The cost of the Tradesafe approach goes to the seller who pays $.50 per transaction plus 3.5% of the selling price. Tradesafe.com is working out agreements with banks (initially signing Fleet Boston Financial) to act as the credit card and automated clearinghouse (ACH) service provider. In effect the fees charged by Tradesafe are in lieu of establishing a merchant account, which for small sellers could be a major savings. In many cases this approach will also reduce or eliminate the delay in processing to and from merchant and escrow accounts. The market for this kind of service is somewhat specialized, although even full-scale online retail outfits could benefit from the service.
Tradesafe is clearly a good idea just being introduced to the market. Tradesafe.com will need to develop visibility among consumers as a mark of trust and successful online transactions, but first it must convince sellers to participate in the program. This probably won''t be easy since competition will certainly be considerable either through copycats or alternative schemes. However, Tradesafe has the jump on the idea and from what we''ve seen it also has made the right moves. This is especially true for products in the $200-$1200 range where enough is at stake for most buyers to need assurance of satisfaction. This is also the level where sellers are most likely to find the Tradesafe costs low relative to the quick payment and guarantee of a satisfactory transaction.
Pros: For sellers: immediate payment, relatively low costs. For buyers: guarantee of a successful transaction or their money back.
Cons: Third-party handling of contested transactions may be difficult.
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