In #2 of my domain safety tips series, I’m going to talk about payment processing. Every payment method is slightly different on the policies they enforce. It’s hard sometimes to know which payment method is the safest to use or what their policy is when it comes to protecting either; the buyer or seller.
With the above said, let’s take a look at a few of the more popular payment methods that domain investors use and see if we can’t find the best solution.
Note: It’s common for a seller to set the payment methods on domain marketplaces. Be sure that you confirm privately with them that they can accept an alternative payment or that you are comfortable paying via the method they outlined in the sales listing before you enter into a binding sales agreement.
Let’s dive in and see what all the fuss is about.
- PayPal – This is one of the more popular payment methods domain investors use. The account review policy looks pretty good for both parties:
When PayPal identifies a potentially high-risk transaction, we review the transaction more closely before allowing it to proceed. When this happens, PayPal will place a hold on the transaction and notify the seller to delay shipping of the item. As a buyer, this may delay your receipt of the item you purchased. If we clear the transaction, we will notify the seller and direct them to ship the item. If we don’t clear the transaction, we will cancel it and return the funds to you.
However, this digital goods policy leaves the door open for the buyer to file a dispute, get their money back, and not return the domain. Digital goods do not qualify for the seller’s protection program, however, buyers appear to still be able to take advantage of the buyers protection policy.
If your PayPal account is approved to accept micropayments for digital goods and a buyer opens a dispute for a transaction involving digital goods from you in an amount below certain pre-determined thresholds (set forth in the table above) we may, at our discretion, reverse the transaction without requiring the buyer to take further action. Your sale of digital goods is not eligible for coverage under PayPal’s Seller Protection program.
In short, PayPal focuses on protecting the buyers more than the sellers.
- Escrow.com – This is another popular payment method domain investors use.
If the Buyer and Seller have not resolved the dispute within the 14 day Negotiation Period, the Buyer and Seller are provided a second 14 day period (considered the Arbitration Commencement Period). During the 14 day Arbitration Commencement Period, the Buyer and Seller are required to start dispute resolution – an arbitration process administered by arbitrators from American Arbitration Association,JAMS Arbitration, or net-ARB.com.
If Escrow.com has not received proof of binding arbitration from the Buyer or Seller by the end of the Arbitration Commencement Period, Escrow.com is authorized to close the transaction and refund the Buyer, less any Escrow.com fees.
With this payment method, both the buyer and the seller are protected, however, you will lose your escrow fee’s and the dispute can tie up the money and domain for up to 28 days. In short, it’s comfortable knowing that the seller gets their domain back and the buyer gets refunded. The downside is that whoever paid the fee’s (Buyer, seller, or split), will take the lose. Depending on how much the transaction was for, this could meet or exceed $100 to $1k+.
Note: If a dispute gets pushed to arbitration, it could potentially take up to 210 days + arbitration fee’s.
- Payoneer – This payment method is starting to pick-up in popularity.
The dispute platform consists of two phases:
Negotiation Phase – the buyer and the seller communicate via the Payoneer Escrow website and attempt to directly negotiate a mutually acceptable settlement
Arbitration Phase – the case is escalated to our authorized independent arbitration provider, NetNeutrals, to evaluate the case and issue a binding decision
Sounds easy enough. Looks like they follow the same arbitration policies as Escrow.com does so far.
The duration of the Negotiation Phase is 2 business days from the time the dispute is first initiated. If the buyer and seller do not agree to a settlement offer by the end of the Negotiation Phase, the dispute is automatically escalated to the Arbitration Phase.
The Arbitration Phase takes approximately 3 business days from the day the dispute is escalated to the day the Reviewer issues a decision.
Interesting, so, where escrow.com may take 24 to 210 days to complete arbitration, Payoneer takes 5 days.
Usually not. Payoneer will cover the cost for one arbitration case per 365-day period. If you are involved in additional disputes that go to arbitration within a 365-day period, there will be a flat fee of $175 for the third-party arbitration service.
Now that’s nice, the first arbitration is FREE per 365 days and then $175 thereafter. Not bad at all.
- Skrill (Formerly Known As MoneyBookers) – This payment method is more popular outside the United States, however, there are still some investors that use them from time to time residing in the U.S.
Does Skrill have a buyer/seller protection policy?
Yes. Skrill offers chargeback protection to some of our commercial customers based on their activity, processing volume and history with Skrill.
If you are chargeback protected, we will absorb any losses originating from chargebacks or reversals enforced by client’s banks.
Ok, but who really qualifies for that? They want you to email them to see if you qualify.
For disputes, claims or to report account discrepancies, Customer shall contact Skrill Help Team.
Sadly, there is no clear policy I can find that details whether they favor the buyer or seller in disputes. I have heard rumors (May or may not be valid) that Skill generally sides with the seller in most digital goods cases.
- WePay – This payment method appears to side more with the buyer.
When a chargeback is issued, the total amount of the chargeback is removed
from the Merchant’s WePay account and all collected fees are reversed. These fees include the per transaction fees collected by WePay, and any fees that the Partner might collect as part of their platform. Additionally, the state of the checkout object will update to “charged back” and trigger an IPN.
There appears to be a challenge option, but it’s not very comforting. There’s only a 3-day window to challenge a dispute and it looks like they are very hard to win.
Once submitted, WePay will look over the information to determine if we will attempt to fight the cardholder’s bank on their behalf. We will only fight the chargeback if we feel the information provided is sufficient to win the chargeback. WePay can only contest a chargeback within three days of receiving the dispute, so it is important that Merchants submit information quickly.
- Google Wallet – This payment method appears to have a stipulation that benefits the seller. For instance, below you can see that if a buyer used a credit card, they must meet the requirements in order to dispute:
The goods or services must be for more than $50, you must have attempted to resolve your dispute directly with the merchant, and the merchant must be located in the same state as you or within 100 miles.
For debit or ACH purchases:
You do not have the right under law to bring a merchant dispute to your card issuer, as you would have been able to do had you used a credit card (see summary above).
Ok, so we looked at a few payment processors above and now let’s summarize what we found in a quick reference list below.
- PayPal – Favors Buyers – Small transactions under $100 is advised.
- Escrow.com – Good for buyers and sellers, however, they have a non-refundable fee and long dispute process.
- Payoneer – Good for buyers and sellers – Only a 5-day dispute process and arbitrage is free one time per 365 days.
- Skrill – Has no clearly written policy and requires email contact to find out if you qualify for a dispute. It has been rumored that they side more with a seller in disputes.
- WePay – Favors Buyers – Only has a 3-day window to challenge a dispute.
- Google Wallet – Favors sellers – Small transactions under $100 is advised.
There are tons of other payment processors out there, however, I just wanted to touch quickly on the top 6 used in both; the domain and design industries.
Which payment processor do you like to use?
Be safe out there!