May/June 2014 – Issue 3

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Alternative Lending Whispers from Transact 14

Commissions
Competitive pressure has increased for merchant cash advance companies and alternative business lenders alike, but that has driven reseller commissions up instead of down. That means it’s a great time to be an ISO. Among some of the jaw dropping compensation programs on display were Business Credit & Capital’s 15% commission GOLD ISO program and Infinity Capital Funding’s sky miles rewards.

According to Infinity Capital Funding’s CEO Shlomo Bistritzky, ISOs can earn 2,500 sky miles for every $5,000 funded in addition to their regular commissions. That means one $30,000 deal could potentially earn you round trip tickets between New York and Shanghai. Not a bad bonus …

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Operation Choke Point
As the Department of Justice continues its campaign to cut off scammers and fraudsters from the payments industry through Operation Choke Point, many payment processors are worried that legal business transactions are under attack. At the center of the campaign are payday lenders operating outside the law.

As criminal investigations mount and subpoenas fly, banks and processors are feeling the heat. Anything high risk, even if it’s completely legal, is believed to be a regulatory magnet. That begs the question over whether or not merchant cash advance companies and daily repayment business lenders are at risk. Whisperers on the exhibit hall floor claimed that at least one ACH processor was no longer accepting merchant cash advance companies as clients but it is uncertain if that was related to fears surrounding Operation Choke Point.

Stop the Choke

Stacking
While folks on one side claim stacking is here to stay, their opponents are preparing for war. Less than two weeks after Transact 14, at least one member of the North American Merchant Advance Association mailed out formal warnings to alleged perpetrators with the message that contractual interference would be grounds for a lawsuit.

At the conference itself, opinions varied. In the off the record conversations with funders in favor of stacking, there was an overwhelming sense of sureness that “seconds” had become a permanent fixture in the industry. Will they be proven wrong?

P2P Lending
Some veterans in the merchant cash advance industry are putting their money where there mouth is and participating in deals with their own personal funds. While syndication has become all the rage, those that aren’t doing it are whetting their appetites with Lending Club. Peer-to-peer lending allows everyday individuals to invest in loans with contributions as small as $25.

Lending Club came up in a surprising amount of conversations at Transact 14, yet they were not exhibiting there. In an April 18th tweet, Sean Murray of DailyFunder described the experience of using Lending Club as pure ecstasy. Excited much?

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