Merchant Payment Services Now Going Online

The online method of merchant payment services today continuously gain popularity worldwide because those business establishments still not using this method are realizing that they will be left behind if they insist on their non-electronic systems before. The Internet has become a most convenient tool in business transactions now at much faster speeds than ever before imagined.

In banking, while some banks still remain reluctant, many of them now are opening online accounts of their clients who deal with them mostly through ATMs now – canceling their need to visit the bank’s physical premises at all. They can deposit and withdraw their money by just using their convenient online accounts – just seated before their home computers with their morning cup of coffee.

The manual type of merchant payment services are disappearing as the new electronic means are replacing them, both for the convenience of the merchants themselves and for the convenience of the buying public as well. Almost everyone now uses his credit card when purchasing anything – even of the smallest items in the malls. The checkout counters are all fully equipped with swipe machines “collecting” the payment of goods bought in seconds.

Online payment services offer secure and cost effective ways for merchants to process transactions. There are now merchant account providers that offer online payment processing services so that international and offshore business owners, especially, can process online their transactions on secure servers and virtual terminals. This has to be done because businesses around the world are practically virtual, as there are different time zones that you as a merchant have to deal with. Many of the small drop shippers now operating just small businesses from home are benefited by the electronic merchant payment services now that they use.

Security is also very important as there are also online hackers now that thrive on the Net, just as there are bad elements in society offline. These thefts online however are being protected now by electronic systems too that are designed to secure online transactions from the Net hackers.

If you are out of a job now because of the economic recession in our country, it might be a good idea for you to look into drop shipping as a source of income online, – or as a retailer for an existing drop shipper to distribute merchandise right in your own neighborhood. The neighbors will likely patronize your store, as they are also economizing on travel expenses to the malls. A small business operation this way is better than having no income at all. Be current however in your retail operations – you must at least have a swipe machine to handle your sales transactions.

SEC Changes Course and Allows Business Brokers to Receive Commissions on Business Stock Sales

Prior to 1985, the SEC did not consider the sale of a business structured as a stock sale to be a sale of securities under the securities laws. This was known as the Sale of Business Doctrine. As a result, the penalties and rules that apply to securities sales did not apply to the sale of a business, and business brokers and merger and acquisition brokers were able to receive commissions in connections with those sales without being registered as a broker dealer. This changed in 1985 when the Supreme Court of the United States took the position that the sale of a business structured as a stock sale was indeed the sale of securities. As a result, business brokers and merger and acquisition brokers were prohibited from earning commissions in connection with those sales unless they were registered as a broker dealer. This created substantial implications for business brokers and mergers and acquisition brokers, especially where a transaction started out structured as a sale of assets and then during the course of negotiations, the transaction was restructured to be a sale of stock. In that case, business brokers and merger and acquisition brokers that were not registered as broker dealers were theoretically prohibited from earning a commission, simply because the structure of the transaction had changed. This result was often thought of as unfair in the industry.

The ABA task force on private placement broker dealers noted in its year 2000 final report that the broker dealer registration process involved significant costs as well as a regulatory model that is not the right size to accommodate the particular role played by business brokers in connection with the sale of a business. The requirement to register as a broker dealer is a lengthy process and there are substantial costs and fees, together with start up and first year expenses, including legal, accounting, and operating costs that can equal several hundred thousand dollars. Persons effecting one or several transactions a year simply cannot bear this financial burden. These firms do not hold customer funds or securities and generally they merely introduce the parties to one another and transmit documents between the parties. They do not participate in structuring or negotiating these transactions or otherwise advise the parties. Both buyers and sellers in this type of transaction are typically represented by legal counsel who can assist with due diligence, draft the transactional documents and advise their clients on structure, tax considerations and contractual provisions and there are remedies, both contractual and by operation of law, that are available to the parties in these types of transactions.

On January 31, 2014, the SEC changed its mind about these matters and issued a long awaited no action letter permitting certain merger and acquisition brokers to receive commissions in connection with the sale of a business even where the sale is structured as a stock sale.

Under the new interpretation, merger and acquisition brokers are permitted to facilitate acquisitions, mergers, business sales, and business combinations on behalf of buyers and sellers of privately-held companies and receive commissions in connection with the transaction. Moreover, the letter does not limit the amount or type of compensation that a merger and acquisition broker may receive, and it does not limit the size of the privately-held company. The letter also permits merger and acquisition brokers to advertise the sale of a privately-held company and include in such advertisements a description, general location and price range of the business.

For purposes of this letter ruling, a privately-held company is one that does not have any class of securities registered or required to be registered with the SEC under Section 12 of The Exchange Act or to which it is required to file periodic reports under Section 15(d) of The Exchange Act. Also the company must be a going concern and not a shell company.

As is so often the case in these matters, there is a catch. In this case, the catch is that the relief available under this no action letter is only available if the transaction satisfies ten (10) very specific conditions.

Those conditions are as follows:

1. The “merger and acquisition broker” must not have the ability to bind a party to a merger and acquisition transaction. A “mergers and acquisition broker” for the purpose of the letter is a person engaged in the business of effecting the securities transaction solely in connection with the transfer of ownership and control of a privately-held company through the purchase, sale, exchange, issuance, repurchase, or redemption of, or business combination involving securities or assets of the company, to a buyer that will actively operate the company or the business with the assets of the acquired company.

2. The merger and acquisition broker must not directly or indirectly through any of its affiliates provide financing for the merger and acquisition transaction. The merger and acquisition broker may assist the purchaser in obtaining financing from an unaffiliated third party but they must comply with all applicable legal requirements and disclose to their client, in writing, the receipt of any compensation in connection with the financing.

3. The mergers and acquisition broker is prohibited from having custody, control or possession of or otherwise handling funds or securities issued or exchanged in connection with the merger and acquisition transaction or other securities transactions for the account of others. The merger and acquisition transaction cannot involve a public offering. Any offering of securities must be conducted in compliance with an applicable exemption from registration.

4. No party to a merger and acquisition transaction may be a shell company, other than a business combination related company.

5. If a merger and acquisition broker represents both the buyer and the seller in a transaction it must provide clear written disclosure of the potential conflict to the parties it represents and it must obtain written consent from both parties to the joint representation.

6. A merger and acquisition broker may only facilitate a merger and acquisition transaction with a group of buyers if the group is formed without the assistance of the merger and acquisition broker.

7. Buyers or a group of buyers in a merger and acquisition transaction must control and actively operate the business acquired with the assets of that business. In this regard, control will be considered to be achieved if the buyers have the power directly or indirectly to manage the company or the policies of the company through ownership of securities by contract or otherwise. Under the view of the SEC, a buyer could be considered to actively operate an acquired company simply by possessing the power to elect executive officers and approve annual budgets or by service as an executive or other executive manager, among other things. The necessary control will be presumed if at the completion of the transaction the buyer or group of buyers has the right to vote 25% or more of the class of voting securities; has the power to sell or direct the sale of 25% or more of a class of voting securities; or in the case of a partnership or limited liability company has the right to receive, upon dissolution 25% or more of the proceeds from the dissolution, or has contributed 5% or more of the capital to the transaction. In addition, the buyer or a group of buyers must actively operate the company or the business acquired with the assets of the company.

8. No merger and acquisition transaction can result in the transfer of interests to a passive buyer or a group of passive buyers.

9. Any securities received by the buyer in the merger and acquisition transaction will be restricted securities within the meaning of Rule 144(a)(3) of The Securities Act.

10. A merger and acquisition broker must meet the following conditions:

(a) The broker has not been barred from association with a broker dealer by the SEC or any state or self-regulatory organization.

(b) The broker must not be suspended from association with a broker dealer.

These rules make very clear who will be entitled to the exemption provided in the no action letter. As a result of these changes, business brokers and merger and acquisition brokers will no longer have to worry whether or not they will be able to receive their commission in the event that a transaction is ultimately cast as a stock purchase. The SEC’s actions in this instance are grounded in an understanding of the realities of the typical sale of business transaction. The truth is that those transactions are structured on the basis of accounting or tax considerations, and not on the application of federal securities laws. The sale of a business between sellers and buyers of privately-owned companies are qualitatively different in virtually every respect from traditional retail or institutional brokerage transactions.

We are encouraged that the SEC recognized these distinctions. This decision will clarify a tricky area of the law and provide appropriate relief to business brokers and mergers and acquisition brokers who work in this area.

How Business Service Management Complements IT Service Management

Information technology has become so ubiquitous in all aspects that majority of businesses virtually cannot function without it. Even the easiest manual tasks such as filling a car with gas or depositing a check now needs the support of an IT system.

This heightened dependency on IT has compelled companies to address this new dependency by putting technology and processes in place to ensure that it does its job of serving the business proficiently. So the Business Service Management is mandatory and complements IT service management in all segments of market. Some of the aspects how BSM strengthens IT service management includes:

Acquires a New Customer Focus

One of the values that BSM offers to the customers is bringing the IT enterprises to the forefronts instead of back office. BSM looks at the requirements of the business uses, i.e. actual customers. Virtually, the broader you leverage BSM, the nearer you are to connecting with the business and to your customers by offering them improved services.

Take a Global Stand

Another great payoff of using Business Service Management solution is in global operations support. With the globalization of the company, the unifying approach to IT operations expands to other IT support groups. You can support your global business processes in other parts of world.

Limits the Expenses

Yet another advantage of BSM solution in the current scenario is that it helps you hold down expenses in the IT infrastructure. Business Service Management can enable you keep track of existing resources minutely and identify ways to leverage it to the optimum.

Looking at the broader picture, it can assist you restrict your datacenter footprint to enable you limit the requirement of your incremental hardware to meet increasing business demand.

BSM automates certain repetitive processes, enabling staff to focus on the core activities of business to support on a day-to-day basis.

Strengthens Virtualization

Virtualization helps several enterprises to save money by leveraging existing assets and handling power in the data center. BSM strengthens virtualization in large server environments. Via better server utilization, you can eliminate various servers and all the allied overhead costs.

As a result of BSM, enterprises have achieved a significant boost in R&D productivity and reduced costs. The time to get the server back online can be improved by 30 percent in the event of failure of a server.

Business Service Management is more of a continuous journey than a milestone. There are various products which can be used internally in multiple ways in combination with the day-to-day IT work making it more effective and efficient thus complementing each other.