Account. However, open account is appropriate only when the buyer has a long, good record as a payer and is definitely creditworthy.

Open account can be thought of as meaning “open to risk.” The ongoing nature of an open account raises the odds that political or economic situations may deteriorate. Legal enforcement to collect payment may be hindered because the extensive documents and banking involvements of other methods are missing–not to mention that pursuing collections abroad tends to be expensive and difficult. Factoring or export credit insurance may be advisable to reduce risk.

Highly insecure for sellers, but very comfortable for buyers.

Standby Letter of Credit

Payment occurs: If necessary.

This is a bank guarantee of payment that is triggered only if the buyer fails to pay in the normal manner, such as defaulting on payments due under Open Account. Note that this lacks the documentary controls in Letters of Credit.

Consignment Sales

Payment occurs: After sale of goods.

On the surface, this looks like consignment sales within the States. The seller sends goods to a distributor in another country, and the distributor sells them on behalf of the seller. The seller keeps title to the goods until they are sold, after which the distributor pays the seller.

Despite legally having title until goods are sold by the distributor, the exporting seller has considerable risk: practically no control over the merchandise, and delay before payment arrives. Appropriate insurance is highly advisable, including property coverage over the goods until they are sold and payment occurs.

International Countertrade

Payment occurs: Variable.

One party accepts goods, services, or something else other than money as partial or complete payment. Beyond that vague description, there are many variations.

Most forms of countertrade can be thought of as forms of barter. However, direct barter is not common internationally. The two parties rarely have balanced needs for each other’s products, and agreeing upon the value of goods may be difficult. To get around that, the parties can trade through an intermediary. (There are brokers and export management companies that handle such transactions.)

Transaction cost and risk are often higher than with other types of international transactions. However, countertrade may be the only way to do business with a company that does not have access to foreign exchange or is in a nation whose currency is not readily exchangeable.


Payment occurs: As agreed, typically after acceptance.

Buyer deposits funds, property or other tangibles in an escrow account that is supervised by an escrow agent (a neutral third party trusted by both buyer and seller). When the terms of the escrow agreement are met (such as satisfactory delivery of goods to the buyer), the escrow agent releases the funds to the seller.

This mechanism is low risk for both buyer and seller if a reputable escrow agent is used. However, it adds cost (the escrow agent’s fee), takes time to set up, and can be difficult to set up internationally. It is normally only used for large transactions. Caution against fraudulent escrow agents is advised.


Whenever payment relies upon presentation of documents attesting that specific conditions have been met, the shipping and documentation requirements in the sales contract and letter of credit or draft must agree precisely. If they do not, the bank may refuse to pay. Reportedly, more than half of document presentations for letters of credit have discrepancies. This is expensive–banks charge extra for each discrepancy, and resolution delays payment.

If this overview leaves you needing to know more, your commercial banker can help you sift through the options and set up the method that best fits your situation.

Mobile Payments – Collaboration is the Key

In theory, the concept of mobile payments has a strong business case, given the high market penetration rates of mobile devices, such as cellular phones and PDA?s, in many parts of the world. In addition, mobile operators and financial institutions, through the use of these devices, envision an attractive way to enable their customers to make payments. On the consumer side, users can reap the benefits of convenience, permitting them to buy goods and services from any location.

In principle, a mobile device can be used as a POS (point of sale) tool. Mobile operators and financial institutions consider this concept as the next logical step in making mobile devices a trusted payment device for consumers, acting as a payment instrument supplementing cash, cheque, credit card and debit card.

Currently, financial institutions are rolling out wireless POS capabilities to merchants which are in-turn competing with a consumer?s mobile phone. Several new services have been introduced around the world in which merchants are accepting payments from wireless POS terminals. These wireless POS terminals, for example, allow merchants to offer home delivery services in which payments are presented and accepted upon delivery of goods or services at the consumer?s location.

Wireless POS terminals use the wireless networks of mobile operators to send payment instructions to a merchant acquirer?s payment server. Consequently, wireless POS services are classified as an extension of traditional payment services. Given that in some areas of the world almost everyone will soon own a mobile phone, and most merchant locations offer POS terminals as a form of payment, it is at least conceivable that the mobile device will take over a large part of the retail payment market.

Since wireless POS implementations are an extension of current payment infrastructures, users still need to use a credit or debit card to make purchases. The convenience associated with current wireless POS methods have to do with the fact that these terminals are brought to the location of the purchase. For example, in a restaurant environment with the user paying for their bill via debit card from their seat, or for their groceries which have been delivered to their front door.

Mobile devices enable the use of numerous services, services that do not need card readers, personal computers, and modem combinations or a merchant?s wireline POS terminal. Nowadays, mobile devices have an embedded chip that can be used to store information and provide secure authorization and identification.

The Need for Interoperability

But to make these services available to the majority of mobile users, mobile payment service providers need to roll out services that offer interoperability. There have been numerous mobile payment pilots conducted that enable mobile devices to be used as a payment option, some of which have advanced into full mobile payment services (e.g. PayPal, PayBox, MovilPago). To date, we?ve discovered that the key to providing a successful mobile payment service has to do with the benefits it gives the end user and the end user’s customers: convenience, security, and freedom being a few key elements.

Though the industry has a long way to go before mobile devices will become a consumer?s payment instrument of choice, to ensure the stability of a viable mobile payments infrastructure, collaboration is the key.

Both mobile operators and financial institutions have tried, with little success, to implement their own individual pilot projects. Both parties have encountered numerous difficulties. Mobile operators, for example, because of their extensive existing customer base, technical know-how and billing comprehension, seemed the most likely candidates to provide mobile payment services. However, problems associated with risk management and the collaboration of numerous providers needed to accomplish interoperability have arisen. Financial institutions on the other hand are confronted with a limited number of users and high infrastructure costs. To remedy these problems, mobile operators and financial institutions have begun collaborating to jointly offer mobile payment services to their customers. For instance, leading Dutch direct bank ING/Postbank Nederland, has partnered with the Netherlands number three mobile carrier Telfort, to offer users mobile access to the bank?s retail applications and link user bank accounts to Telfort?s prepaid service top-up capabilities for account recharging. In this case, the fact that these two entities are taking advantage of their natural symbiosis is a big step in the right direction.

Right now there are four entities needed to make a payment via credit card (acquirers, issuers, merchants and consumers) to make a payment via mobile device, there are five (mobile operators, acquires, issuer, merchant and consumers). As a result, the ideal business model includes the cooperation between mobile operators, financial institutions, technology suppliers and industry associations to create a certain amount of standardization which will ensure the successful implementation of a strong mobile payments infrastructure.

Still, numerous issues, including limited functionality available through the current generation of networks as well as a lack of standards to name a few, are still hampering the efforts being carried out by these industry players. In addition, questions regarding successful revenue generating business models also remain.


As mentioned earlier, cell phone and PDA penetration rates are higher then they’ve ever been, with forecasted growth rates showing exponential increases in consumer adoption. Accordingly, industry focus should be centered around the business side. Right now it is not feasible for a mobile operator or a financial institution to role out competing services on a proprietary model that does not include interoperability. Mobile operators and financial institutions must work together to implement mobile payment services that marry a consumer?s bank account with their mobile subscription. Offering payment services should not be seen as a competitive advantage, but rather as a necessity which will drive the success of the rollout of mobile commerce.

Today we see several initiatives taking place including the creation of various industry associations designed to address the different issues associated with the mobile industry. With these activities underway-mobile operators and financial institutions are beginning to work together to roll out new payment services. Pre-paid top up, for example, is the first real commercial mobile payment application that is being introduced into several markets. Financial institutions and mobile operators are collaborating to enabling mobile subscribers to electronically pay for their pre-paid wireless accounts using several banking channels such as telephone banking, Internet banking, and ATM and mobile banking, completely automating the ?top-up? experience using SMS (Short Message Service).

Currently, payment instruments are stored in virtual wallets residing either on the mobile device or centralized on the open network service platform. Consumers register for the service through their financial institution, mobile operator or service provider, depending on how the service is setup. The registration is necessary to link the consumer?s subscription data with their financial information and provision the mobile device for the service. Future methods may see users using their mobile device as a way to simply access their bank accounts, whereby the mobile operator?s function will be simply to transport the data. In addition, smart cards issued by financial institutions may begin to become more prevalent.

As mobile services and infrastructures evolve we will begin to see the true notion of mobile payment instruments living up to the hype of ?anytime, anywhere payments.? Soon, mobile payments will become an integral part of consumer lifestyles, replacing the payment instruments we have hidden in our wallets today. It is clear, that the co-operation between mobile operators and financial institutions is needed to build a viable mobile payments offering. It is also clear that the next logical payments industry step is to provide consumers with the ability to make payments for goods and services on their mobile devices. The only true concept of ?anytime anywhere payments? is conceivable through access via a mobile device. ‘Where there’s a wireless, there’s a way’ and the key to the success of the industry is as simple as giving consumers what they want.

Making Your Extra Mortgage Payments Count

Home owners with a mortgage usually want to reduce their interest cost by paying down the loan balance as fast as possible. This article is about what borrowers can and cannot do on their own, and answers some frequently asked questions about making extra payments.

Is There Any Benefit In Making Scheduled Payments Before the Due Date? No. On a standard mortgage, interest accrues monthly, and is calculated by multiplying one-twelfth of the annual interest rate times the loan balance at the end of the preceding month. For example, if the loan balance is $100,000 and the interest rate is 6%, the interest due is.06/12 x 100,000, or $500. The borrower owes $500 regardless of when the payment is made or how many days there are in the month,. If the payment is late by more than the 10 or 15 day “grace period,” there is an additional late fee. But there is no rebate for paying early.

Simple interest mortgages, on which interest accrues daily, are an exception. On these mortgages, every day of delay in making the payment increases the interest cost, and paying early does reduce the borrower’s interest bill. Simple interest mortgages used to be fairly common, but I am not aware of any being offered today.

Do Extra Payments Save More Interest When Made In Some Months? No, the only valid rule is that the sooner you make the payment, the more interest you will save.

One common misconception is that the best month to make extra principal payments is January. It is certainly true that a January payment saves more interest than one made in the succeeding February, but it saves less than one made the preceding December.

Is There a Best Time Within the Month to Make an Extra Payment to Principal? Yes, the best time within the month to make an extra payment is the last day on which the lender will credit you for the current month, rather than deferring credit until the following month. If it is the 15th, for example, an extra payment made within the first 15 days of January will reduce your balance that month and the interest due in February. Payments made the 16th or later will not be credited until February, and the interest deduction will be deferred until March.

There is no universal lender practice in crediting extra payments. Some lenders will credit payments received anytime during the month while others are much more restrictive. In most cases, extra payments sent in with the scheduled payment will be credited the same month, but it is a good idea to ask your lender what their rule is.

Is There a Best Way In Which to Make an Extra Payment? No, you can use the same payment method that you use to make your scheduled payment. Just bear in mind that the relevant date is when the payment is credited by the lender, not the date when you sent it.

A practice you should avoid is to make the extra payment an exact multiple of your scheduled payment. If that payment is $610.43, for example, don’t make a payment of $1220.86 because then the lender will probably interpret the additional amount as an advance of your scheduled payment and hold it, rather than pay down your balance.

Is There a Best Way to Allocate Extra Payments When a Borrower Has Two Mortgages on the Same Property? Yes, the general rule is to pay down the second mortgage first. Not only will the second have a higher rate, but second mortgages also can make life more complicated for borrowers looking to refinance or having payment difficulties.

The possible exception is a HELOC second, which might well carry a lower rate than the first mortgage, though it has high potential for future rate increases. The borrower who directs extra payments to a HELOC that has not yet reached the stage of mandatory repayment increases his credit line by the amount of the extra payment. This could be a desirable outcome for the borrower.

Is There a Best Way to Allocate Extra Payments When a Borrower-Investor Has Mortgages on Several Properties? Yes, the general rule is that you save the most by paying down the mortgage with the highest interest rate first. One possible exception is where the mortgage that does not have the higher current rate is exposed to the most interest rate risk. For example, a borrower with a 4.5% fixed-rate mortgage and a 4% adjustable-rate mortgage, both in the early stages of their lives, might well elect to pay down the adjustable-rate mortgage because of the possibility that at some future time its rate could go as high as 9%.

Another possible exception would be where the lower-rate mortgage has a greater potential for a profitable refinance. For example, a 6% mortgage has a loan balance that is 89% of property value while a 5.75% mortgage is at 81%. If the extra payment directed to the lower-rate mortgage reduces the balance to 80%, no mortgage insurance would be required to refinance it.

A third possible exception is where the borrower-investor has so many mortgages that lenders refuse to finance any more acquisitions. Many lenders have a limit of 10. In that situation, the borrower looking toward further expansion wants a complete payoff ASAP and will concentrate all extra payments to the mortgage with the smallest balance.

Accepting Micro Payments For Your Website Or Online Business – Assessing Your Options

The number one problem for online sellers and website owners accepting and processing micro payments is the very high fees charged by payment processors and credit card companies, which can typically eat into a significant portion of the payment revenue stream.

Before we examine the various options and solutions in dealing with this pervasive problem, we should first define what constitutes a micro payment.

A micro payment is a payment for an item or service that is of low value. For example, website payments for ring tones, pay-per-views, downloads, e-books, and subscriptions in the $1 – $3 range would be considered as micro payments. A 25 cent payment for a download or a 5 cent payment for a SMS are very good examples of lesser value micro payments.

There are two basic methods that an online seller might employ to accept a micro payment. The first method is to use a credit card, but the merchant fees would be quite high to accept a large number of payments for $1 and $2 micro payments, and this is not usually a cost efficient option.

Some online business owners whose websites sell micro payment valued good and services will ask customers for their credit card details, and will process fees and invoices to their customers’ cards when account balances reach specified payment threshold amounts.

Another variation of this method is to charge the customer’s credit card a minimum charge amount of (say $10), and a credit in this amount is then posted to the user’s account, which depletes as nominal value goods and services are purchased from the vendor.

The problem with this method is that customers don’t like providing their credit card details to strangers, and they don’t like the idea of making a down payment purchase commitment for goods or services which the customer might ultimately decide not to purchase.

The other option is to process payment for each micro transaction as it occurs using an online payment system, and there are a few viable options with several companies competing in this space, some of which are much more cost efficient than others, as I shall explain.

Let’s look at the following example:

Consider a micro payment in the amount of $2 USD sent internationally (from one country to another) using a business account.

I’ve compared the fees that each of the following online payment processors would charge to handle this payment, and present the results below, from highest to lowest cost: $0.99 flat fee = $0.99 (49% commission) 1.9% +$0.40 = $.44 (22% commission) Regular 2.9% + $0.30 = $0.36 (18% commission) 2.5% +$0.25 = $0.30 (15% commission) Micropay 6% + $0.05 = $0.17 (8.5% commission) 5% + $0.05 = $0.15 (7.5% commission) 1.5% no minimum = $0.03 (1.5% commission)

The highest fees would be incurred if using the services of Netherlands-based ZayPay and UK-based Moneybookers. PayPal’s regular payment service would result in an 18% payment commission, and even their lite service for mirco payments results in an 8.5% commission. By far the lowest cost micro payment processor is Canadian based CashSender, as their 1.5% commission does not have a fixed fee component. Thus, CashSender’s fee is even a fraction of the cost of the next lowest provide on the list.

Many online sellers and website owners accept micro payment as the life-blood of their business operations. This means, many such payments are processed over the course of each month, throughout the year.

Therefore, to see the real bottom line effect of the fee differences presented above, we need to factor the data up to a one year analysis.

Let us assume that a typical online seller needs to process 1,000 of these $2 payments each month, which translates into 12,000 such payments every year (representing $24,000 in annual micro payment revenues).

We then need to adjust our data to reflect the annual fees using each of the respective online payment services, and the data is presented as follows, again listed from highest cost to lowest cost: ($0.99 flat fee) X 12,000 payments = $11,880 (1.9% +$0.40) X 12,000 payments = $ 5,256 Regular (2.9% + $0.30) X 12,000 payments = $ 4,296 (2.5% +$0.25) X 12,000 payments = $ 3,600 Micropay (6% + $0.05) X12,000 payments = $ 2,040 (5% + $0.05) X 12,000 payments = $ 1,800 (1.5% no minimum) X 12,000 payments = $ 360

The most well known company in the online payment space is PayPal, which is owned by eBay. PayPal’s regular online payment service is actually $4,000 per year more costly than the low price leader.

PayPal’s lite micropay service is $1,680 more costly than the low price leader, and even Amazon, which is the second place low cost leader is four times more costly than the low price leader.

In conclusion, online sellers and website owners need to pay very close attention to which online payment service they choose to handle their micro payment transactions. Even a middle range micro payment processor will cost several thousand dollars per year more in fees than using the low cost leader.

What to Expect From Credit Card Payment Services

We may not be fully immersed in the cashless society, as cash is still around, and it appears that it may not be leaving very soon. It may be entirely possible to manage a business without accepting credit cards, but by doing so, as a business owner, or merchant, you may actually be hurting your prospects for growing your business.

Payment by credit cards is facilitated by the use of credit card payment services. The providers of credit card payments services may sometimes be known as merchant service providers and they supply of all of the physical needs for businesses owners to accept credit card payments, such as merchant accounts and POS terminals. They may also supply many complimentary or associated services in addition to payment accounts.

Credit card payment services will allow vendors and business owners to accept payments online. Online payments are rapidly expanding to include payments from mobile devices, such as tablets and smartphones. Although there may be limits on the value of the purchases, it offers the advantages of rapid payments that may be pre-authorized. This can be a big benefit for business owners, as most of the transactions with be handled by card processors, while the business simply accepts the payments.

Your credit card payment services provider may also provide you with the ability to process payments with debit cards. Debit cards are popular with consumers for the payment of smaller to medium sized purchases. The advantages to consumers, are that it helps with managing cash flow, as `payment is made with funds that have already been obtained, and are no longer expected. Debit cards are another payment option that merchants can increase the volume of sales.

Other payment options that may be offered by your provider, include wireless machines, for mobile vendors, who can accept payments from checks or even debit cards without needing physical wiring. The process is secure and faster that processing over telephone lines.

Although the use of cheques as a payment method is fading quickly, some payment services may also offer check processing software, that can be used to verify the validity of the check. However, the use of check-processing software is now being supplanted by a process that converts a physical check into an electronic check.

The type of payment service that you choose, may depend on the nature of your business, and the type of customers that you serve. Some customers may actually prefer ending payments by check, while others will prefer to use credit or debit cards. As a merchant, you may need to implement multiple payment methods, and the merchant service provider can help with the proper selection.

An evaluation should include an examination of how the payments are received, and examination of the ability of the customers to make payments. It should also include a cost analysis, and a comparison of the different payment methods. The choice should also include a process with some flexibility, that allows for changes, if conditions in the commerce environment changes.

Avoid Having Your Structured Settlement Payments Serviced by a Factoring Company

Avoiding the servicing of structured settlement payments can net you tens of thousands of dollars or more in the long run. The servicing of structured settlement payments occurs when a seller decides to sell and split some payments. For example, if you are receiving a monthly sum of $1,000 and decide you would like to sell 50% of each disbursement, you are causing a split. Doing so, will create additional record keeping requirements upon the insurance company. Some insurance companies refuse to do this, thus a special need was created upon the factoring industry to service structured settlement payments. This meant that if you decided to split structured settlement payments and your insurance company refused to do so, all your payments would then be assigned to the structured settlement factoring company who in turn would split the disbursements. The “servicing” of payments by the factoring company entails receiving each disbursement from the insurance company and then paying to the seller the appropriate amount. In the example above, the factoring company would receive the full $1,000 monthly sum, and then directly pay the seller their $500 split payment.

At initial glance there does not seem to be much wrong with this set-up. However, if or when the seller decides to sell the remaining payments or portions thereof, this is when costly issues surface. Continuing with the example above, say you now decide to sell all or a portion of your remaining $500 per month payments. Because these payments are being serviced by a factoring company you must now inform this factoring company of your intention to sell your remaining payments. Since these payments were “assigned” to this factoring company, they have control over these payments. This control devalues your remaining payments due to several reasons:

1. Your future payments are worth less because payments are made to you directly by a factoring company and not a highly rated insurance company. This means that the payments are not as guaranteed than if the payments are made by a highly rated financial institution. Prospective factoring companies will now have to further discount this additional risk when calculating the present value of your remaining payments. In other works, the risk of payment default is higher from a factoring company than a highly rated insurance company.

2. Your future payments are worth less because the factoring company that is servicing all remaining payments will use this leverage to provide you with low ball offers. In the event you can obtain quotes from other factoring companies, the quotes will be a lot less due to existence of payment servicing and the additional work and risk involved with purchasing payments from a non-insurance company.

These reasons alone can cause you to lose tens of thousands of dollars or more in the sale of your remaining structured settlement payments.

In addition, one has to be weary of situations when your intent is not to have any remaining payments serviced by the factoring company. This happens when payments are not split, but when you sell only parts of some of your future payments, and the factoring company gets you to assign all remaining payments even when not required by the insurance company. Even though the servicing of payments was totally unnecessary, the goal of the factoring company is to lock you into an unsuspecting position and to potentially secure future business from you in the event you should decide to sell any or all of your remaining payments.

The practice of servicing payments is not new and many factoring companies engage in it including J.G. Wentworth and Peachtree Financial Solutions. Regardless of their reasoning, including facilitating the sale of structured settlement payments particularly in cases when the insurance company refuses to split payments or to secure future business by locking in clients by unnecessarily servicing their remaining payments, the fact is that the remaining unsold serviced payments will be heavily devalued.

Even though you may have zero interest of selling any remaining payments, any questions you may have surrounding your structured settlement annuity policy, will now have to be directed to the factoring company and not to your insurance company.

Knowledge is power. You can protect yourself by knowing how the servicing of structured settlement payments can affect the value of your remaining unsold payments.

Access On-Demand Event Payment Solutions to Simplify Payment Processing

The growing threats of credit card scams and other online payment processing hazards have encouraged event organizers to think of some highly secured payment platform. The event registration software offers you the integrated benefits of seamless registration and highly secured payment processing through multiple gateways. With this new-age technology, organizers can do away with the manual process of cash handling and thus, eliminate the hazards associated with it. Moreover, with the wide access to internet, people are increasingly looking for conveniences that allow them to buy tickets and pay right from the comfort of their homes.

A comprehensive payment management solution offers a wide range of benefits. Let’s take a look here.

The comprehensive event payment solution lets you control the entire processing remotely, even without installing any hardware device or software program. It streamlines the payment processing by collecting event payments and managing back-end payment functions simultaneously. It reduces manual intervention and thus, accomplishes the process with increased efficiency. Apart from this, a payment processing solution helps you reduce workload by 60%, thereby allowing you to invest more quality time in your core business functions. Moreover, you can calculate your ROI, which also helps you manage, sell and promote your events.

The scalable event payment software accepts payments from all major credit cards as well as online payment methods, such as PayPal and CyberSource. Attendees can also make payments through wire transfer, purchase orders, checks, and gift cards. With so many options, it becomes easier for the attendees to complete event-related transactions and thus, helps in maximizing attendance.

Using this system, organizers can accept payments through their Merchant Account and get it directly deposited in the bank account without paying any additional fee. The system not only takes care of your online credit card payment processing requirements, but also helps dealing with cancellations and refunds easily.

Accessing the on-demand reporting tools, you can track the payment status and get the related data with increased efficiency and in the most error-free way. These features allow you keep a regular track of payment status, refunds, revenues, and registration data. Moreover, you can display payment instructions and refund policy, for the convenience of the attendees, while monitoring the transaction process.

The event payment solution, delivered in the form of Software as a Service (SaaS), features effective tools that can easily prevent fraudulent transactions.

A comprehensive event payment solution simplifies your payment processing in no time. Use this on-demand solution today to cut down on your human and financial resources and maximize return on investment.

How to Choose the Right Online Event Payment Solution

Payment collection and its tracking are key elements of any successful event. An online payment solution lets you manage the payments and tracking activities for events in a streamlined manner. However, before you decide to explore relevant products for an online collection solution for your events, you should better check out if your preferred payment platform promises you with the following benefits or not!

5 major benefits of using an online event payment solution are as follows:

· Instant fund transfers by letting the registrants pay through various online payment methods

· Create different levels of admission prices per event

· Create time responsive ‘Early Bird’ prices or limited special offer tickets

· Accept donations from the global audience, 24/7

· Easily track payments status of every event

You must choose an event payment solution that is accessible, 24 hours and 365 days a year. Cloud-based collection platform is one such software that fits these requirements; you can easily access the payments portal as and when you host a meeting, business conference, product launch parties or holiday events throughout the year.

Such a solution should be PCI-compliant offering highest level of protection to fund transfers via a credit cards. Hence, people don’t need to worry about fraudulent activities in case event organizers use a PCI-compliant event payment service. Besides, the solution should allow you to receive payments using a variety of online transfer methods including wire transfers, POs, PayPal, and similar leading payment gateways.

It should permit you to accept payments on an installment basis. The system will greatly be appreciated by those registrants who prefer to pay in small amounts rather than the full fees at one go.

With regard to tracking of the payment status per event, the system must automatically capture payment information of each individual registrant and store the same in its database for generating different financial reports in a timely manner. You should have access to check attendee payment data anytime you so desire on an event to event basis. Thus, you can use an online payment solution to track how many people have made their payments in full against those who have chosen the partial pay option.

Majority of Cloud-based, online event registration services come integrated with such an event payment solution. It lets you manage events registration plus payments at once without purchasing separate software to collect and track credit. Such online systems are easy to use, convenient plus completely secure for your event attendees.

Various Online Payment Options and Tips to Avoid Fraud in It

With businesses spreading wide across the globe, several people are encouraged to start their business online and earn their living. However, the main question that runs in everyone’s head is how to make payments online when one is sitting far away from the company he is tied up to. People also worry about how to receive payments for the work they do. Due to this fear, people usually fret in making online payments as they are afraid of revealing their financial details online. The lack of knowledge adds to the problem more when one needs to make or receive online payments.

Making payments online is one big necessity for home based business holders and small entrepreneurs. With the advancement in technology, transferring of funds and receiving them has become very flexible over the years. It is popularly known as e-commerce payment method, where all the transactions are done electronically, i.e. online. The method has become popular due to increasing popularity of online shopping, online business and e-banking.

To get acquainted with online payment options one must be aware with the basic terminology relating to it to avoid confusion. When you are into a business there will be something you will come across is the merchant account. It is a bank account you can use to receive payment and even send it. It is linked particularly with the credit card or debit card you use. There is a payment gateway, which is a passage or a portal where one can safely pass the card information to the merchant. The payment which a customer sends is then processed by a payment processor. Payment processor is a company that handles the transactions and implements several policies to be careful from the fraud which is likely to happen. Thus these are the very basic terminology to get started with online payment.

In all these years, and event till today, credit card is the leading and most preferred mode of online payment. However if you own a website or an internet based business, you need to study various other factors also like your product cost and easy payment options which your customers might prefer. Making your website flexible in payment transfer will also help attract more customers in turn helping in pushing your business upwards. There are various alternate payment methods now in market which are gaining popularity at such a higher rate that more and more people have started preferring to use them without any misconceptions in their minds.

Two of the very widely used among the online business owners is PayPal and Alert Pay. PayPal is a leading name in the industry that is secure and quick. It offers its customers independent account or one can link it with the credit card. It’s got various other options too, to transfer payments and to get paid. It has no monthly or set up fees but only charges some amount when you are engaged into a transaction.

Another of most widely used contemporaries of PayPal is Google Checkout which avails its services to millions of users. There are other various payments options like, Amazon Payments, Authorize.Net and Brain

Thus there are several of payment options available and it is on you to decide that suits your criteria and dealings. The list is huge and the options here mentioned are exemplified to make you aware about the big heads of the field.

Another very important thing that comes in notice when using online payments is the security. There are security guidelines and terms and conditions laid down by the merchant accounts, banks, payment gateways and payment processors. They work into that limit to ensure the customer’s privacy and safety as they reveal credit card numbers, bank accounts and so on. Online frauds have increased in number due to hackers as they dupe the customers by storing their personal data. Cyber crimes have also been reported in last few years and the hackers do have their eye on big heads of the industry.

One of the best ways to be protected from such scams is to read carefully all the security terms and conditions of the service you are likely to use. It is to be vigilant on our part to avoid frauds. Credit card service providers also advice its users to not pass their personal data online to any one whom you don’t trust or the companies that are non-validated. One must not answer to emails or pop-up pages that directly ask you to provide the banking details and credit card details.

In case you suspect any undesirable or forced transaction, it is your responsibility to contact the service provider and immediately block the card or the transaction.

It is also advisable not to use in public places and other user computers to make payments or even use the function of net banking. One very good solution to avoid this problem is to have a good and licensed version of anti-spyware or anti-virus software installed in your PC which you use for transacting online.

Thus using alternative payment methods is a very good option as it ensures the safety of its customers. They are vigilant on their part as they do not wish to lose their customers and company’s reputation. A little responsibility lies on our shoulder too, to be careful in passing on personal information and which company to choose. Some of the methods mentioned above will definitely help in avoiding scams, Phishing or Duplication etc.