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Brad Fallon and Paymentech
October 23, 2004
Since my husband and I have been thinking about setting up an online store, I started doing some research last night. I came across an interesting post by Brad Fallon (of Stompin' the Search Engines fame) called Paymentech Sucks.
Paymentech is the merchant account company that Yahoo Store recommends as it's "default" payment processor. (They must get a bit of business from Yahoo Stores, because you can't set up a store with Yahoo unless you actually have a merchant account.)
According to Brad's post, Paymentech decided that the site run by Brad and his wife, My Wedding Favors was making too much money so it unilaterally froze their merchant account, along with $50,000 of Brad's money. After investigating the matter, they decided they needed a "reserve" from Brad of $75,000.
Brad has been with them for nine months and he says he's only had three chargebacks during that time. And his average order is only $100.
Of course, Brad found another merchant account company almost immediately. But when he asked for his $50,000 back, Paymentech told him they could hold his money for up to ten months while they decide what to do with it.
Ouch! Apparently this kind of thing is not an infrequent occurrence and is something that small business owners, both online and offline, need to be aware of. It seems rather outrageous to me. I can understand merchant account companies wanting to keep themselves covered against the risk, but shouldn't they at least be made to check numbers and individual circumstances for each individual account before being permitted to make these kinds of decisions?
Think about it. If you run an online store, even a day without a payment processor means lost income. I know lots of people felt the impact of Paypal being down for a few days.
Brad's hoping to get his post to the top of the search results for "Paymentech". I just checked Google and the post is at no. 10 right now.
If you want to help out by linking to his post, don't forget the anchor text!
- BJ
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Posted by BJ at 07:26 PM in Internet Marketing | Permalink
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Comments
Looks like a merchant account company to avoid.
Gerry
Posted by: Gerry | Oct 24, 2004 2:44:39 PM
WOW. I can not believe that something like this would happen, especially with the very few chargebacks. Had he been a high risk business, then that is different, but in this case, totally uncalled for.
vibrating condom
Posted by: Sammy | Nov 1, 2004 11:25:34 PM
I recently opened my bridesmaids gifts store www.silverlandjewelry.com and I chose paymentech because Yahoo recommended it and setting things up with them was smooth and quick but now I am concerned. I try to follow Brad's advice on internet marketing and now I wonder if I have made a mistake going with paymentech. With Brad's reputation what it is , Yahoo should consider intervening with paymentech and straighten them out or find another processor to recommend.
Ray
Posted by: Ray | Nov 21, 2005 10:02:59 AM
As a small business owner I would greatly appreciate any recommendations for merchant accounts that are providing good service. My experience with the major player in this field has been far from satisfactory. Refunds to customers after 5 months of personal product use.
Posted by: jeffrey | Dec 31, 2005 3:25:26 PM
http://www.2checkout.com are good, easy to use and no problems even for large volumes.
Cheers
Shane
Posted by: Shane | Jan 8, 2006 7:48:01 AM
It's to bad paymentech has merged with Chase and is 60% of the market share... Hell they must be doing something right. Believe what you like.
Posted by: Nick | Apr 19, 2006 1:08:48 AM
I've just started my site and use Paymentech. My biggest gripe is that it seems to take forever for them to deposit my monies into my account. (Up to 2 weeks) I use the drop ship system and I have to pay up front for the merchandise and the shipment fees. This really hurts when I have large orders and not much money to back my small business and then have to wait for Paymentech for 2 weeks.
Posted by: Paul | Jul 14, 2006 11:39:59 PM
I went though hell with Paymentech as well, we started our internet business over 2 month ago, and our sales rocketed to over $400000 a month, Paymentech out of the blue shut us down, they demanded we pay them $150000 to their reserve, even after doing an investigation and clearing us of any merchant fraud, when told we are considering going elsewhere they cut off communication with us and then started seizing funds directly from our Bank Account. Luckily our bank caught it and froze the account and set us up with a new one. Through out the process they treated us like criminals, they took actions behind our back such as seizing as much funds as possible from our bank account, lied to us, and extorted us. We offer to compromise by redusing the volume sent their way, inorder to reduce their risk, they said no, we want that volume cause we know you can generate it. I WILL NEVER EVER DEAL WITH PAYMENTECH OR CHASE MANHATTEN AGAIN. There could have been a better deal with the situation, extorting us to using only paymentech as the single provider when they can not meet our needs, seizing our funds blindly, and lying to us inorder to get information from our bank account is not how you do business. I am sorry, killing a small business owner livelihood (who may be a potential big account one day), is not how you do business.
Posted by: Al | May 6, 2007 12:57:14 PM
You might want to check out our site. www.Acceptbyphone.com, you can simply accept credit cards using any phone. the monthly fee is only $5.00 per month.
You are not locked into a contract. Accept by phone is for any solo professional, mobile or small business owner that wants to accept credit cards, but does not want to pay all the recurring monthly fees associated with a traditional merchant account. Their is a Free report if you scroll down the home page that educates on the different type of merchant accounts so that you can make the best decision for your business.
Posted by: kevin cross | Jul 18, 2007 11:53:05 AM
This happened to my business but with 2checkout.com. They are freezing $3,000 of my companies money becuase they claim the company i was buying from sold illegal chemicals. they are holding the money while they decide, they say, we cannot release the money becuase of the nature of the website i was buying from.
i was ordering lights and they bill through a parent chemical company. this hurts my small business.
Will
Posted by: Will Howard | Jul 30, 2008 3:12:52 AM
