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Table of Contents

Lead Story

Will easy money flow to acquirers and ISOs?

Patti Murphy
ProScribes Inc.

News

Industry Update

Financial pressures on Square appear to mount

Heartbleed offers chance to hit 'Reset'

Insider Technologies takes Sentra on the road

Features

Improve merchant retention: Five quick steps

Mobile payments update: An overview on HCE

Jeff Crawford
First Annapolis Consulting

Marketing success in the mobile age

Views

Voices from Transact 14

Education

Street SmartsSM:
A Square peg in a round industry - part 2

Tom Waters and Ben Abel
Bank Associates Merchant Services

Debunking four myths about our future

Jeff Fortney
Clearent LLC

Lower your data breach risk, a mathematical approach

Jake Young
SecurityMetrics

Company Profile

Nationwide Payment Solutions

BPC Banking Technologies

Rapid Advance

New Products

Innovation to facilitate mobile commerce

SwipeSimple
CardFlight Inc.

Mobile card-linked offers for SMBs

OfferPipe
TranSEND Inc.

Checkout made easy

Forte Checkout
Forte Payment Systems

Inspiration

One thing at a time

Departments

Readers Speak

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

May 12, 2014  •  Issue 14:05:01

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Readers Speak

The cons of merchant aggregation

Can you tell me if there is an archive article of any sort related to the "argument against merchant aggregation." Anything along those lines would be fine.

Steve Rizzuto President, Commercial Services TransFirst LLC

Steve,

That's an excellent question, especially since the perception of what aggregation is has changed over the years from the forbidden practice of one merchant using his or her merchant identification number to process payments for multiple merchants, to that of payment businesses processing numerous small merchants under one umbrella.

Also, Visa is implementing changes to its Fixed Acquirer Network Fee (FANF) that are expected to raise costs for aggregators because Visa will be assessing FANFs based on individual merchant transaction types and volumes rather than as one fixed fee per aggregated merchant group. This topic is touched upon in a news article we posted April 24, 2014, under Breaking Industry News on our home page, www.greensheet.com. And Ken Musante, President of Eureka Payments LLC, is writing an article on Visa's FANF changes that will be slated for an upcoming issue.

As for archived articles that delve into the cons of aggregation, here are several that should be helpful:

We published a lead article, "Switch it up this year: investigate aggregation," The Green Sheet, Jan. 13, 2014, that focused on the positive aspects of aggregation. A feature on the downside of this practice would likely be valuable to our readers.

Thanks again for your question. Let me know if I can be of further help. Editor

The status of virtual currencies

Are virtual currencies real currencies? And does bitcoin have staying power? Dave Smythe Smythe Payment Affiliates

Dave,

Most of our sources distinguish between government-backed currencies like the U.S. dollar, and virtual currencies such as bitcoin. But virtual currencies are nevertheless real and on the government's radar. In August 2013, Judge Amos Maazant of the U.S. District Court, Eastern District of Texas, ruled that while bitcoin is not akin to the U.S. dollar, it is comparable to precious metals, such as gold, or other valued resources. The defendant in that case had argued that bitcoin is not money and is thus neither regulated by the United States nor subject to lawsuits based on laws pertaining to currencies.

In March 2014, the IRS ruled that bitcoin and other virtual currencies do not have legal tender status, but are instead a form of property governed by capital gains tax regulations. Also, wages paid in bitcoin are subject to income tax at the value of the bitcoin at the time of payment. Such payments are also subject to employer tax withholding requirements. The IRS views bitcoin payments for goods and services much like it views barter transactions.

Whether bitcoin is here to stay is difficult to predict. Given the lack of success of prior alternative currencies due in part to unfavorable monetary policy, at least in the United States, banking on bitcoin is not for those who are risk averse. Good luck to you if you decide to invest in bitcoin. Editor

What's your perspective?

Do you have thoughts on the impact of merchant aggregation on our industry and whether it's a good idea to adopt it as a business model? What about other concerns of promising developments of interest to payment pros? Please let us know at greensheet@greensheet.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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