Comment by strnisa
Requiring money upfront would classify the platform as an e-money institution, which is highly problematic from the legal perspective.
Requiring money upfront would classify the platform as an e-money institution, which is highly problematic from the legal perspective.
We don't hold upfront funds. When a customer pays, we initiate Stripe transfers to the merchant as soon as the funds are available.
Paying the merchant before the customer's card payment settles would mean advancing funds, which would start to resemble lending/guarantee rather than payments, raising regulatory issues. It would also concentrate risk at the platform: defaults from one merchant’s customers could jeopardize the platform for all merchants.
How does tarsnap handle it? I think there's lots of services that bill up front... Isn't it only e-money if you can convert it back to cash?