First Data Becomes An Approved Processor Of AmeriMerchant Merchant Cash Advance Program

First Data, one of the largest merchant processors in the world, has entered into an agreement with AmeriMerchant to become an approved processor of the AmeriMerchant merchant cash advance program. This deal will expand AmeriMerchant's market share by allowing First Data ISOs to offer the AmeriMerchant merchant cash advance program to their merchants. For more information on this story, see the story in The Green Sheet or ISO & Agent

Merchant Cash Advance Green Sheet Article

The Green Sheet just published an article on the current state of the merchant cash advance industry entitled, The squeeze in merchant cash advance.

Like I've said all along, the 2007 Merchant Cash Advance model doesn't work. There will only be a few legitimate merchant cash advance providers doing any real volume when the dust settles.

Note to Merchant Cash Advance Providers: It's not how much you fund a month, it's how much you can collect back. To those providers that don't understand, you need to be able to collect the money back to make a profit and stay in business.

Accelerating Cash Advance

The latest issue of The Green Sheet has an updated article on the merchant cash advance industry entitled, Accelerating Cash Advance.

I think this is a very well written article with quotes from CEOs of such companies as yours truly from AmeriMerchant, American Microloan, Merchant Cash And Capital, North American Bancard and AdvanceMe.

The spirit of article is very similar in line to what many of my postings over the last few months have indicated, the days of merchant cash advance companies approving everything are over. There are some industries that may never qualify for a merchant cash advance again because simply the product doesn't work for it based on the payment flow of the industry / the ability for the customer to control the cash register.

The article also speaks to how agents / ISOs and resellers of this product should be concerned about who they are sending their deals to today. As soon as you hear a company can't fund, RUN! Better yet, don't even get to that place, a lesser, normal commission will be worth more in the long run then what seems like a too good to be true commission from a company that won't be around in the long term.

One positive aspect is that the merchant cash advance industry is coming together to establish best practices for selling the product as well as establishing risk tools to eliminate unscrupulous merchants.

Green Sheet Article - Sizing up Merchant Cash Advance

The recent issue of The Green Sheet has an article about the merchant cash advance industry, Sizing Up Merchant Cash Advance.

This article was written by First Annapolis Consulting, a consulting firm that specializes in consulting and investment bank services for the payments industry. Most of their assumptions were previously indicated in this blog including the size of the industry (First Annapolis' best educated guess is $500 million to $700 million in future receivables purchased). I believe it's closer to $1 billion at this point (as mentioned in my October 2007 posting).

They also indicate how there will be some shakeup in the merchant cash advance industry as I predicted in my 2008 Merchant Cash Advance Industry Predictions.

Merchant Cash Advance Article In The Green Sheet

Yes another article regarding selling a merchant cash advance appeared in the recent issue of The Green Sheet. Mike Evans, a Sales Manager from 2nd Source Funding in New York, wrote an article entitled Use rapport to score with cash advance. (Editor's note: Second Source Funding is a broker / sales agent for several merchant cash advance companies. I believe they also offer merchant fundings / business cash advances under the name Tribul Cash and BPS (Business Payment Systems) also based out of New York City.)

Mike points out several things that I've mentioned previously back in September, namely how former mortgage brokers are getting into the merchant cash advance business (see my previous blog entry - Invasion of the Subprime Mortgage Brokers).

I agree with what Michael is saying for the most part about how merchants are being inundated with merchant cash advance offers. The one interesting item he indicated is the average merchant cash advance factor rate is 1.38. My personal opinion, any merchant that is paying 1.38 for a cash advance can find the money less expensive for around 1.35 (which can add up to signficant savings to the merchant as the advance gets larger).

AdvanceMe Patent Invalidated - Cover Story of The Green Sheet

The story of the invalidation of the "obvious" AdvanceMe patent just keeps on going. As I mentioned in previous posts, the New York Times wrote an article about it, University of Washington School of Law has made the story of the AdvanceMe patent invalidation part of the course curriculum for its Intellectual Law class and it has been the feature story of many publications.

Once again, the story behind the AdvanceMe patent invalidation is the COVER STORY of The Green Sheet, one of the largest credit card processing industry publications. The September 10, 2007 issue features the cover story, "AdvanceMe patent ruling opens merchant funding floodgates."

To update everyone on some facts since this article written, it indicates that the case AdvanceMe v. AmeriMerchant (the companion case to AdvanceMe v. Rapidpay) was scheduled to goto trial in January 2008. The article indicates, "experts predict it will be dismissed as a result of the August ruling."

Indeed this has already happened, the court dismissed this case shortly after the AdvanceMe patent was invalidated.

Two other items to point out about this article. In the print version of The Green Sheet September 10, 2007 edition page 67, there is a featured quote of the article that indicates:

"When you call someone and say, 'I'm being sued,' the first thing they think is, 'I don't want to get involved,' not 'Oh, I want to go through all my dusty old file cabinets,'

– Glenn Goldman
CEO, AdvanceMe

This is an actually a mistake as you can tell, that was actually my quote that appeared in the article earlier that they highlighted later saying it was Glenn Goldman that said it.

However, Glenn Goldman, CEO of AdvanceMe is quoted in the New York Times article and other publications as well as The Green Sheet as saying, "Although we feel vindicated that the court found clear infringement of our patent by each of the defendants, we respectfully disagree with the court's findings on validity."

That is not a typo my friends, Glenn feels vindicated that the court found that the defendants in the case infringed on an invalid patent that is unenforceable and OBVIOUS. Enough said......