ECONOMY: The Absurdity of Merchant Account Requirements

From: Ken Meyering (ken@define.com)
Date: Sat Aug 29 1998 - 02:43:57 MDT


Let's say you have a newsletter article on a web page that is
password protected. In order to profit from the newsletter, you wish
to sell passwords, which provide access to the newsletter. The idea
is to have an online, completely electronic process, for obtaining
credit card numbers, dispensing passwords, and electronically
crediting the personal bank account of writer.

In order to have an automatic form on-line that processes credit
cards, you need to have a "Merchant Account" at a bank.

This is a policy that is very unfriendly to e-commerce.

In the U.S. (Silicon Valley, in my case), to have a Merchant Account,
the individual needs to register a "Fictitious Business Name" with the
County Clerk. This process involves traveling to the Country Clerk's
office, doing a database seach for a business name, filling out a form
that is carbon-copied in quadruplicate.

I went through this process last week, for "DEFINE.COM". First of
all, it's absurd that I need to register this business name, since
it's already registered with Internic, and is unique on the whole
internet. Nonetheless, to use it as a business name for a merchant
account, registry with the county is required.

The process takes quite a while, since the County Clerk is not able to
accept credit card payments, and does not have the name registry
online. Here in Silicon Valley, the process still requires physical
travel to the County Clerk's Office, in Oakland.

Last week, I registered the name, for "FILING FEE" of $29.00. There
is a terminal in the lobby of this large office in a grand courthouse.
 I had to use the antiquated data terminal myself, to perform the name
check. After finding that it was not taken yet, I filled out the form
in ink, waited in line for 45 minutes, then handed the form to a clerk
in a window.

The clerk checked the computer again, to confirm that the name wasn't
used, then asked for my $29.00 cash payment, plus an additional $7.00
for registration of the name "IMMEDIA Expert Systems". She took out
her dated rubber stamp, and stamped all 4 copies of the form, then
signed her signature.

She gave me the three back copies (YELLOW, PINK & ORANGE), and kept
the fourth (WHITE), which she added to a stack of others awaiting
further processing. I asked the clerk if she entered the name and
address into the database herself. She advised, "no, these go to the
Recorder, who enters them into the database."

Then she promptly told me that I needed to take the pink copy of the
form to a newspaper within the next 30 days, or the registration would
become null and void.

Here's how the instructions read on the back of the form:

"Within 30 days after the fictitious business name statement has been
filed with the county cleark, the statement must be published in a
newspaper of general circulation in the country where the principal
place of business is located. The newspaper selected should be one
that circulates in the area where the business is to be conducted. The
statement must be published once a week for four successive weeks with
five days between each date of publication. An affidavit of
publication must be filed with the county clerk within 30 days after
the completion of the publication. (Sec. 17917 B&P Code)"

She advised me that this process should cost approximately another $35
or so, to be paid to the advertising department of the newspaper.

Frustrating enough, since I don't have a physical "place of
business", I just wanted to have a way to compensate writers for
posting articles on web pages, located in cyberspace.

I went to the SJ Mercury News Advertising department, but they said
they don't do this anymore. They gave me some suggestions for other
newspapers to try.

I went to the bank, and gave them the YELLOW copy, and opened a
merchant account. I advised that checks would not be necessary, since
the only purpose of the account was to electronically receive payments
from selling passwords.

So far, I have still not published the "FICTITIOUS BUSINESS NAME
STATEMENT" with a newspaper, so the whole thing may become null and
void. I doubt that bureacratic mechanisms will trace their way back
to the bank to cancel the account, but just in case, I'll keep trying
to contact the newspaper to publish this.

Unfortunately, I don't want to give out my home address, since it's
common knowledge on the internet that you "never give out your home
address". It will be interesting to see if the newspaper can publish
this entry and send an "AFFIDAVIT OF PUBLICATON" back to the county,
without publishing my home address.

To be continued...

ken@define.com
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