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Ask HN: How do AirBnB, Etsy etc. handle payments?

12 points| nikcub | 15 years ago | reply

I am interested to know how sites like these handle payments. ie. accepting money from one group of people, taking a cut and then distributing the money to another group of people

PayPal makes this near impossible to do, and they are known to freeze a lot of accounts where this is the use case.

I remember reading somewhere that early in the history of AirBnB they were with Paypal, had problems, and had to implement their own solution. Does anybody know what that solution is? Is it simply (heh) opening a merchant account and using authorize.net or similar?

I am very impressed that both AirBnB and Etsy are able to handle payments in/out so well across so many users, bank accounts, etc. across so many different countries and currencies.

Is there an easy low-volume, no merchant account way of doing this for products that are just starting out?

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[+] jonah|15 years ago|reply
I haven't studied the payment aspect of AirBnB, but Etsy does it like this:

Seller:

* When you sign up to be a seller you provide (and they verify) a credit card number and optionally your paypal account.

* A listing fees of $0.20 are charged for each item posted but these are not charged immediately. Rather, they accumulate in your account.

* When you sell something, the transaction fee (3.5% if I recall correctly) is also added to your account.

* At the end of each month you receive an invoice from Etsy for the fees you accrued that month. You can pay this via PayPal or your credit card on file.

* If you don't pay your bill, Etsy will bill your credit card on file after several months.

Buyer:

* During the payment step of checkout, Etsy directs the buyer to pay the seller via PayPal (or check if the seller offers that option). Link off to the Seller's PayPal in the standard way and return to Etsy to complete the transaction.

Etsy doesn't handle the actual payment money between the buyer and seller, only their listing and transaction fees.

[Edit] One reason Etsy - like Apple and others - batches their charges like this is to reduce the number of per-transaction fees charged by PayPal/credit card processors. Below approx. $0.40 you'll actually receive $0.00 via PayPal for example.