Credit card processing Many-to-One relationship | Hacker News Reader

Credit card processing Many-to-One relationship

Is there a good way of moving money from many people to one person (who isn't the host of course)?

If the amounts were small and numerous enough, it may make sense to simply direct most of the payments between the parties and siphon off your cut with several payments. But this is an ugly solution.

If the amounts were few and large, this solution is not practical. As far as I can tell, the only alternatives to the small e-businessman are using paypal and being charged twice (once for accepting from one party and another time for pushing to the other), or (somehow) negotiating with a bank to get a merchant account (at great expense I imagine) that charges a little bit less for the same solution.

My goal is to minimize the amount paid to credit card processors while taking a small cut.

Do any of you know anything about this?

Thanks.

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Can you give a particular scenario? And is your goal here to make money while at the same time making it simple, or just to make it simple?

My goal is to minimize the amount paid to credit card processors while taking a small cut.

Well, without knowing too much, here are a few thoughts for you. First, you probably want to hold all the money, i.e. take it from all the people first. The reason for this is you can float it while you hold it. Even if it ends up being only a couple of days, this will add up over time and enable you to take a small cut without seeming like you are taking a small cut. You can turn this into clever UI by having a screen shownig that you are waiting on these people before you can release the final payment or something like that.

Secondly, I'm pretty sure with the right processor you can credit a card for whatever amount you want, even if you haven't charged it, i.e. separate from any transaction. This depends on the processor but I think I have seen this before.

Finally, if the one person is OK with a check, that hardly costs you anything as most of the check processing system is subsidized by the federal government. Similarly, you might be able to get lower rates on incoming payments using EFT. At the same time, you can keep the cut small but you take home a higher portion because you aren't paying the credit card processor most of it.

What sort of processor do you mean? A bank or a paypal operation or something else?

I cannot find any automatic check processing services, have you heard of any.

Is this just a one time thing--or is this around a business where it is going to be happening all the time?

By processor I mean a credit card processor like Paymentech or Verisign or Cybersource. Paypal offers most processing and bank functions, but you pay for it and are forced into their API. Most of the major processors now have eCheck products, though I haven't used them and am not sure on the pricing, but it should be less than credit cards.

On the backend (you sending the one payment) I meant just doing an electronic bill pay from your bank account where they send out a paper check. This is usually free for you on a small enough scale. And it would further extend the float period.

are you doing something similar to fundable.org? What not try the simple method?

Let all the payers transfer the money directly to that one person. Then, you send an invoice to that one person for your commission and trust him to actually honor the invoice.

This is what Ebay does and it seems to be working well enough.

That makes a lot of sense, but I did not think it was easy to transfer the money directly to someone else. When people collect with ebay they are forced to sign up for a paypal account.

This does lower the cost, but it I think it significantly raises the transaction activation energy.

Am I wrong?

Yes. Fundable forces users to sign up for a paypal account or pay by check. It does raise the transaction activation energy but i think this is the best way to circumvent the double-fees problem.

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