

Ask HN: Do I need a license to be an escrow? - Avalaxy

Hi, I&#x27;m working on a C2C web application, and I want to implement an escrow system where user A pays me for an item, user B ships the item to user A, and when everything is received I release the payment to user B.<p>I want to launch this in the US only (as a Dutch company). The only thing I&#x27;m afraid of: do I need any licenses? Will &#x27;they&#x27; see me as a bank? How does all this work (especially in the US since there are so many different states with different laws)? Is it hard (especially for a Dutch company)? What can&#x2F;will happen if you do this without the proper licenses?<p>Edit: I&#x27;m just talking about low-priced objects. The value of the items sold is between $10 and $100.
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davismwfl
Seems like a question for a US based attorney.

Is the escrow management your product or just something you need to offer? It
seems to me if it is just something you need to manage, then use a service
like Balanced Payments. If it is your business, then seek out some legal
advice to make sure you protect yourself.

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Avalaxy
Escrow'ing is not my business, it's just a measure I'd like to take to protect
consumers against other (fraudulent) consumers. It's how AliExpress does it
(and maybe ebay too, but I don't really know ebay): you buy an item off the
website, pay AliExpress, and when you received the item you can flag it as
received. After that, AliExpress pays the money to the merchant that shipped
you the item.

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davismwfl
You may really want to check out someone like balanced payments. I know there
are others out there as well, but they have this type of service, and you can
control when funds are released etc. I personally just happen to like Balanced
more than most, so I have a bias.

But no matter what you do, I personally wouldn't go about writing this type of
system as the requirements for security, certifications etc can just consume
all your time.

Good luck with whatever you choose to do.

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Avalaxy
Too bad, Balanced only works with US companies. Bummer.

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davismwfl
Sorry, I should've thought about that, did you try reaching out to them? Just
to see if there are any options or things they can suggest? I am trying to
think of any other systems like that which exist already.

Maybe someone else has some ideas of systems that work where you are.

If you do have to go about making something, you might want to checkout the
payment API's, like Balanced, Stripe etc to see the type of things they
handle. Might help things go a little faster.

Good luck.

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Avalaxy
Thanks! I checked with Balanced to see if I can sign up as a European company,
but they didn't offer any ways to do that. I'll just keep looking for
alternatives.

