From: Vincent Cate <vince@offshore.com.ai>
Date: Thu, 1 Feb 1996 14:35:39 +0800
To: cypherpunks@toad.com
Subject: FV has 91 day lag between sales and payment
Message-ID: <Pine.LNX.3.91.960131205343.9803A-100000@offshore.com.ai>
MIME-Version: 1.0
Content-Type: text/plain


FV seems to be the only Internet payment mechanism that lets buyers
quickly open an account and use their credit card to cover purchases. 
Anyone know of any others?  

The FV 90 day lag is their main downside in my opinion (though defaulting
to not paying if the customer does not answer email is another problem). 
So FV does not take any risk at all - and a merchant has to have enough
extra capital to let 3 months worth of sales sit at FV. Some ideas for
ways that they or someone else could improve on this: 

   1) reduce the 91 days after a merchant had been a merchant for awhile
   2) reduce the 91 days when sales were to long time customers
   3) verify customers with letters/phone calls when opening the
       account and then with digital signature on sales - and give very 
       short clearing time

    --  Vince

---------- Forwarded message ----------
Date: Wed, 31 Jan 1996 15:11:02 -0800
From: morehelp@fv.com
To: vince@offshore.com.ai
Subject: <960130/vinc0328078> (Lag between sales and payment?)

Your question has been answered by a help operator for FIRST VIRTUAL (TM).
The operator assigned to your question is op106 (Christopher Arndt), 

That operator, or someone consulted by that operator,
has provided the following answer to your question:
----------------
Hello,

We put an escrow hold on a seller's money for 91 days to 
protect ourselves from buyer credit card charge backs. We 
realize this can be inconvenient for some of our sellers, but at 
this time, that is how the system works.

Federal Regulation Z of the Credit Card Regulations entitles
credit card holders to a 90 period during which they can charge back 
any purchase. Though buyers are obligated to return the goods, 
this does not always happen.  The credit card company is obligated 
by federal law to pay the buyer back, and it is the merchant who 
is left without payment. In our system, because it is First 
Virtual that has the merchant credit card account, not you, First 
Virtual is at risk of losing money when your buyers issue charge 
backs on your sale items.

Because we do not conduct any credit checks on a seller, and because
any buyer can charge back any charge, if we didn't protect ourselves 
with this 91 day hold, we could easily fall victim to charge back fraud. 

But once 90 days have passed, it becomes significantly harder for a 
buyer 
to make a charge back. And it is at this point that we feel that the 
risk of a charge back is sufficiently low that we can deliver your funds to 
you.

We hold your money for 91 days for our protection, but the flip side is 
that we allow our sellers the freedom of being allowed to sell without
having to go through a credit check. Virtually anyone can sell using 
First Virtual, and this opens up many possibilities for people who 
otherwise would not be able to sell products through major 
credit cards over the Internet. 

Thank you for your interest in First Virtual

-- 
*************************************************************
            ...one flew east, one flew west,                               
            one flew over the cuckoo's nest...                                                                                                                             
 Christopher Arndt                 First Virtual Holdings          
 carndt@fv.com                     http://www.fv.com                  
*************************************************************




----------------
You may communicate further with our operator by replying to this message.

If you are unhappy with the service you get from operator op106,
you may send mail to "helpescalator@fv.com".

Your original question is included at the end of this message.

Thank you for using FIRST VIRTUAL!