

Ask HN: Payment systems? - auntik

I need to implement a three-party transaction model, where I will facilitate payment between a buyer and a merchant and charge a fee to process the transaction. I am neither the buyer nor the merchant, say I am the developer who hosts the merchant’s product. Which payment gateway has APIs to support this payment system?
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jacquesm
I would suggest less capitalization in the title, it makes the place feel like
AOL :)

If you wish to facilitate the payment then you need to become an IPSP. The
specific thing to look for is what it takes to become PCI certified. You will
need to hook up with a gateway (such as FirstData or PaySquare) to get your
charges processed.

Imho you are on the wrong path and would do better to simply apply to an
existing IPSP as a customer and get a merchant account. That way you sidestep
all the things that have to do with certification, you only need to pass the
merchant accreditation, which is a whole lot easier and less costly.

Examples of IPSPs that you could apply to are epoch, ccbill and vxsbill.

Good Luck.

~~~
auntik
Thanx jacquesm. I have very little knowledge regarding IPSPs. How do they
differ from third party payment processors?

~~~
jacquesm
An IPSP _is_ a third party payment processor. You are essentially suggesting
that you wish to become one.

What you are about to do is to layer one IPSP on top of another so you control
the stream of funds. Because you outsource the bulk of the problems to the
IPSP below you you will have a relatively easy time of it.

If your merchants are going to use your platform (it is hard to say exactly
what you will run in to without knowing a whole lot more about your project,
but I understand you do not want to put all your cards on the table) then you
will want to keep the balance you hold for them as low as possible to reduce
the risk in case something goes wrong.

I'm actually working on a very long post (more like a small book) regarding
the whole internet payment process, likely it will too much time for you to
wait until it is done.

Ideally you would make a deal with an IPSP to see you as an affiliate, and get
every merchant their own account with the IPSP. That way your exposure is
limited and in case of conflict it will be between the merchants and the IPSP
you pick.

Some, but not all IPSPs support this kind of functionality, the 'split' is
usually either a fixed amount per transaction or a %age of the total sales
volume.

You will have to figure in a two to six week 'holdback' period which is used
to create a reserve in case of massive chargebacks due to fraud, it is also a
major source of income for IPSPs and a major source of trouble in case one
goes under.

~~~
auntik
Its actually a different kind of auction where the buyers role and the sellers
role are switched. Maybe I could explain the business model to you in detail
over here: <http://etherpad.com/FhFO67ihv2> ?

~~~
jacquesm
That comes up blank for me.

But I get what you're saying, you get buyers that want to buy stuff from
merchants, they deposit some amount of money with you, then the merchants can
go in to a 'reverse auction' (that's what this model is called), the winner is
the one that puts in the _lowest_ bid.

You really should make such stuff clear up front when you ask for advice.

This is _yet_ another kettle of fish, with its own associated problems.

You really don't want to be in between here, after all the chances of rip-offs
increase enormously, or you will have to go through a lengthy accreditation
phase with each merchant where you verify that they can deliver the goods.

In a normal auction the bigger problem is the buyers not being able to pay up.

If there is a performance related issue (such as work for hire) then you have
even more things to contend with, such as deadline management, fallbacks and
so on.

~~~
auntik
Authorize.net has "Authorize only" transaction types, and you can "Capture"
within 30 days. But how do I transfer this deposit to merchant without putting
ourselves in the higher risk category?

~~~
jacquesm
Have a look if they are pre-auth or actual charges, that's a huge difference
(both to you and the buyers).

For instance, if there are no 'takers' then you end up having to refund but
the charges are gone.

A hard to catch fraud angle here is a person laundering money putting charges
on cards for deposits, then having a 'white' merchant receive the deposits
with ridiculously low bids.

------
ig1
Let me know if you figure out a good solution for this. The only thing I could
find to do this was PayPal. I've had lots of ideas for marketplace type of
sites, but the stopper was figuring out a way to let sellers accept payment.
Often individual sellers aren't making enough to cover the hassle/cost of
getting merchant accounts set-up so going the IPSP route seems unviable.

Google Checkouts is also a possibility but lacks a strong api.

------
dimarco
Amazon Flexible Payment

~~~
jacquesm
Does not allow third party processing, which is what he is asking for:

> I will facilitate payment between a buyer and a merchant and charge a fee to
> process the transaction.

So his customers could apply to FPS but he can not do that unless he is the
merchant.

Amazon does not allow that because they want to sit in that chair and do not
want the 'real' merchants to sit at arms length.

I believe that Paypal does allow you to do this, iirc that's the reason etsy
chose them for their financial needs.

Paypal is very finicky to deal with though, especially if you hold money in
your account that is intended for third parties.

And if your account would ever be blocked then you would be in serious trouble
with your merchants.

