Alternative Lending and FinTech Law
Good FinTech lawyers, like ours at Global Legal, are deeply knowledgeable in new forms of litigation that came along with the dawn of payment facilitators
Historically, credit card companies have prohibited what is called “aggregation” that is, they haven’t allowed merchants to accept credit card payments through a single payment location. In times past, each credit card company had its own bank and its own bank payment processor.
The internet forced a change in that stance, and payment facilitators (such as PayPal and Square) became standard.
This change in the payment game brought about a boom in “FinTech,” or financial technology. FinTech combines financial services, technology, and law through innovative payment solutions like digital payments, cloud-based lending, virtual banking, and more. Customers have come to expect easy and less expensive financial services and products. Alternative lending companies are evolving in response to this demand – but the new legal waters can be murky
Global Legal’s Areas of
Focus in Fintech
Merchant Cash Advance
Because of the lag time in processing payments via facilitators, merchants developed cash flow problems. To fill this gap, the merchant cash advance system, a form of alternative lending, was created. Merchant cash advance, or MCA, is a short-term loan to cover short-term costs, such as payroll and inventory, backed by regular credit card payments of the sort frequently paid through facilitators.
For instance, if a merchant typically receives monthly payments via PayPal of $500 from a renter, and that renter has fallen behind, the merchant may apply for an MCA against the regular PayPal payments evidenced by his PayPal account.
FinTech Lawyers and
Convincing banks to accept these loans can be a challenge, and so can collecting on the outstanding accounts through PayPal or other facilitators. These are two key areas where a FinTech law firm can help. This is a comparatively new area of law, but the concepts are as old as law itself: A debt was incurred and now must be repaid.
The only thing that has changed is the nature of the transaction itself. At Global Legal, our attorneys are able to demonstrate to the courts’ satisfaction that despite the intangibility of the exchange through a payment facilitator, there was still a contract for the exchange of money, and the debtor owes the merchant on that contract.
Global Legal Law Firm and Alternative Lending
In the new world of financial tech and alternative lending, companies have complicated choices to make. FinTech challenges businesses to evolve their products and services, rethink their technologies, manage risk, and maximize efficiencies. Add to those challenges the difficulty of finding a qualified lawyer.
With so much at stake, expert advice can be a lifeline. Global Legal is already there on the leading edge of the FinTech law field. Contact us and schedule a consultation to hear how we can help your business find its way through the technological challenges and changing legal landscape of the electronic payment processing marketplace.