I'm currently in the process of planning a business that sets up buyers with sellers in a particular niche. This forum has provided a lot of great information for me already, and I'm hoping you can provide some more advice.
I'd like to offer both the buyers and sellers an escrow service--middleman, if you please. A) A buyer and seller make a deal, B) the buyer sends me the funds, and C) when he receives his goods from the seller and verifies it's what he ordered, he tells me to release the funds to the seller. This whole process is similar to what freelancer.com and other freelancing sites provide.
I have the following questions regarding this business model:
1) Forms of payment: I wouldn't be able to afford having the buyer request a reversal on a payment. Seeing as I only would keep a tiny percentage of the whole transaction, a single reversal for the funds can be devastating after I've already released them to the seller.
I have looked into wire transfers, and from some posts I saw here it seems that they are fairly secure. It is possible for the sender to request a reversal, but this is very rare and requires a lot of paperwork and a good reason. What are the chances that, in cases of dispute between a buyer and seller, the funds would be returned due to "unfair" resolutions? Of course, my TOS would make it clear all decisions are final.
2) Are money orders and certified checks as secure and one-way as wire transfers? One bank I called, BB&T, said that ACH is also as secure as wire transfer if using their "ACH Block" program (for $40/mo) that asks me for permission for any debit to my account. Does anyone have experience with this and ACH in general? Using ACH, I'd be able to automate the funds deposit online, whereas with wire transfers I cannot. Are these secure options also for international payment sources?
3) What are some good resources to learn how to prevent fraud? For example, how would I verify that the buyer is who he says he is? For example, newegg requires a shipping address to be listed under authorized ship-to addresses
[newegg.com] with the bank. What services do all of you use and recommend for your payment processing that helps you deal with all of this?
Thank you, and I apologize for the lengthy post.
EDIT: Bonus question: how risky is my business model? If I limit the escrow service to, say, $3000 or $5000, what are the chances of lawsuits from unhappy customers? Thoughts?