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Will PayPal allow my new marketplace to accept payments?
 

Hi all, I am building a new marketplace which links buyers and sellers of a certain niche product (which ebay also has a category for). The Australian banks are rejecting my applications for a merchant account as they say I'm the "third party" to the transaction. So I thought we would just fall back onto PayPal until I read their terms and conditions which state that if you are operating an escrow service then you require pre-approval from PayPal. There are elements of an escrow service in our business model which is as follows

1) Sellers list product, buyers search, find and buy it.
2) Buyers pay my company using PayPal (we have a business account with PayPal). We also intend to add a commission fee to buyers (this is based on other companies in different countries that do this business model very succesfully - we are just copying their idea).
3) We provide the seller with the address to send the goods to.
4) We hold the buyers money until the goods reach the seller.
5) When buyer confirms goods are received we release the funds, minus our commission to the seller.

Do you think PayPal will allow this? I have read all their user agreements and terms and conditions etc and couldn't see any real problem, except they say that if you are operating an escrow service (which in a way we are), you require pre-approval from PayPal. I'm desperately seeking advice and any experience anyone might have in getting this pre-approval from PayPal?

The second issue I am concerned about is our role acting as a third party intermediary in the transactions - this is why banks have rejected us. As PayPal is just a glorified credit card processor too will they also not allow us to do this? I think we have good reliable systems to ensure we don't have chargebacks, such as just doing a pre-authorisation on the buyers account until they receive the goods, then putting the final charge through.

A friend experienced and successful in e-commerce advised me just to not tell PayPal what we are doing exactly whilst we get some sales and experience that will allow us to apply for bank merchant accounts with some history. How long do you think we could get away with this for?! Is that a stupid idea given the way PayPal freezes accounts etc!

If PayPal rejects us I don't know where to turn to after investing my money in website development so far. Are there any good high risk merchant account providers that actually operate out of Australia, as a lot of the ones outside Australia I'm just not sure if I can trust.

Thanks for any help!