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I'm wondering how companies operate that take credit card payment for products they are not providing.

For instance, half.com allows users to sell their books through their website. Buyers can purchase listed books with credit card, in which half.com then transfer the money to the seller through ACH.

I'm wondering how half.com prevents chargebacks and fraud. And how do they get accepted by merchant services?

If anyone has any knowledge on resources on this subject it would be very helpful. Thanks

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This is a good question. Because I think stripe.com would also fall into this category and I have been curious about it. They essentially accept credit cards at a fixed 2.9% I think, and then transfer it to you EFT. They do charge you a chargeback fee... but not sure how they get that chargeback amount back from you. If it's just held on future orders or they take it back out of your account? PayPal also has to deal with this situation... sometimes they lock funds for 30-90 days to make sure there isn't a chargeback on it if it looks potentially fraudulent. – Ryan Doom Dec 11 '11 at 1:34

1 Answer

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1) They provide drop-dead outstanding customer service.

2) They typically have Terms of Service written that protect them VERY well (see eBay, Amazon, Half)

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