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If you read any merchant agreement for credit card companies, you will see that you are technically not allowed to charge someone until you ship a product. Cha
by apinstein 15y ago
If you read any merchant agreement for credit card companies, you will see that you are technically not allowed to charge someone until you ship a product.
Charging someone before you have actually "delivered" the good is a completely different level of risk than charging someone for something you've already delivered. The supplier might not ship, the manufacturer might not ship, or you could be outright scamming people.
This is not a defense of PayPal, but just explaining why money processors do not typically allow you to get your money for pre-orders. There's a huge risk that it blows up in their faces.
- cdh 15y agoI wonder if this requirement can be sidestepped by shipping the customer something, but just not the actual item being pre-ordered. For example, emailing them a redeemable code or physically delivering a voucher. If not, it seems like you could go even further and bundle something small but tangible with each sale. For a game pre-order, maybe access to a demo or access to private forums?
- apinstein 15y agoThat sounds like fraud to me. I would think that you could negotiate this with a merchant bank. For instance service companies often take deposits and kickstarter clearly charges before shipment. But in both cases they probably have agreement from their processor for their business model. I think having to post reserves is one such model for when you are doing riskier transactions. But don't think that merchant bank won't cut you off if you violate the terms of your agreement. However in practice merchant banks seem very lax compared to PayPal.