not to ask pointless questions here, but did they give any explanation?
i mean, why would they turn this down? seems kind of stupid...
Ok, I'll try to explain this best that I can:
PayPal never gave Chance an "exact" reason, or at least that heard... I just heard her say that they [PayPal] was choosing not to do it... Chance asked what he could do to verify that all of this was legit, verify his identify...etc., and finally, I heard her say that there was nothing that he could do or say that would suffice...we just don't want to process these transactions...
With that said, I'll try to hash this out for you so you can better understand it:
When a bank transaction takes place, someone actually "gets a loan"... Sometimes it's only for a short amount of time; few hours to a few days, but it is still a loan...
I'll use the scenario below to demonstrate what I'm talking about:
For instance when you send money to Chance via PayPal, the money goes directly into his PayPal account, at which time he can do whatever with it...transfer to his offline bank account, spend on the internet IMMEDIATELY. PayPal DOES NOT receive the money from your account for a time span of 1-4 days... So essentially, they are "loaning" Chance the money, until they receive 'real funds' from your funding source. During this time span of 1-4 days, Chance could transfer the money to another bank/holder and withdraw cash for the entire amount...MEANWHILE, you have withdrawn all the money from your funding source and skipped town. When PayPal attempts to collect these funds from your funding source they get what's called an "ACH Reject", an electronic NSF. They go back into Chance's PayPal account to freeze his account and funds only to find out that he's transferred them, and cashed out... PayPal is left "holding the bag" for these funds...and since they are the "RISK Acquirer", they are responsible for these funds...essentially they have to eat the entire amount. This is one of the most common fraud models in the bankcard industry; a group of people electronically paying one person a large sum of sum of money, and during this 1-4 day funding period the recipient cashes out, and the "payees" close their accounts, then they all meet up on a south sea island and split what they've looted...and usually live happily ever after...
When a company like PayPal wants to process transactions, they can assume the RISK and be the "RISK Acquirer" or they can pass the RISK onto their upstream provider...if this upstream provider passes, it gets moved up again...and can eventually end up that the processor, such as Mastercard/Visa end up being the "RISK Acquirer". The reason for a company such as PayPal to assume the RISK is that if you do, your upstream provider pays you a greater commission of the transaction fees... If you choose to be a RISK Acquirer, you have a group of Underwriters and a RISK department that analyzes each account to determine if the transaction commission revenue that they're gonna be making off the transactions out-weigh the amount of risk they are taking... If they aren't willing to assume the RISK, they can refuse to process the transaction(s).
***RISK is an industry term and DOES NOT refer to whether or not the person or company that you are paying is of great risk (a crook or scoundrel)... The merchant that you are paying may be the most honest person in the whole world, but if the processors just don't want to accept the transactions, they can refuse.
It's kind of like the stock market... If you KNOW that you can buy a certain stock low and sell high, that's ideal... Since you KNOW the outcome, there is very little risk involved. If PayPal thinks that they can process certain large transactions, with very low probability of them loosing money, either due to the fraud model I've described above or to CHARGEBACKS, this is the type of business they want...and will always accept. CHARGEBACKS is another avenue of bankcard fraud. When you pay via bankcard, you have, usually, 60 days, in which you can request a "refund"... If you're using Mastercard or Visa, they guarantee this... You can easily see how this could be used fraudulent...same scenario as the model above, but this time, the co-conspirators, waiting up to 60 days before they request a refund... In the model as well, they get their money back (guaranteed by Visa/MC) and the recipient of the money has already skipped the country...with all the loot...
Ok.. enough of that stuff!
I was leery of PayPal's agreement/consent to process these GB items all along...but, it had been done before without hitch, so why not again...that's why I didn't from the beginning plan on using a different gateway... I knew that Chance was familiar with PayPal and they way it operated since he'd used it for the previous GB's, and most of the GB participants were familiar with PayPal and had a certain level of a "feeling of security" using PayPal, so I never pushed the issue to use a different gateway...
Although it was not said on the phone with PayPal, I know from being around this industry for so long, that there were 2 things that pertained to this GB that they didn't like:
- The large dollar amounts spread over approx. 400 transactions.
- The fact that payment was being made NOW, but items wouldn't be shipped/received by the purchaser (us) for about 4 months.
These are 2 main items that will throw alarms in every processors system... ALTHOUGH, WE'RE DOING NOTHING FRAUDULENT, PAYPAL DOESN'T WANT TO TAKE THAT CHANCE, given the amount of money that will be processed through the duration of this GB.
In order to get ANY processor to process the type of transactions that we're doing with this GB you have to have 1 of the following 2 things happen:
- Pay HIGH processing fees to out-weigh what the processor determines their probability of loss is.
- Know someone high up on the foodchain in the processing industry, that can walk into the RISK department of the processor and say, "I know these guys, they are Ok, leave em' alone and let them process..."
I'm hoping to use the latter, tomorrow, to try to get a processor to process our transactions...and at a low cost... Wish US luck!
Ah, I've rambled on enough... Hope I explained it well enough... If anyone has read this far, I'll bet they're either bored or crazy!
Randy
Zetajazz44
Click HERE to Register for the Musician's Workshop Group Buy
Click HERE to See Another One of My Hobbies
