What is a good payment gateway option for a donate-to-invest type platform?
Payments
Asked by Question Bot02/Aug/20131 answer
1 Answer
F
Faisal Khan
Answered 02/Aug/2013
The issue with your model is not so much as a payment processor who will process your payments, but your business model. In most countries you would need to qualify as a bank (to take deposits which is essentially what you are doing) and then loaning this money out. This is something that regular (read: non-regulated) businesses are not allowed to do.
Even regulated entities such as MSB (Money Service Businesses, Money Transmitters, etc.) would not qualify to hold on to money (deposits) and give loans based on interest.
You would have to qualify as a credit union, a bank or a loan disbursing institution to do so. This is in my opinion, the prime reason why no payment service provider would work with you.
There are only two ways to get around this problem:
In either event, your under writing poses a serious risk. This, the transaction in itself is essentially a cash advancement for purposes of loans, etc. The whole concept of fraudulent charges and / reversals based on change of mind or an under-performing loan can pose a risk to the bank and/or processor underwriting you. Your default risk is high and you have no recourse to cover it.
The only way to by-pass that risk would be to cover it financially as a deposit, but then again, it kind of defeats the whole purpose, since the person the loan is being sent out to and the person giving the loan can be in two different countries from where risk assessment cannot be done.
In short, this is a tough sell.
Even regulated entities such as MSB (Money Service Businesses, Money Transmitters, etc.) would not qualify to hold on to money (deposits) and give loans based on interest.
You would have to qualify as a credit union, a bank or a loan disbursing institution to do so. This is in my opinion, the prime reason why no payment service provider would work with you.
There are only two ways to get around this problem:
- Find a payment processor who can also help you with the holding of funds and funds disbursement as loans. (Honestly, can't think of a processor who does this)
- Alternatively, partner up with a bank or a loan issuing entity to make your case legal and then approach payment service providers.
In either event, your under writing poses a serious risk. This, the transaction in itself is essentially a cash advancement for purposes of loans, etc. The whole concept of fraudulent charges and / reversals based on change of mind or an under-performing loan can pose a risk to the bank and/or processor underwriting you. Your default risk is high and you have no recourse to cover it.
The only way to by-pass that risk would be to cover it financially as a deposit, but then again, it kind of defeats the whole purpose, since the person the loan is being sent out to and the person giving the loan can be in two different countries from where risk assessment cannot be done.
In short, this is a tough sell.