"Joe Lee" wrote
That's not very "clear"... MasterCard and VISA are also third parties!
The buyer has a CC from an issuing bank. The seller has a merchant a/c with an acquiring bank. The issuing bank and the acquiring bank go through MasterCard or VISA.
How would you go about "... using your CC to pay the seller
*directly* ...", without going through MasterCard or VISA?
"Joe Lee" wrote
Those are irrelevant here, she's claiming under SoGA.
"Joe Lee" wrote
That's just an extra right under DSR - it doesn't invalidate the other right under Joint Liability, does it?
"Joe Lee" wrote
The seller *has* failed to conform, in the example considered, under SoGA.
I don't know which of those three (issuing bank, acquiring bank, and the Visa or Mastercard network) would be deemed to be the credit provider here, but would have thought that in respect of any one end-to-end transaction it would be deemed that two of them would be acting as agent for the third, and this third would likely be the issuing bank.
But if PayPal become involved, their role, as far as the credit provider and its two agents is concerned, would be more like a merchant than an additional agent. Essentially the end-buyer is using the credit card system to buy a kind of *money* from PayPal, and PayPal then arranges to transfer this money to the end-seller.
The end-seller, in other words, has not been paid by means of credit, but of money, and the end-buyer therefore loses CC protection and has only the same rights as if he had bought the goods using cash. The customer would only have recourse to the CC trio if *PayPal* had failed to supply *the money*.
So are (some of) the sellers falsely advertising when they say 'Visa, Mastercard etc accepted' and then direct the buyer to PayPal or Worldpay[1] when the buyer presses the 'checkout' button?
[1] I am assuming that WorldPay is treated the same as PayPal as it is a 3rd party which accepts the charge from the buyer's card and credits the seller's account.
"Ronald Raygun" wrote
I'd automatically imagined it would have to be the buyer's issuing bank; is there really a chance that it could be either of V/M or buyer's acquiring bank?
"Ronald Raygun" wrote
Hmmm. Wouldn't that mean that the acquiring bank was acting as both agent for the (buyer's) issuing bank, *and* agent for the seller? Conflict of interest?
"Ronald Raygun" wrote
A similar argument applies if the acquiring & issuing banks, & M/V, are acting as principals (rather than two being agents of the other one). Are you *sure* that the acquiring bank can act as agent for both the buyer's issuing bank, and as agent for the seller, both at the same time?
"Graham Murray" wrote
Doesn't PayPal give the buyer the option to "Pay with their bank account, debit card, credit card or their PayPal balance"?
Perhaps it depends on whether the buyer pays from their PayPal
*balance* (so the balance has first been transferred to PayPal from CC, *then* from PayPal to seller's acquiring bank), or not (does PayPal act more like MasterCard/VISA here?) ?"Graham Murray" wrote
Isn't WorldPay the 'acquiring bank' in this situation?
Is Paypal covered by the CCA? The transaction between the credit card issuer and the entity first receiving the money is the one covered by the CCA. Buying directly, the CC issuer passes the money directly to the buyer, invoking the CCA. Using Paypal, the CC issuer sends the money to Paypal, and it is this transaction that is covered by the CCA. Paypal sending the money to the seller is a seperate transaction, not covered by the CCA.
I`ve been using Visa as a shorthand for my CC issuer.
No idea, I`m not stupid enough to ever have considered using a CC cheque. Never bothered looking into them at all, I`ve got better things to do with my money than waste it on such a con.
"Simon Finnigan" wrote
Oh no it doesn't! You are mistaken... [I assume you meant 'seller' here - the buyer doesn't receive the money!]
The *seller* gets the money from their **acquiring bank** (ie, the bank that the seller has a relationship with). The acquiring bank receives the money from the buyer's issuing bank (ie, the CC issuer) *via* either MasterCard or VISA.
"Simon Finnigan" wrote
That's very imprecise of you. They are separate entities!
"Simon Finnigan" wrote
"Con"? Even those CC cheques with a 0% APR?
Agreed, a slim chance if at all. The acquiring bank may be the first to actually advance any money (to the seller), and is then reimbursed by the issuing bank. But it may be that the acquiring bank doesn't give the seller a penny before the buyer's funds (advanced by the issuer) are in the acquirer's hands.
Yes, it might. Delete "for the third". Two of them are acting as agents. Probably the acquiring bank for the seller, and the network for the acquiring bank, the issuing bank being the credit provider.
Yes, if, but the condition is not satisfied. I see three principals, namely the buyer, the seller, and the issuing bank. Strictly there are two contracts, each with two principals. The buyer and seller are principals in the contract of sale, and the buyer and the issuing bank are principals in the agreement by which the issuer pays the bill on behalf of the buyer, thereby creating a debtor/creditor relationship.
No, see above. The setup is very similar to what there would be if the buyer paid by cheque. The buyer sends/gives the cheque to the seller, the seller instructs his bank (the collecting bank) to collect the funds from the buyer's bank (the drawee) via the interbank clearing network.
"Ronald Raygun" wrote
I see a third contract, with two principals: the seller & acquiring bank in the agreement for merchant services.
The payment (for the contract of sale between buyer & seller) is actioned through the performance of the two other contracts: the buyer pays the issuing bank, & the acquiring bank pays the seller.
How can the acquiring bank not be a principal?
OK, agreed, and if you want to be pernickety, there are two more contracts, with two principals each (but three in all), which regulate the relationships between the two banks respectively with the V/M network.
It is a principal in the contract for merchant services, but not in the sale contract or the credit agreement. It cannot be a principal because it never owns the money (for the goods or services which the seller provides to the buyer) which it handles.
As part of its obligation under the contract for merchant services, the acquiring bank acts as the seller's agent in collecting the funds from the buyer (via the V/M network and the issuing bank). It has no direct contractual relationship with either the buyer or with the issuing bank.
I must be being a little dense here, but I still do not see how that differs from PayPal. When a seller offers payment by credit card and has a 'traditional' merchant services contract, the funds are paid by the (buyer's) issuing bank to the seller's merchant services provider who then pays them (probably at a later date) into the seller's account. When the seller offers payment through PayPal, the funds are paid by the issuing bank to PayPal and PayPal pays them to the seller. Thus (to me) it looks as though PayPal is (in this type of transaction) performing the exact same function as the merchant services provider in the more transitional credit card payment mechanism. Therefore by the 'if it looks like a duck, walks like a duck and quacks like a duck, (legally) it is deemed to be a duck' maxim, should PayPal not be treated the as a merchant services provider and the transaction (where the buyer, acting as a consumer, purchases goods from the seller) be subject to the same CCA protection as any other payment by credit card?
"Ronald Raygun" wrote
"Ronald Raygun" wrote
I agree with all of that; but how does that mean that:- (1) Paying via PayPal loses CCA Section75 protection; and (2) Paying using a CC cheque loses CCA Section75 protection; but (3) Paying via MasterCard/VISA keeps CCA Section75 protection; ?
It was suggested that "paying directly" keeps the CCA Section75 protection, but we can see from the above that one cannot even pay *directly* with a "normal" CC transaction!
What is the specific difference between each of (1), (2) & (3) which determines whether CCA Section 75 protection applies?
No, they are paid to PayPal's merchant services provider who then pays them (probably at a later date) into PayPal's account.
The difference, AIUI, is that, as far as the credit card consortium (represented by the issuing and acquiring banks and the V/M network) is concerned, PayPal is not a member of that consortium, and in particular it is not an acquiring bank, but *uses* a separate acquiring bank, it is basically the end merchant in a transaction in which the buyer buys what amounts to gift tokens, which the "real" end merchant is prepared to accept in payment for the goods or services it supplied to the buyer.
PayPal therefore breaks the link. The CCC's joint liability extends only to the quality and fitness for purpose of the tokens, not of the goods or services subsequently traded for them.
It means that because in effect PayPal isn't an acquiring bank but only a merchant peddling payment tokens.
(3) Uses the acquiring bank and the network as a channel for transmitting funds from the issuing bank to the merchant. The issuing bank has advanced credit to pay for goods or services.
(2) Uses the merchant's normal bank to process the cheque in the same way as a non-CC cheque would have been processed. This cheque works its way through the system, and in due course the issuing bank advances credit, but not to pay for goods or services; it is, like any other cheque, in effect a cash advance or an overdraft.
(1) Is similar to (3) but also to (2): the issuing bank again has not advanced credit to pay for goods or services, but to pay for another style of money. The buyer would have a case against the issuing bank if the *money* turned out to be faulty is some way, but the protection does not extend to the goods or services.
(1) and (2) are the same as though the buyer had used the credit card to draw cash out of an ATM and used that to buy stuff. There would be no CCA protection on such a cash sale.
"Ronald Raygun" wrote
"Ronald Raygun" wrote
Surely you're not suggesting that the CCA actually lists certain "gentlemens clubs" (ahem, "consortiums"), and if the money is transferred through anyone not in the consortium, then the Section 75 protection does not exist?
"Ronald Raygun" wrote
Not necessarily; if you don't keep a balance at PayPal, then they simply pass the money along the chain -- exactly like the acquiring banks do...
"Ronald Raygun" wrote
Just like when PayPal comes in the middle and simply becomes another link in that channel transmitting the funds!
"Ronald Raygun" wrote
Surely that only really applies if the buyer first creates a balance at PayPal and then pays the seller from that balance; but if a balance *isn't* created in the process, then PayPal is just another link in the "channel for transmitting funds", isn't it?
The difference is *how* it comes in the middle. In a normal CC transaction, the merchant says to his acquirer "here is the customer's card number, amount, date, etc, please fetch the money from his bank". In a PayPal transaction, IIUC, the customer says to PayPal "here is my card number, go get the money from my issuer and give it to the shop". Paypal then goes to *its* acquirer and says what a merchant would have said.
In what way does "passing the money along" differ from creating a temporary balance and then paying the seller from it?
I've never actually used paypal, but is it not the case that you give your card number to paypal, not to the actual merchant? In that case it seems quite clear-cut that what you are using your card for is to buy money with which to buy stuff, you are not using it to buy stuff.
"Ronald Raygun" wrote
"Ronald Raygun" wrote
AIUI, with some online shops (*not* using PayPal), the merchant's website directs the user to their acquiring bank's website to take the CC details (so the actual merchant never receives the card details); are you suggesting that Section 75 protection doesn't apply in those cases, too?
No. I'm merely suggesting that the legal framework is different, despite the similarity that the merchant's website also "directs" the user to PayPal's website.
AIUI the acquiring bank acts on behalf of the merchant, and "pulls" the money. PayPal, on the other hand, acts on behalf of the customer and "pushes" the money.
There is also the little matter that the CCC is only technically jointly liable, by which I mean it doesn't normally stand the loss itself except in the exceptional case of the merchant having gone into receivership. In practice it would not lose out because it would simply do a chargeback against the merchant. With PayPal the cannot happen, PayPal won't "pass through" a chargeback because it is not party to any agreement which would compel it so to do (as a proper acquiring bank would be). At best the customer has to make do with whatever protection PayPal offers him *instead* of what his CCC offers him.
Look, how the hell am I supposed to know what goes on? I'm just positing plausible reasons and mechanisms of how and why paying via PayPal would be different if in fact it is different. That it is different is something I'm not trying to prove, it is something that appears to be received wisdom. If you're trying to refute *that*, then argue with someone else.
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