A British-based Internet payment processor that launched in February is working along an unusual line: using a third-party auditor rather than the processor itself to track client payments in order to facilitate transactions directly between banks and webmasters.
The company, Segregated Payments (or SegPay for short) operates by having its processing bank hold all money except for the fees due to the processor, with the bank then paying the webmaster directly through Washington-based auditor Inteca. SegPay itself has a U.S. office in Florida.
SegPay finalized a deal with Inteca in February for merchants to receive state-of-the-art tracking tools to follow funds "all the way from the acquiring bank to their own individual bank accounts," as SegPay itself put it. "Inteca, acting as a trusted third party to ensure safe segregation of client funds, will only transfer to SegPay fees earned on client funds. Client funds will be held securely until distributed directly to the clients."
SegPay was launched in early February for European merchants initially, with plans to move to other regions before the end of 2005.
Sales director Michael Sperber was quoted in a published report as saying that taking the third-party processor out of the direct equation leaves them with no discretion on who does or doesn't get paid depending on the funds—an issue that has caused trouble for processors in the recent past.
"This is the way it works in the normal financial world," he said in a report. "The only reason why it's not working this way in e-commerce is because it has been an unknown area for banks and financial institutions. But this is the way it will work for everyone in the future."
SegPay has also suggested possibilities of traditional IPSP companies shifting their bases of operations out of the United States as anticipated regulatory modifications arrive and credit card companies continue tightening limits on how and with whom they do business.
