Payment Due

Get it, spend it, save it: how to make the most of your money
Magazine Contributor
8 min read

This story appears in the January 1999 issue of Subscribe »

T here's a new heavyweight contender going after the crown in e-commerce payment processing. The PaymentNet Service ( is the industry's only single-source, automated, multipayment, secure gateway for real-time processing of credit-card orders, purchase cards, electronic checks and other forms of e-commerce payment, says Greg Xenakis, PaymentNet's marketing director.

The company is marketing PaymentNet as the antidote for Internet merchants who are "disappointed by slow, costly, cumbersome, and inefficient Internet-based payment solutions."

The PaymentNet Service has already enlisted a number of major banking partners, including First Data Corp., Wells Fargo and Unified Merchant Services. It has also attracted Value Village, one of the largest Internet cybermalls. The American Heart Association has committed to using the service, as have Network Solutions Inc. and

"PaymentNet is not subject to the `time-outs,' which result in double-billing problems, plus we've automated a lot of the processes small businesses need, such as manual batch settlements. All settlements in batch mode are settled automatically by PaymentNet at the end of each business day," Xenakis says. "Also, Internet storefront merchants using [other e-commerce payment processing services] have to maintain their own credit-card data, which can present some security risk. We keep all our customers' credit-card records on a double-encrypted security server."

PaymentNet users get low cost of service and exponentially faster processing speeds, as well as more advanced services, such as "delayed" transactions for delayed product fulfillment, storage for multiple credit-card numbers, and other automated account-management, processing and reporting features.

The service also includes back-end account management through a secure site that provides a virtual desktop terminal, daily transaction reports, credit authorizations, delayed settlement for Visa and MasterCard compliance rules, and partial-order settlement management. "PaymentNet has a lot of value built in for small businesses. It was originally built for big, industrial-strength clients, but we've re-engineered it for smaller merchants, while giving them plenty of room to expand," Xenakis says. "Small businesses can grow from a small package group to [one with] larger, more sophisticated features. For instance, they might start with simple credit-card processing, then graduate into accepting purchase cards and e-payment transactions through a single gateway."

Kurt Samson is a freelance business writer and public relations consultant in Annapolis, Maryland.

Sweep Rewards

Looking for a better return on your business checking account? Many banks have started offering "sweep" accounts to business customers--a service whereby any funds left in low-interest checking accounts at the end of the business day or workweek, are automatically transferred into short-term investment instruments.

According to an industry survey by Treasury Strategies, sweep accounts grew by 143 percent from 1995 to 1997, with an estimated $113 billion invested in 1997 alone.

Instead of earning 3 percent interest on your checking account, your excess balance is transferred into higher-yielding money-market funds, T-bills or stock funds. Banks offer a variety of plans--some sweep overnight or on the weekend, then transfer the funds back before the next business day, while some sweep the money above a limit, then transfer funds back to cover potential overdrafts as the money is needed.

A few banks let customers set the thresholds for sweeping money, although most thresholds are set by the banks, which charge clients anywhere from $20 to $150 (think investment bells and whistles) for the service.

Donald Hance, vice president of cash management for Union Bank of California in Los Angeles, says his bank offers a variety of arrangements, with different prearranged cutoff points. "For instance, a customer selects a $50,000 cutoff," Hance explains, "and any other money gets swept into investment accounts--usually money-market funds or T-bills. As checks come in, the funds are swept back into the checking account."

Sweep accounts may not be suited for all small businesses, Hance cautions "You have to keep enough in the account to make it worthwhile," he says. "Smaller businesses may be better off making transfers themselves--the return on their investment may not cover the administrative costs of the sweep account."

Two things to remember: Funds placed in investment vehicles are not insured by the FDIC, and not all banks have the same cutoff rates--plus their investment timing varies. The Treasury Strategies survey found 80 percent of banks that swept funds into repurchase agreements invested the money on the same day as the sweep itself, while less than 60 percent of money-market investments were made on the same day as the sweeps. The sooner the money is put into a higher-interest investment account, the sooner it can begin to earn and the greater its potential return will be.

Foreign Affair

Anyone doing business overseas knows most banks and money exchanges charge an arm and a leg to convert foreign capital into greenbacks. The more global business you do, the larger the chunk of change. With the Web, home businesses are marketing products to potential customers from Athens to Zimbabwe. Still, converting foreign currency has been both time-consuming and expensive--until now.

Sonnet Financial's FX service has provided foreign-exchange services at a discount since 1992 for companies that move money across borders. The service pools smaller transactions into one larger sum, then shops around to find the best exchange rate. Pretty smart, right?

The idea came to Sonnet's founder and president, Gady Nemirovsky, at an airport in London. He was stunned by the fees he was expected to pay to change dollars into pounds and realized an automated pooling system would provide the bargaining leverage that is badly needed, especially by small businesses.

Using Sonnet, customers simply complete an online transaction form when they do business with a foreign client, and Sonnet then forwards them a check or transfers the money electronically. "Small customers don't have the clout to get the most favorable rates," says John Windsor, director of marketing at Sonnet.

Windsor notes that, in addition to traditional wire fees for international transactions, most exchange banks add a markup to the wholesale exchange rate and include other "hidden" fees. "Customers generally don't know how large of a markup they're being charged," he says. "Sonnet Financial FX is a tremendous value, especially for small businesses."

Of course, transaction fees are involved, but the charges are significantly smaller than those at banks and vary depending on transaction size--$40 for exchanges of $2,000 and under; $70 for those between $2,000 and $10,000; and a maximum charge of $150 for transactions of more than $10,000. Also, while Sonnet Financial FX proprietary software runs about $400, the service is available on the Internet ( for only the transaction fee.

Because the service is automated, small-business owners don't have to waste valuable time doing exhange transactions by phone, fax or on actual visits to their bank, according to Windsor.

"It's inefficient and time-consuming to do it by hand," he says, "plus Sonnet provides greater control for users. They don't have to go through so many fire drills."

Another valuable feature Sonnet offers is its forward contract service that allows businesses to lock in an exchange rate for shipments that won't arrive for weeks or months, thereby eliminating the risk of any unforeseen cost overruns due to fluctuations in the dollar.

Go Figure

Thank the people at Intuit for giving accountants more to worry about than the Y2K bogeyman. The QuickBooks Pro 6.0 accounting system can track sales taxes, accounts receivable and inventory. It also includes payroll functions and can perform many of the other administrative tasks that often tie up homebased business owners for days.

Once you install the CD, the program can track and sort transactions by time, date, amount, and check or document number to help users easily find specific data. QuickBooks can also sort transactions by whether they've been entered or cleared.

The software offers tutorials for step-by-step instructions on tracking sales and expenses, as well as start-up "need to know" information on setting up accounts and inventory management.

The payroll setup feature makes adding and editing payroll information a snap--handling salary adjustments, direct-deposit transactions, employer contributions to retirement and employee-benefit packages, state unemployment insurance, and state-specific programs such as workers' comp premiums and employee-training taxes.

QuickBooks Pro 6.0 also includes features and forms for tracking federal and state payroll taxes, including W-2 forms, automatic payment and filing of taxes, and printing and mailing of W-2s.

Other features include access to Intuit's Internet directory of professional business advisors; a special referral section for finding small-business advice; and CashFinder, a feature that locates the best rates on loans and lines of credit for small businesses. Intuit also offers an e-mail newsletter that provides information on product updates and support.

"QuickBooks has long been at the top in accounting software, holding about 80 percent of the retail market share," says Jeff Larson of Intuit. "What's great about QuickBooks Pro 6.0 is, for the first time, the accounting software is networkable, so now multiple users and growing small businesses can use it to automate their accounting."

QuickBooks Pro 6.0 is available for Windows 95/98 or NT 4.0 or later, and is the fee is $220 for a single-user license. Additional users can obtain licenses for a discounted fee. Call (800) 4-INTUIT for information, or visit the QuickBook product Web site at

Contact Sources

PaymentNet, (925) 225-1670

Sonnet Financial Inc.,

Union Bank of California, (213) 236-7010, fax: (213) 236-4251

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