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08-20-2014, 12:02 PM #6
Technically, ACH deals were set up as receivables factoring (just like CC deals), only the payments were averaged out in a fixed payment style.
This MEANS, that if the sales should happen to go down, the merchant's daily ACH should also go down -- with no penalty to the merchant whatsoever
-side note: this is why some of the daily ACH companies put a % remit down on contract. Their collection will not surpass that % of monthly gross
If one of these funders has a merchant who is having issues making payments, and just decides to go legal or whatnot, then the funder is technically in breach and has created a loan.
Everyone is so bat**** about California because the courts there have stated the exact same thing (and AMI & Rewards paid handsomely). "Put a dress on a pig and it is still a pig", is what the judge said in the Rewards case.
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