- You can place a “hold” on money from the client for a period of time. The money isn’t drawn out of their account. Say this is tickets to a concert – you can withdraw the money from their account on the day of the concert, even if they “bought” the tickets 2 months in advance. This is similar to a hold that a hotel might place on your credit card for additional expenses after you leave.

- At the time when the money is finally withdrawn (i.e. when the concert goes ahead), you then use adaptive payments to split the money appropriately, e.g. 10% to the ticketing agency and 90% to the production company.

- If the event doesn’t go ahead, no money is withdrawn, the hold expires and everything’s back to normal.

This strategy also happens to save a LOT of transaction fees and processing and reduces risk. It does however introduce one additional risk: that at the time you draw the money from the person’s paypal account they don’t have enough in there.

That’s a separate issue though and unlikely (I hope) to bite people on the butt too much.

Either way for ad networks, downloadable products from multi-vendor stores, this is going to mean a lot of new business. Hopefully the price point for micro-points will be a small percentage and not a fixed amount (i.e. of 5 cents like Amazon FPS does) so that ad networks can run through this, paying out publishers instantaneously.

Let’s say I make a purchase at Russ’ computers and Russ in turn has components dropped shipped from 4 wholesalers to me. It sounds clever that one payment from me can be split to Russ and the 4 wholesalers but what happens when 1 of the wholesalers fails to deliver/perform? Arguably the computer is worthless to me without all of the components so my first reaction is to dispute or charge back the transaction. The safe bet, since Paypal sits in the middle of all disputes, is that Paypal won’t be the one to take the financial hit. It either means that buyers lose protection, or that sellers become responsible for the performance of everyone else in the payment chain.

Thanks for the preview Russ!

Collectively, the internet, globalization, social networks, and mobile phones have been shifting the payments landscape and reducing these barriers. It’s the wave that Paypal and other innovators have been riding and has turned what was a potential threat and minor scratch for the Card Brands into an open wound.

http://www.braintreepaymentsolutions.com/blog/PayPal-Adaptive-Payments/