Gateway and Merchant account

[j1477]

We need a payment system for our website where we'll be able to reserve an amount against a buyer's account and settle it after wards. During the settlement we would transfer part of the buyer's deposit to a seller. We cannot go with Amazon FPS, PayPal or Google Checkout. What gateway and merchant account would you suggest?

[jacquesm]

Most IPSPs support this kind of functionality, it's called a pre-auth.

You can place a hold on it for a 3-5 business day period, depending on the issuer and gateway details.

It's hard to suggest a company to deal with without knowing more about your location and other details but more IPSPs will do this. Also, please make sure you have your own merchant account, do not get sucked in to have a third party arrangement.

[j1477]

Our customers are largely going to be located in the US. Right now we are thinking of going with Authorize.net or Braintree for the credit card processing.

[jacquesm]

If you are in the US and your target market is the US then for sure you should limit your search to IPSPs in your country, there would simply be too much hassle getting set up elsewhere.

I'm not sure if authorize.net will allow you to plug in your own merchant account.

The reason why that is important is that the chance of the IPSP going under or being fined some massive fine are diminished substantially if you have your own merchant account.

See 'IBill' and 'DMR' for what can happen if you decide to use a multiplexed account, plenty of people lost their shirt or worse.

Another risk is that your 'good' traffic will be used to dilute 'bad' traffic in order to lower the charge-back rate on the bad traffic as perceived by the card companies.

The pre-auth feature should be offered by most gateways I don't expect any major problems there unless your period is longer than the 3 to 5 days indicated above.

Longer than that and it is probably better to simply charge the account right away and do a whole or partial refund.

[hga]

I looked into both of these companies last year and made the following observations back then:

Braintree looks great, but you need a rather large minimum monthly to sign with them (6 figures, can't remember the cutoff then). But they seemed to be the class act at the time.

Authorize.net just does not inspire trust, from their business practices to their flaky infrastructure (plus they've been a major target for attacks). They do have some pretty neat public APIs you can use.

Good luck! This is not an easy area.

[bryanjohnson]

Thanks @hga for the nice comment, we certainly try. Regarding the volume minimum, we did away with that about a year ago.

@j1477 - here are a few resources that may help you in your search for a solution:

1. You mentioned reserving an amount on a credit card. You can do this one of two ways. First, you can authorize a credit/debit card and then settle it at a later date. Authorizations do go stale after a few days (the general rule is 7 days, but it varies bank to bank) so if the time between authorization and settlement is greater than ~7 days, you'll need to reauthorize to complete the transaction. Also, authorizations cannot be settled more than once. For example, you can't authorize a card for $100 and then settle it twice, each for $50.

The second option is to do an Account Verification request. Here is more information on that: http://bit.ly/NlKuG

2. The second thing you mentioned was "transfer part of the buyer's deposit to a seller". I may not understand this correctly, but this sounds like you're collecting payment on behalf of a third party, which is known as aggregation and is one of the highest forms of risk in payment processing. Here is more information on that: http://bit.ly/775RkJ

If you're looking to transfer funds to payout out another provider, you could also move the funds via electronic funds transfer (EFT) from your bank to theirs.

[j1477]

Thanks bryanjohnson. I was wondering if you work for Braintree and if you could please tell me who at Braintree I could contact as a new merchant? I would like to discuss our business model and see if we could achieve the same effect without putting ourselves in the higher risk category.

[bryanjohnson]

Yes, sorry, forgot to mention that I am with Braintree. You can contact Eric at ej at getbraintree.com and he will be able to provide some guidance.

[j1477]

But most people say that it is difficult to integrate with Authorize.net

[hga]

In all fairness I only looked at their API documentation, but it didn't look hard.

Are these people who don't have those sorts of skills, or are there non-obvious gotchas or bugs?