[KTK]

Client just showed me the doc's to a $97k funding offered to them by PayPal that is an effective 12 month 1.06 inclusive of the origination fee. Before fees it looks like a 1.03 on the contract. 97k PB $100k

Luckily they need more, we have an pretty aggressive 18 month buy rate, and we have won the deal, but wow is that a rate or what offered by PP.

[J.Celifarco]

is that a fixed cost of 6% or is it an accruing interest rate like a credit card.. That seems impossible

[KTK]

I know that's what I thought. But I read it on the contract myself. Check it out:

[J.Celifarco]

what is daily repayment % is that gross holdback? They are taking 20% of a person total gross sales? wow

I would read the whole contract because sounds to me like there has to be some kind of a catch. Just seems to good to be true

[KTK]

In this circumstance it's irrelevant because they aren't going with them. However I read it and that's the deal as I see it. As crazy as it sounds. And yes a 20% split on their PP transactions, which in this case is only 20% of the companies gross so it's really only a holdback of 4% of their actual revenue. So if the funding amount was useful to them this product is unbeatable.

[Scott Williams]

1.06% 12 month total cost is usually what American Express also charges on their advance. Seems like a comparable program

[nrh1lp]

Quite a few processing companies will offer their merchants an advance with these types of terms. A lot of times it is an at cost offer to keep the merchant from applying everywhere and getting the "well if you switch your processor to me..."

Especially considering the residuals are where processors really make their money

[J.Celifarco]

this is paypal not a processor though

[nrh1lp]

Paypall has a similar business model, operating as a platform to exchange funds between parties and with their popularity I am sure they have enough capital they are still making some money off of these offers. Albeit they are not making a substantial amount with these rates, but considering advances are not their primary means of revenue generation I would not be surprised if they just offered this as an incentive to keep utilizing them over the dozens of other programs any consumer/business can use to exchange funds

[Michael I]

this is paypal not a processor though

i thought paypal does processing also

[J.Celifarco]

if they do I didnt know it

[MCA]

if they do I didnt know it

How can you be in this industry and not know that Paypal is a payment processing company and one of the largest acquirers in the world???

[MCNetwork]

How can you be in this industry and not know that Paypal is a payment processing company and one of the largest acquirers in the world???

Paypal is a payment gateway, NOT a payment processor/acquirer. Acquirers/acquirer banks are registered members of a card network, such as Mastercard and VISA. But of course you should already know that.

[MCA]

Paypal is a payment gateway, NOT a payment processor/acquirer. Acquirers/acquirer banks are registered members of a card network, such as Mastercard and VISA. But of course you should already know that.

I guess their in store payment acceptance (terminals, face to face swipe) is a gateway as well, correct it's not. Paypal is so much more than a gateway.

Paypal acts as the merchant account, gateway, and processor.

PayPal Holdings, Inc. is an American company operating a worldwide online payments system. Online money transfers serve as electronic alternatives to traditional paper methods like checks and money orders. PayPal is one of the world's largest Internet payment companies.[6] The company operates as an acquirer, performing payment processing for online vendors, auction sites and other commercial users, for which it charges a fee.

In this sense, to “acquire” means to “accept” payments. So, an Acquirer is a banking partner for businesses. They take the risk that you’re going to be a trustworthy merchant (aka underwriting).

Any other questions let me know

[wally]

Interesting that WebBank is funding them.

"PayPal Working Capital is subject to credit approval, as determined by the lender, WebBank, a Utah-chartered Industrial Bank, member FDIC. To apply for PayPal Working Capital, your business must have a PayPal business or premier account for at least 3 months and process between $20,000 and $10 million within those 3 months or within any time period less than or equal to 12 months. PayPal sales include processing on PayPal Express checkout, PayPal Payments Standard, PayPal Payments Pro, and PayPal Here."

[Sean Cash]

Interesting that WebBank is funding them.

Nothing weird about it. WebBank is the bank behind the majority of non-bank lenders in this industry.

[Chambo]

Paypal is a payment gateway, NOT a payment processor/acquirer. Acquirers/acquirer banks are registered members of a card network, such as Mastercard and VISA. But of course you should already know that.

Can't Paypal use both CC and bank transactions via Paypal though?

[ADiamond]

Interesting that WebBank is funding them.

"PayPal Working Capital is subject to credit approval, as determined by the lender, WebBank, a Utah-chartered Industrial Bank, member FDIC.

so webbank does all of the UW for the companies that it funds for? or just paypal? or is that statement incorrect?

because i thought most of the lenders that use webbank basically just let them fund the contract then they buy the receivable from webbank so they dont have to be licensed. or vice-versa.

[anonymous]

so webbank does all of the UW for the companies that it funds for? or just paypal? or is that statement incorrect?

because i thought most of the lenders that use webbank basically just let them fund the contract then they buy the receivable from webbank so they dont have to be licensed. or vice-versa.

...pretty sure it's the latter

[Sean Cash]

...pretty sure it's the latter

The "lender" does all the underwriting. WebBank issues the loan that the "lender" approves. The "lender" then buys the loan immediately from WebBank. If that sounds a bit wacky, you wouldn't be the first to think that.

Basically, in order to get by the usury laws in all 50 states in one fell swoop, you need a state or nationally chartered bank to make the loans for you.

[anonymous]

The "lender" does all the underwriting. WebBank issues the loan that the "lender" approves. The "lender" then buys the loan immediately from WebBank. If that sounds a bit wacky, you wouldn't be the first to think that.

Basically, in order to get by the usury laws in all 50 states in one fell swoop, you need a state or nationally chartered bank to make the loans for you.

makes perfect sense

[MCNetwork]

I wonder what Webbank makes on the transaction

[Jake_]

Looks like a 1.08 to me unless I'm missing something. Still pretty impressive

[BankComplianceGuy]

I wonder what Webbank makes on the transaction

Depends on the lender, but I've read anywhere between 25-50 bps as an "origination" fee plus any that may have accrued for the time they held the loan.