Ask HN: I'm working on a marketplace app. Which escrow service should I use? | Hacker News Reader

Ask HN: I'm working on a marketplace app. Which escrow service should I use?

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I'm working on a marketplace app that connects buyers and sellers for certain services that may take several days or months to be completed. I'm still working on the process flow of the site (i.e. how the site is structured, how buyers/sellers will interact etc), so I'd like to get a sense of what payment processors I could use. I have very little experience in processing online payments, unfortunately. I'm looking for escrow options that hopefully someone here could provide some insights on.

For example, I see Fiverr allows its users to pay with PayPal...but from what I know, PayPal does not offer escrow services. So I'm assuming a buyer will pay $x to Fiverr's PayPal account, which then pays $y to the seller's PayPal account (after transaction/processing fees). In other words, Fiverr is holding on to the buyer's $x for a few days until the gig is complete. Is my understanding correct? If so, this is a scenario I'm uncomfortable with...I'd rather not hold on to the funds as a middleman.

Alternatively, I understand escrow.com offers escrow services. Would this work for my site? Are there any other escrow options that you use or would recommend (e.g. Stripe, Payoneer etc)?

Some background for those who may not be familiar with escrow services: Taxes and financial obligations are simplified if a company only holds their own money.

Simple example: A consignment store owns no products and allows people to offer their items for sale. They charge 20% of the sale price. Option 1: The store accepts the customer's payment of $100, then gives the product owner $80. Pro: simple Con: the store needs to prove how the money was handled and also prove it was given to the seller.

Option 2 with escrow: Customer pays Stripe/escrow service. The escrow service splits the payment and gives 20% to the store and 80% to the customer. Con: more complicated. Pro: the store does not need to disclose the money they did not touch on their taxes (correct?) and liability is decreased because they never held the seller's money.

Stripe Connect [1] offers this (not the standard Stripe account). In my research, PayPal was integrated into more services (I was interested in integrating with WooCommerce), had been around longer and offered several options under their adaptive payments option. PayPal requires a pre-approval process, and talking to a WooCommerce developer, they noted that companies who are very new may have trouble getting approved. WePay was another option I looked into, and they noted an approval in "minutes", but their API seemed to be very manual and did not integrate with WooCommerce for escrow/ marketplace payments.

[1]https://stripe.com/connect

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