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How to set up an escrow type service

    • 3 posts
    May 29, 2009 4:16 AM EDT
    Hi there,

    Fantastice website! I`m on the verge of having a website built for a new startup and have hit a stumbling block in terms of how to process payments. It might seem straightforward but I`m hoping to get some advice on how to set things up so my profits are not all eaten up by fees and commissions of PayPal, etc.

    Definitions for easier explanation (sorry!):
    Clients - professionals who pay me a monthly subscription to list their profiles and services offered on my website.
    Customers - these are people who use the website to engage and buy services from my clients. Only customers who have bought services may then leave a rating for my client.

    The issue revolves around the customer making the payment to my client but me having full visibility of payments being made:
    * The customer lands on my website, chooses which of my clients he wishes to use, contacts them and they agree on a price for services.
    * The customer must book and pay for at least one `job` through the website in order to be allowed to leave a rating.

    My thinking was to have customers pay me, I hold the money in escrow, and release the funds to my client at a later date. In a perfect world, I would have the customer pay my client directly with me simply receiving confirmation but I`m told by PayPal that this is not possible. Also, I intend to carry the cost of any fees for the payments from customer to client as I`m charging my clients a subscription for the service anyway.

    Has anyone come across a similar business model and what was the best way to set up the payments? Any recommendation on which service provider to use? I would be hugely grateful for any advice, tips or direction anyone can give?

    Thanks,

    Koby

    • 3 posts
    May 29, 2009 6:34 AM EDT
    Hi Mark,

    Thanks, that`s a great help and very prompt too!! So if I`ve understood this correctly, customer pays for services through the website using PayPal (or other merchant account). Paypal deduct their commission and deposit the remainder into my escrow account which is setup with paypal. Then funds are distributed from the escrow account to each client?

    Thanks again, should have come here a lot sooner.

    Koby

    • 3 posts
    June 4, 2009 6:54 AM EDT
    Great, thanks again!
    • 88 posts
    May 16, 2010 8:05 AM EDT

    You probably need to have at least a 2million paid up capital to offer that kind of service.

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