Today I received a call from a gentleman promoting a startup website. His motivations and mission sounded good so I was inclined to support it.
But partway through the call, it became obvious his understanding of what was involved in launching a website was rather green. So I did some digging.
It quickly became apparent he was going to use Paypal to accept payments on behalf of merchants. This is specifically disallowed in the Paypal agreement which states:
Prohibited Activities
You may not use the PayPal service for activities that:
[...]
2. relate to transactions that (a) show the personal information of third parties in violation of applicable law, (b) support pyramid or ponzi schemes, matrix programs, other "get rich quick" schemes or certain multi-level marketing programs, (c) are associated with purchases of annuities or lottery contracts, lay-away systems, off-shore banking or transactions to finance or refinance debts funded by a credit card, (d) are for the sale of certain items before the seller has control or possession of the item, (e) are by payment processors to collect payments on behalf of merchants, (f) are associated with the sale of traveler's checks or money orders, (g) involve currency exchanges or check cashing businesses, (h) involve certain credit repair, debt settlement services, credit transactions or insurance activities, or (i) involve offering or receiving payments for the purpose of bribery or corruption."
I asked if he had received approval from Paypal to conduct the business in the manner in which he was intending to. He didn't know what I was talking about. I explained to him what was involved in taking payments on behalf and it sounds like I ruined his day :-(
But I am quite disgusted. His professional(?) web developer ought to know about this. It's in Paypal's and every bank's T&C's I have ever come across.
It is possible to get approval to take payments on behalf (Think Trademe, Ali, 2nd tier processors, etc) but it's no trivial matter.
I am interested in comments.