Business Lyceum
e-Letter
Practical
Instruction in the Arts and Sciences of Making Money
MARCH 2000
Greetings & Salutations:
Over the past 6 months, in Discussion Group after Discussion
Group, I have seen posting after posting, asking about getting
a Credit Card Merchant Account.
Having had a Credit Card Merchant Account for nearly 30 years
... even before it could be used for mail orders ... and never
having been denied a Merchant Account, I paid little attention
to those postings ... mostly I just skipped over reading them.
-- Then, last week, with nothing to do, I happened to read a
couple of the postings about getting a Merchant Account.
After reading those postings, I went back through my files
and read a number of previous postings. Then, I went on-line
and read a variety of articles on the subject ... and visited
a few websites that offered Credit Card Merchant Accounts.
To say I was disappointed by what I read would be an understatement.
It appears the vast majority of posters and article writers have
little, if any, working knowledge of the banking and credit card
industries.
So, let me explain ...
How to really get a Credit Card Merchant Account!
During my tenure in the banking business, our small offshore
bank obtained licenses from both VISA and MasterCard to both
issue Credit Cards to our customers and establish Merchant Accounts.
Although we were never able to initiate the programs ... owing
to the fact that our bank was not FDIC insured ... I was obligated
to study and learn the approval methods employed within the banking
and credit card industries for both the issuance of Credit Cards
and the establishment of Merchant Accounts.
I will not belabor you with the details, however, the establishment
of Credit Card Merchant Accounts is, essentially, "risk
free" for the bank.
Think about it. -- A Credit Card Merchant Account is nothing
more than a record keeping process for the bank that established
the account with the merchant.
Unless the credit cardholder making a purchase from the merchant
has a credit card issued by the same bank there is no ìunsecured
debtî obligation on the part of the bank.
Money flows into the bank account of the merchant from issuing
banks around the country (or even the world) and is simply held
in the merchantís checking account. -- The bank has no
"unsecured debt" problem with those funds. -- They
even get paid a fee by the card-issuing bank for handling the
transaction and another fee from the merchant for maintaining
the account.
Should a cardholder who purchased something from the merchant
"dispute" the charge, the bank loses nothing. -- The
bank simply debits the merchantís account for the amount
of the disputed item ... commonly referred to as a "chargeback."
They even get to keep the fees they were paid. -- The merchant
loses the full amount of the charge plus the fees paid when the
original credit card charge was made.
That being the case ...why then is it seemingly so difficult
for Mailorder and Internet Marketers to get a Merchant Account?
It isn't the products they sell or how the products are
sold. It is, rather, the nature of the "people"
who own and operate those kinds of businesses.
By and large, Mailorder and Internet Marketing companies are
the domain of "beginners" and "con-men" ...
both of whom are feared by the bankers. -- I don't think I have
to explain why bankers fear con-men, but ...
Why do bankers fear "beginners?"
"Beginners" are feared because they still have a
"consumer" mentality. -- Meaning the bank will have
to explain, and explain, and explain, every charge made to the
merchant's account on credit card transactions. And, should
there ever be a "chargeback," the bank knows it may
have to fight the merchant; sometimes tooth and nail, in order
to justify the debit. (Some "beginners" have
even been known to sue the bank for making chargebacks to their
account.)
Another reason the bankers fear "beginners," is
that "beginners" in any business ... more especially
Mailorder and Internet Marketing ... are oftimes hard-pressed
to keep sufficient funds in their checking accounts to cover
any chargebacks that may occur. That leaves the bank holding
an "unsecured debt." ("Beginners" do
it by accident, "con-menî" do it on purpose.)
Statistically, over 90% of small businesses fail within their
first year. (That percentage is even higher for small Mailorder
and Internet Marketing companies.) -- A statistic with
which every banker is familiar, and the ìrealî reason
they are more than a little reluctant to provide services; extend
credit or loans, to small start-up businesses ... especially
small start-up Mailorder and Internet Marketing businesses.
That is about the only reason a bank will refuse to open a
Merchant Account ... not the flimsy excuses they use to protect
themselves from unwarranted discrimination lawsuits. -- It
is NOT the product, or the method of sales, it is the "person"
behind the business.
But, stop and think about it for a minute. -- How many thousands,
upon thousands, of mailorder companies have Merchant Accounts?
-- How may thousands, upon thousands, of companies selling Adult
Products have Merchant Accounts? -- If the banks didn't establish
Merchant Accounts for them, how did those companies get their
accounts?
NO -- they didn't get their accounts by using the ìtricksî
espoused by some of the people who sell courses on getting a
Merchant Account. -- The bankers have read the same stuff.
They know and recognize all those stupid tricks. -- Using those
tricks only creates a ìsneaky imageî for you in
the eyes of the banker.
If you really want a Credit Card Merchant Account, start with
your local, hometown, bank ... the one where you have your business
checking account. -- Build a rapport with your banker.
Whether you know it or not, only the very largest banks process
their own credit card transactions. -- Your local bank may be
a small independent, located in a rural area - but - they can
(and will; when asked) provide their Merchant Accounts with electronic
processing through the processing center they use - and - again
if you ASK, the processing center can connect the electronic
processing directly to your on-line order system. (My current
bank uses the NOVUS system.)
Contrary to what you might believe, your banker pulls his,
or her, britches on the same way you do ... one leg at a time.
They are only human and, as such, respond to the same stimuli
as any other human being. -- Don't try to use any "tricks"
on them. -- Just be yourself, explain your situation, and WORK
WITH THEM to establish your account.
By doing so, you will show the banker that you are losing
your "consumer mentality" (which they fear) and will
be a "responsible" and "profitable"
customer for the bank. -- Get to know your banker. Give
your banker an opportunity to get to know you.
And, remember, it doesn't matter what you are selling,
or how you are selling it ... it is always a matter of "who"
you are in the eyes of your banker.
Hey ... don't give me any nonsense about selling Adult Products.
-- I, personally, know at least a dozen men (and a few women)
who have made fortunes with those products and have ALWAYS had
a Merchant Account and have never been denied a Merchant Account
(at any time). -- Why? -- Because they are "real" business
people without any ties to the "sleazy" underworld
of pornography (or crime).
The very few bankers who do object to giving a Merchant Account
to companies who sell Adult Products do so ... not because of
the products themselves ... because of the "sleaze"
factor of the people involved in the industry. -- A problem that
can be overcome by allowing the banker to get to know YOU ...
not by the reputations of some of the people in the industry,
but, rather, on your own, personal, merits.
If you can't find a banker with whom you can build a personal
rapport, then (and only then) allow your self to be subjected
to the fees, and costs, charged by the Credit Card processors.
-- Then, after six months to a year of allowing that processor
to handle your credit card charges ... with limited chargeback
activity ... take your records to your local banker and ASK for
a Merchant Account again. -- By then, you will be able to prove
to your banker that your business can be a "responsible"
and "profitable" customer for your bank.
If you have a heavy chargeback factor, find out "why"
your customers are disputing the charges to their credit cards.
Then, correct the problem; whatever it is, before you go back
to your local banker.
Of course, the whole endeavor hinges on your ability to present
and express yourself as a "real" business person ...
instead of the willy-nilly "beginner" (or "con-man")
they fear.
'Nuff said. -- Now, let's explore some ...
Comments, Questions & Answers from Business
Lyceum Attendees!
In last month's issue, I answered a question from Attendee
Sydney Freeman about where she
could find information about products from other countries. --
I answered her with my usual brilliance -- but ...
Attendee Andreas Sass wanted to
add his 2-cents worth, to wit ...
"There are tons of sites on the Internet where
you can start your search, such as the following:
http://www.jeta.ru http://www.tradelead.com
http://www.eckorea.net/ECMarket
http://manufacture.com.tw/trade.htm
http://www.ec21.com/tops/index.html
http://www.tradetaiwan.com http://asiatrade.com/Mkt.html
http://www.commerce.com.tw/mail
http://www.thedollar.com http://www.tradeserv.com
http://www.asiannet.com
This should get your started looking for buyers and sellers."
NOTE: I didn't check out those websites,
so, if'n you're interested, you'll have to check'em out yer ownself.
Q: Then, Andreas presented
the ol'master (me) with a problem to solve.
"I've been reading your BusinessLyceum and I like what
I see. So now I have a problem I hope you can help me with
it. It's mostly an Internet question. So here goes.
A little while ago, I was viewing the web site of a company.
I noticed on one page that they had a plant for sale. I
thought this would be great for my first Finders Fee deal.
My problem is, how do I use the Internet to find my buyer?
Where on theInternet would I start looking for a buyer for this
plant? I've looked at all the sites I've listed above,
but those are only for import and export deals.
Part 2 of my problem is just the opposite. I came across
this company's plant for sale by accident. My other problem
would be how do I find other plants for sale? -- I hope you can
help me."
A: Thank You for your
kind comment about my e-Letter - but - shhh! -- don't tell nobody
-- I ain't an "internet person." I only write
this e-Letter so my readers can learn some truth about doing
business and making money ... in an Internet Jungle filled
with misinformation; half-truths; pure, unadulterated bullstuff
(you know what I mean);and out-and-out bare-faced lies.
But, even though I am not an "internet person,"
I would start the same way I would start if I were looking for
a buyer in the more conventional (paper & ink) resources.
First, I would prepare a brief (one-page) description of the
business for sale ... without divulging enough information that
someone could locate it without me. -- Then, I would begin searching
for companies involved in the same industry ... or any industry
that relies upon businesses like the one for sale for raw materials,
products or services. (Of course, I would go looking in
trade directories instead of on the Internet.)
Businesses involved in the same industry, may want to acquire
the plant to expand. -- Businesses that rely upon businesses
like the one for sale may want to acquire the plant to control
their own source of supply.
Once I had a list of possible candidates, I would write each
of them a letter advising that I had a possible acquisition target
for them ... including a copy of the brief description of the
business for sale to whet their appetite.
When one (or more) of those companies inquired about the possibility
of seeing the business ... or just request more information ...
I would make a copy of their inquiry (blanking-out all identifying
information) and send that copy, along with a cover letter to
the party offering the plant for sale.
In that cover letter, I would tell the "seller"
that I had a possible buyer for the plant ... referring them
to the copy of the letter (or letters) of inquiry you enclose.
-- In that letter, I would ASK the "seller" if they
would be willing to pay a "commission" (don't mention
Finder's Fee unless, or until, they do). -- Once you have a "written"
commitment from them for your fee, send them a true copy of the
letter (or letters) of inquiry you have received ... by Certified
Mail; Return Receipt Requested, so you can prove they received
the contact from you.
Once you have done that ... stand back and leave'em alone.
If a deal is made, you will be paid your fee. (Highly recommend
you read my Finder's Fee course.
In answer to "Part 2" of your question:
Most often, finding businesses for sale is more a matter of chance
than design ... just as you discovered one. -- Then again, if
you get a number of inquiries about the business for sale, only
"one" of those parties can buy the business, so ...
Send letters of inquiry to other businesses in the same industry
ASKING if they would consider selling their business ... include
a copy of one (only one) of the letters of inquiry about buying
a business like theirs. If one (or more) of those businesses
respond that they business might be for sale to the right party,
ASK for some brief details about the business and, of course,
get them to commit to paying you a "commission" if
they sell their business to one of your contacts. -- Then, just
follow through as you did with the first business.
Hope that helps!
Then, I had another Question on the same subject.
Q: Attendee Don Evans
wrote to ask:
"I just finished reading your Finder's Fee manual and
it is great!!! -- I never believed I would start a new career
at age 63! --I do have a question. Are the buyer/sellers(for
the purpose of finder fees) always in the same country? Otherwise
it would be import/export would it not?"
A: I am pleased that my
Finder's Fee course has inspired you to begin a new career.
Don't forget, Colonel Sanders was older than you are when he
started Kentucky Fried Chicken ... he did hokey-dokey. -- Now,
to answer your question.
A finder can work with buyers and/or sellers in any country.
As a finder, you DO NOT get involved in the import, or export,
of the product ... you simply introduce the importer in one country
with the exporter in another country.
Business is Business the world around.
Usually, I try to work with "sellers" in the U.S.
-- getting my fees from them. Then, when I bring them a
buyer from overseas, I still get paid when the sale is made.
But, I have made a bundle of money working with "sellers"
overseas ... finding them "buyers" in the U.S. -- As
long as you "Get it in writing. Put it in writing."
(as fully explained in my course) your deal is sound.
Well ... that's it for this month. -- In order to make every
issue responsive to YOUR needs, please send me your questions;
or tell me what sources or resources you need to build your business;
or give me any thoughts you want to share with your fellow members.
Believe it or don't ... I ainít a mind-reader. -- Ifín
you doesn't tell me what you need, I may never touch upon the
information, sources or resources you need.
This is your publication for you to use to your benefit ...
I am just your moderator.
Until next month, keep well ...
J.F. (Jim) STRAW
Super Finder & Ex-Banker
Thought For The Month!
"What good is running if you're on the wrong
road?" -- English Proverb
Can you stump the old master? -- Betcha can't!
Over the past 40 years (man and boy), I have made bundles
of money in direct selling, service contracting, wholesale merchandising,
entertainment (I was a professional Trumpet player, vocalist
& Radio Announcer), freight forwarding, import/export, retail
merchandising, warehousing, real estate, electronics manufacturing,
finder's fees, closeout merchandising, financial brokerage, business
consulting, steel fabrication, gold and coal mining, offshore
banking, mailorder, writing, and publishing. -- That being the
case ...
No matter what business you're in ... whether you're just
starting, well on your way, or at the top of the heap ... I've
probably been where you are, done what you are doing. -- So ...
Anytime you have a question about 'how' to do something
in your business - or - if you have any comments about
anything I've said in issues of this e-Letter; or if you want
to add your 2 cents worth ... just "ask" me or "tell"
me.
Send your Questions, Comments or 2 Cents Worth to ...
with "Question" - "Comment" -
or, "2 Cents Worth" in the SUBJECT.
If I, personally, don't have an answer to any question
you may ask, I will contact some of the professionals in your
field of endeavor (I will probably know one or more personally)
to get the real 'skinny' for you.
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Copyright - 2000, J.F. (Jim) Straw. All rights reserved.