This is rather an unusual post for me, normally I don’t tend to blog about this sort of stuff (generally because it goes swimmingly!).

Too Much Credit
Creative Commons License photo credit: Andres Rueda

As many of you know I run my own company and we’re in the proceeds of moving everything over to a limited company (for a variety of reasons but it’s just started to get a bit bigger than we expected!). This is great news and means we’re doing really well however I’ve hit a pretty major stumbling block today.

We’re in recession (or just coming out of it, depending on who you believe!), but it’s note really affected my business. If anything it’s been quite good for business, which is something we should all be pleased by.

In the process of the business moving to a limited company we’ve had to re-apply for pretty much everything (as a limited company is a legal entity in it’s own right) but my big stumbling block today has been WorldPay (the payment processor).


We’ve been with WorldPay for about 5-6 years, the rates aren’t that great (in fact we get a better rate through PayPal!) but we’ve been loathed to change since they’ve been very reliable during that time.

I completely understood when they said they needed me to re-apply for an account in the limited company name and promptly filled out all the details for them whilst being assured that my new account would function in the same way as the old one.

They’ve asked for far more financial details than they did when I applied all those years ago (and the numbers I’m giving them are considerably higher). Yet in their wisdom today they’ve come to this decision:

As you may already be aware where goods and/or services are paid for by credit/debit card, the card processing company becomes jointly liable with the merchant under the card scheme rules (VISA, MasterCard, etc.) for the provision of those goods and services.

During our assessment we look at many factors including the age of your business, its net worth and the goods/services you are intending to sell online in relation to the perceived risk of chargebacks*. It is designed to help us understand and determine the potential exposure for which we may be jointly liable.

On this occasion in order to proceed with your application we have found that we will need to apply a reserve to your account. The reserve level will initially be set to £2500 and represents additional security that may be required to cover our potential exposure.

Once you begin to trade, the reserve amount will be accrued from funds due to you and then, providing the reserve level has been met, we will transfer the remaining funds to your bank account in accordance with our standard terms.

£2500? What’s that all about (believe me I have asked and am awaiting a decent response), I put more business through PayPal than I do through WorldPay meaning that this is likely to take several months to accrue – during this time they won’t pay me a penny!!! This is ridiculous, and then on top of that I’ll need to pay transaction charges on each transaction (so it will take longer to hit the £2500!). That’s £2500 I could be investing back into the company… No company in their right mind can justify that surely?

Needless to say I’m looking elsewhere whilst they await my response!

The Economy

What’s all this got to do with the economy? Well I read an article this morning about starting up business on the back of a recession and will try to get around to listening to the show on listen again this week and one fact stuck with me all day….

We’re losing 120 small to medium sized enterprises (SMEs) every day, but for each one of those around 11 are starting up. That’s approaching half a million new SMEs in 2009.

I’m not surprised businesses are going under when payment processing companies are doing the above. I also have a concern about how the new ones will survive when companies like WorldPay ask for this in their starting up costs!