[tzs]

I don't understand how instant underwriting works. I thought the the reason it normally takes a while to get set up to take credit cards is because your merchant account provider is liable to the credit card providers for chargebacks, even if they can no longer collect that money from you because you went under months before.

Who assumes the risk for chargebacks in the instant underwriting scenario? How does that party control their risk?

[klynch]

Kristi from Braintree here.

We wrote our own underwriting software that connects our online signup process with years of data and experience underwriting tech companies. That combination of better software, years of data and more experience with tech companies makes us way more efficient than traditional payment providers.

As for who assumes the risk: the merchant is responsible for chargebacks first. If the merchant fails to cover those chargebacks, the risk then typically sits with the payment provider. If the payment provider is not able to cover the risk, the bank then stands behind the payment provider.

[BallinBige]

pretty sure you are just an aggregator. Visa & MC are making this more 'feasible'

[klynch]

Kristi from Braintree again.

All of our merchants get their own merchant account during our onboarding process.

Admittedly, it's a complex process behind the scenes. We know that a lot of people are interested in how we do this, and we want to be completely transparent about our business practices. We plan on putting out a blog post explaining it all in detail in the coming weeks.

You can subscribe to our RSS feed at http://feeds.feedburner.com/braintree for updates.

[tzs]

I've tried on occasion to figure out all the players involved in processing a payment, and their relationships and responsibilities. It is complicated because (1) so many companies offer multiple services (gateway, merchant account, etc) and their documentation blurs the distinction, and (2) some companies use different names for the same thing.

Here was my best attempt: http://news.ycombinator.com/item?id=2445866

If your blog post could cover all the components I tried to cover there--but without the errors I probably made and with the gaps filled, I and many others would be grateful and ecstatic.