Ask HN: Who Has Solved the Third Party Payment Aggregator (TPPA) Problem?

Marc Caron, on your Board of Advisors seems like he would have the connections.

I deal with this on the IPSP side. TPPA really isn't difficult from your merchant bank's standpoint, the risk factor is what they are trying to prevent. Being the intermediary between purchase and sale carries a greater risk if you aren't shipping the item yourself with confirmation tracking. Since you don't know if your vendor has drop shipped the item, or the quality of the item that was shipped, or if it was even the right part, the onus is on you when you do TPPA.

Address that risk and how you plan to fix that with your merchant bank. Your bank will generally require a larger reserve, financial guarantees, or perhaps a longer hold on your funds until you've established trust/a low chargeback percentage. You will pay a higher discount rate.

Braintree offers this service, did they tell you why they won't offer it to you?

Marc deals with the processors on a slightly different level and has been hitting the same wall we have.

Our model is designed to cover a lot of that risk. We can determine when the package arrives as we've built in the shipping system to our model. The model would be:

- We receive payment - The seller prints out the shipping label - Carrier picks up the package - Package is delivered - When the buyer approves or 48 hours after delivery has passed we then release payment to the seller

If there's a problem with the shipment we can then enter a claims process to solve the issue. This is designed to mitigate as much risk as possible.

I suppose to clarify it is the merchant bank that is the problem, we're unable to find one that will take on the business. It would have been easier had I stated that in my original post, I'll edit it.

Braintree is trying to help, but we're unable to get underwritten by their Acquiring Bank. That particular bank wants to see $50MM in net worth, which we cannot claim at the moment.

I think I better understand here. One way to further reduce risk is not actually charge the card until the product is delivered and buyer/seller happy. The initial charge would only be an authorization for the amount to make sure there were enough funds to cover. Either that or do a simple $1 authorization to make sure the card is valid. Either way the actual charge though would not be processed until buyer and the seller are happy.

Also, I would make sure that your terms & conditions on the site clearly outline every detail and protect you from liability.

From the US side I have never seen banks out right refuse as long as your personal/business credit is good and you would qualify for a merchant account under normal circumstances. Most here simply require a greater reserve and/or charge a higher percentage. I do know that Visa has some special requirements such as filing an application direct with them, paying a premium application fee, and then an annual fee on top, but I am not sure about the other cards.

You may want to talk to your bank directly. Go in with all the details, a flow-chart of how the process works, have the website ready to go, and all the details for your company/founders. It is sometimes easier to talk to a person face-to-face and have them understand clearly what you are trying to do. It may simply be that you are not explaining it clear enough for them to understand your business process.

Your suggestion could be a possibility but it then introduces fraud on behalf of the buyer that we'd have to account for and put more thought into.

We've got the Ts & Cs fairly well covered, that's an evolving document though, I think.

Perhaps this is a Canadian bank issue, I'm really not sure yet. Our experience has been that every processor we've talked to (And thereby their Acquiring Bank) has told us they couldn't get the model approved before we had gone through the application process.

If you're saying that it doesn't seem to be a problem then I'm going to have to go back to the drawing board and scratch my head a bit. There are companies like AirBnB and Yardsellr that have been approved recently.

Yes, buyer fraud could be a problem in this scenario and is something that would have to be accounted for.

I am not saying it isn't a problem, just that you should expect to have to make concessions in the form of higher reserves and/or fees. Many companies do similar, if not the same, scenarios so it is definitely not impossible or something that is so difficult to accomplish that it is avoided at all costs.

From the sound of your response, you have not gone through the application process as of yet, you have just been talking with processors. If this is the case I would suggest going through the application process. They, like you, are trying to reduce risk and are most likely not going to tell you upfront that they can get it approved or not.

Try http://globalpaymentsinc.com I had a customer who used them in the past and was very pleased with their service (although they were selling directly). They offer service in Canada as well.

Not sure in Canada, but my merchant agreement forbids me from charging any money before an item is shipped. The $50mm in net worth is a polite way of saying No.

Two suggestions. Change your business model. Obviously you have some credit with your sellers. Talk with UPS Logistics, integrate a shipping platform so that your sellers ship to you, and you reforward. At this point, you don't need TPPA processing. You get the business off the ground, processing orders, proving the viability of your concept while continuing to pursue TPPA.

Two, YOU or your cofounder get on the phone with the acquiring banks. Only you know the business, only you know how you're going to address fraud and risk, and only you have the passion to sell the idea to the banker. My guess is you're talking to a broker that is doing the dealing behind the scenes that isn't talking to the person that can actually make the decisions. Leverage your Board - they surely have connections.

It is a longshot, but, email me and I'll give you two contacts that MIGHT be able to help. Poorly disguised email address in my profile.

I'm trying to find a path through to the Acquiring Banks, have been unsuccessful thus far, sadly.

E-mail coming your way. :)

Not sure exactly what you are asking here. Essentially companies like this collect payment from the "buyer", deposit payment in their bank, and then when it is time to pay the seller, they deduct the fees from the amount deposited and pay out to the seller using their account. I am not sure exactly how AirBnB does it, but I bet that it is pretty close to this process.

That's exactly how it's done. The problem is getting a payment processor (or more accurately, their acquiring bank, who takes on all the risk) to approve you to operate under that model. Since the merchant doesn't have control over the product or service being purchased (as in the cases of airBnB and yardsellr), there is a greater risk of chargebacks. Generally, acquiring banks won't touch these business models.

I can't see a problem description anywhere here ...