[strbean]

I was thinking more in an upfront payment model, where the customer pre-funds their account with the merchant. If you immediately sent those funds to the merchant, then would you avoid functioning as an e-money institution?

Of course, this would then mean that the customer is trusting merchant not to run off with their money.

[strnisa]

That's an interesting idea. This may avoid the e-money issues, but:

  - The customer has to pay upfront, which lowers conversion rates.
  - No shared balance across multiple merchants, resulting in higher total payment processing fees.
  - As you already noted, trust shifts to each merchant to honor unused balances.