Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.
Articles by Sean Murray
More Photos From the ETA Expo
April 19, 2012The ETA Expo has been quite an experience. ISOs came in droves, with one privately sharing with us that the past two days have generated a tremendous amount of business. Others have used the time less productively and at least one business development manager who sat this year out said he purposely did not go because there was “too much partying last year.”
You get out of it what you put in to it. Tony Syracuse, the Sr. VP of Sales for GBR Funding, is on the scene and says the expo is “a lot better than last year. The venue is a lot better. San Diego’s show was way too spread out.” He added, “It’s a good show overall. [There are] lots of ISO’s in attendance, both from the payments industry and merchant cash advance.”
Tony was nice enough to send us some additional photos of the show:
Subprime Lending and The ETA Expo in Vegas!
April 12, 2012Are we really still saying “banks aren’t lending”? We are, and apparently everybody else is too, because it’s still true. Time Magazine just published a piece that promotes the idea that bank lending is so dead that people wouldn’t even lend money to themselves. Could this be more evidence that banks are no longer necessary to a recovery or economic growth?
We recently scolded the Huffington Post over an article casually claiming that businesses had no financing options other than to pawn off their jewelry. That led us to create a mini-petition in which many players within the Merchant Cash Advance industry could politely inform them of their omission. We are happy to report that individuals from more than 40 MCA companies have participated in the petition so far. “40?! Only 40?!!” If you think 40 is small, you should keep in mind that there are only so many MCA companies in the country. We encourage anyone who has not participated to do so HERE.
Huffington Post hasn’t responded yet but we expect they will be forced to as the emails keeping rolling in!
————————
Woo-hoo! Vegas!! YEAHH!!! (April 17th – April 19th)
As the Merchant Cash Advance industry has evolved, we find it kind of interesting that the we have adopted the Electronic Transactions Association Expo has our own official trade show. Split-processing or ACH collection are both electronic payments, but we believe piggybacking on other industries could potentially be keeping MCA in the shadows. Whenever there’s a trade show, whether it be payment processing, restaurant associations, or other, the Merchant Cash Advance guys seem to show up but they’re never hosting the event.
Now that the volume of MCA transactions per year is in the billions of dollars, it may be time to starting pulling ourselves out of the booths and onto the big stage. Don’t get us wrong. The ETA Expo is the most valuable place for the MCA space to meet, greet, close deals, learn, partner up, promote yourself, and party, and it’s important that we maintain a big presence there. We can’t help but imagine what could be if wholesalers, equipment vendors, distributors, and retail business owners were coming to the Annual Merchant Cash Advance Industry Expo. Attendees would get pez dispensers shaped like credit card terminals and the candy would be green and shaped like money. As long as we had pez, we wouldn’t need a big fancy dance show:
Thoughts on this anyone? Are you going to be at the ETA Expo? Comment below.
The SEO War Continues
April 4, 2012In the last few weeks, Google dropped a nuclear bomb on the SEO battlefield. Some of you may have noticed but no one really wants to talk about it. Who would want to publicize the fact that their website has plummeted from page 1 to page 25 after investing tens or hundreds of thousands of dollars a year to rank on page 1 for a hot keyword? To be the one holding the bag when the bubble bursts has obvious economical consequences but can also be emotionally damaging. So what happened?
In March, Google de-indexed and banned some of the major subscription-based blog networks and effectively wiped out thousands of backlinks for companies throughout the world. Many in the MCA space have secretly been using these networks to compliment their SEO strategy or worse, be the focal point of it. Blog networks such as BuildMyRank (which has been completely shut down) allowed their subscribers to submit up to ten articles per day. These articles are usually a minimum of 150 words and contain at least 1 link pointing to the subscriber’s website. At the rate of 10 articles per day, a company could build at least 300 highly contextual backlinks per month and easily jump in search results over the competition.
We could write 5 articles today with no problem but task us with 300 and we’ll run out of content after 20 and be mentally exhausted after 50. The quality of the content would likely suffer and there would eventually be a point where it was even too cumbersome to produce gibberish. Some of you may think the article you’re reading now is gibberish. 😉
And so the subscription fees were compounded by the cost of hiring writers internally or outsourcing the work. But when everyone in the industry was doing the same thing, the stakes were upped and MCA companies were forced to use new methods. One blog network subscription turned into four and paying for links and issuing PRWeb press releases became the cost of staying competitive, rather than being the recipe to rank the highest. The subscriptions, the labor, the link purchases, online releases, and other costs to stay visible on the Internet have become increasingly material line items on P&Ls in effort to get to Page 1.
But being listed on page 1 doesn’t guarantee clicks or conversions. In fact, if you’re not in the top 3 for a particular keyword there’s a good chance you won’t experience any clicks at all. According to a study performed by Slingshot SEO, humans just don’t like clicking anything but what’s on top.
While some of the MCA companies that relied heavily on the defunct blog networks have practically disappeared from the search results altogether, those that used them in moderation have fallen out of the top 3. Going from position 1 on page 1 to position 5 on page 1 can be practically the same as going out of business.
Internet marketing became exponentially popular in the MCA space just in the last twelve months mainly due to the seemingly low cost and reported success by online lead generation companies. For small to mid-sized ISOs, spending $100 on a website with Godaddy and trying to get the site ranked organically just seems so much easier and cost effective than surrendering to the expenses of hiring telemarketers, renting office space, running mailer campaigns, billboards, radio/tv ads, hiring multiple salespeople, and buying leads.
But diversifying your marketing strategy is key. Buy quality leads, mix it up with mailers or calls, or go door to door. Just don’t put all your eggs in one basket. As many companies learned in the last few weeks and more will learn in the ones upcoming as all the SEO penalties finally set in, Google runs the show. They can change their algorithm at any time and there’s nothing anyone can do about it. If you’re going to spend a million dollars for a Times Square billboard, make sure there’s no clause that allows them to move it to the middle of the Pacific Ocean. If you hadn’t figured out why your website is generating less leads lately, we’re sorry to be the bearer of bad news. Your billboard was lost at sea.
Read related article: The SEO War for Merchant Cash Advance
– deBanked
https://debanked.com
PCI Compliance Double Standard?
April 3, 2012Hey Small Business Owner! Get Compliant or You’ll Be Out of Business!
That’s the message being fed to businesses accepting credit cards by the payments industry. But the communication isn’t getting through. 60% of merchants are unaware of the costs they would incur for a data breach and 64% believe their businesses are not vulnerable to credit/debit card data theft. These statistics fuel the rhetoric by payment processors and ISOs to get compliant, pay highly monthly fees (most of them bogus), and to get serious about protecting customer data. The result is always the same… merchants continue to ignore the PCI Standards. And why should they care when the big companies like Sony and Global Payments aren’t even capable of securing themselves either?
We spoke with a business owner about PCI Standards, who requested to remain anonymous after we informed him about potential fines and termination for non-compliance. The owner of a small grocery store in Queens, NY said he had never heard of compliance standards, the requirement for annual self-assessments, or the necessity to use secure equipment. He’s using a 10 year old Nurit 2085 that was passed down to him by a relative’s failed business four years ago. The NOS has never been upgraded and he hasn’t considered doing it because he’d “rather not mess with the machine.” According to literature distributed by Verifone in 2009, the Nurit 2085 was no longer PCI compliant years ago (if it ever was at all) and the recommended replacement is a vx510. But the business in Queens never got that memo and the owner was very frank in his response to our warnings on the costs of a data breach. “If something ever gets breached, it’s not my fault or my problem. They can talk to my account rep. It’s his problem, his machine, and he’s the one responsible for this whole thing, not me. How can I be liable for the technology that they’re making me use?”
The truth is that a single data breach is likely to result in:
- A security audit (cost of $8,000 to $20,000)
- Replacing the card for every customer who was at risk for having their information stolen ($3 to $10 per card)
- Up to $50,000 in compliance fines
Source: http://www.pcicomplianceguide.org/merchants-20090416-cost-data-breach.php
The average merchant faced with a data breach in 2009 incurred $6.7 million in fees. That’s vastly more than the Queens grocery store is worth. So are merchants being ignorant or is this attitude cultivated by the payments industry? Talk to any merchant account rep and they’ll name a handful of processors that will sign up accounts with Non-PCI compliant technology. At the end of the day, some processors would rather book the account than educate, support, and protect their client from security breaches.
This isn’t to say that carelessness or ignorance is what caused the massive breach at Global Payments but allowing hackers to grab sensitive information on 1.5 million cardholders sends a bad signal to merchants. Experts are already predicting that the cost of this breach will be in the tens of millions of dollars. Visa has temporarily removed them from their “list” of compliant processors and Global expects to be reinstated very soon.
Already the payments industry is spinning this event as contained and Global continues to process card transactions as usual. In a few weeks, we’ll all forget about this and it will be no harm, no foul. Global will dip into whatever reserve fund they have for breaches and square it all away.
But the merchants will never forget. Instead it will serve to further justify their thought process that if something happens, it’s not their fault. 1.5 million stolen credit card numbers fits right in line with their account representative who has never mentioned PCI compliance and their processor who is willing to play ball and book their account with unsafe technology. Everyone’s looking the other way, so how can the end user be stuck with the blame if something goes wrong?
Plenty of ISOs apply PCI compliance fees to their clients’ statements but don’t actually help them become compliant. If the day ever comes that big processors can lead by example (no thefts) and each level of the payments industry gets serious about compliance, perhaps merchants will be more inclined to change their attitude. Until then, they’ll keep right on believing it’s not their fault or their problem. They’re probably right…
– deBanked
https://debanked.com
Do You Work in The Merchant Cash Advance Industry?
March 28, 2012It’s a good time to be employed in the Merchant Cash Advance industry. Without doing any formal research on the sweeteners being offered to agents, we frequently see some of the enticing ads:
Share in the Profits!
Get an iPad!
Work with a TRUE DIRECT FUNDER
and so on…
But forget the iPad boys and girls because you can go to the freaking olympics! Someone forwarded us this advertisement from Infinity Capital Funding which apparently is offering anyone that funds over $125,000 in deals through April 30th, two tickets to the 2012 London Olympics, free flights, hotel, $2,000 in cash, and a VIP helicopter tour. We’re inclined to believe that funding 125k will enter you into a raffle to win this package considering medium-sized ISOs could surpass that target with no sweat. Hopefully this plug reaches Infinity and they can clarify this for us.
The last time we saw a sales prize on that scale was in August 2009, when 1st Merchant Funding was offering a free Mini Cooper to any ISO that funded more than $1 million with them in the span of 120 days. Nobody ended up getting the car.
But not everyone in this business is an agent. There are countless underwriters, portfolio managers, secretaries, assistants, callers, bookkeepers, and other individuals that drive this industry day in and day out. It’s important work and we salute you. That doesn’t stop the account managers, sales representatives, and brokers from getting all the attention though. So what IS IT that these brokers do anyway? It depends on who you ask…
This image was created by the staff of Entrust Cash Advance, a veteran Merchant Cash Advance firm in New York City. They’ve been in the industry since 2007 and from what we gather by the image, they’ve got it figured out.
deBanked would like to hear more from companies about any incentives, rewards, and prizes you’re offering. Send any information regarding this to webmaster@merchantprocessingresource.com
– deBanked
https://debanked.com
Banks Conclude Dismal Loan Demand is a Result of Business Wariness
March 23, 2012
Banks are lending again but businesses aren’t taking the money… Surprised? We’re not. According to an article in the Wall Street Journal, “much of [last year’s] loan growth comes from lines of credit, not traditional loans. And instead of tapping available credit to power up plants, open factories and hire people, businesses are waiting.”
All of the statistics used to conclude about what businesses are or aren’t doing relied on data provided by the nation’s largest banks.
- Bank loans to businesses grew 10 percent last year after dropping 19 percent in 2009 and 9 percent in 2010, according to the Federal Reserve.
- Analysts are watching bank loan growth closely because it provides clues about whether companies are preparing to hire.
With the blind assumption that banks are the only institutions that provide financing to small businesses, experts are inferring faulty conclusions.
- Wells Fargo assumes businesses are uneasy about the future.
- JPMorgan reports that businesses just don’t want to use the money.
- Chase Bank believes that small businesses have enough money of their own and don’t need loans.
It seems that yet another one of our predictions is coming to fruition. What the banks conclude is wariness, is a direct contradiction to what is being experienced in the Merchant Cash Advance industry: an incredible, insatiable, all consuming demand for for working capital.
Dear Banks,
Small businesses are more confident than they’ve been in a long time.
Sincerely,
The Merchant Cash Advance Industry and Micro-Loan Providers
Why just yesterday, Yellowstone Capital announced the closing of a $1 million deal for a health care service provider. This is right after they financed a trucking business for $751,000. Millions of dollars are literally being poured into small businesses DAILY. United Capital Source recently finalized $1.25 million for a mid-sized business and these are just a few of the deals we’ve caught wind of. If we ran a story every time a large Merchant Cash Advance deal funded, well there would be so many stories that our web servers would crash. And because these deals are not being closed by Chase, Bank of America, or any other national financial institution, the Federal Reserve, major banks, and Wall Street Journal analysts assume that (a) businesses must not be getting financing and (b) businesses must not want capital.
Both are absolutely false. Prediction: The Wall Street Journal will run the following headline two years from now:
Economy and Small Businesses Experience Phenomenal Growth While Bank Lending is at an All Time Low. Experts Stumped.
Other News: President Obama Proposes New Legislation to Allow Him to Run for a Third Term in Office.
Everybody will know the reason for this except the big banks who will conclude that some kind of miracle has happened.
– deBanked
https://debanked.com
