[Webfunds-users] Third party deposits

Wed Mar 29 14:41:07 2000

> By 3rd party deposits I mean:  Alice writes a payment to Bob,
> but Carol deposits it.  In this case, Bob didn't take any part
> in the deposit, and doesn't know it happened (until the receipt
> turns up).  Carol, who does the deposit, never sees the money,
> can't control it, can't spend it, all she did was form a "useful"
> proxy by providing her WebFunds for some comms.

Although there are variations, in a legacy escrow either:

a) Alices obtains an instrument such as a bank check or money order made
payable to Bob or Alice, but not Carol.  She gives it Carol, who forwards
the document  to Bob upon performance.

or

b) Alice obtains an instrument such as a bank check or money order made
payable to Carol, who deposits it in her account and later pays Bob upon
performance.

Option (a) works in the legacy system because Alice handed over the funds to
the issuing bank, she cannot keep a viable copy of the paper document for
herself, and cancelling such a payment usually involves a waiting period.
(The waiting period is really for the issuing bank's benefit but happens to
give Bob some protection).

In webfunds however, neither directed payments nor bearer payments xfer the
value from the payers account into the payment hash or a holding account at
creation time, this happens at deposit time.  IOW it is like a personal
check, and you can overdraw.  Furhermore Alice could easily keep a copy of
the payment and deposit it back into her own account before Bob does, or she
can cancel it outright.  This method of escrow cannot reasonably be used in
the current webfunds.

The only way to accomodate this model that I can see is to have a payment
type that is payable only to Bob, cancellable only by Carol, and Alice is
decremented at creation time.

Option (b) works with Webfunds now, and without 3rd party deposits.

Regards,

Ben Lawrence
Melbourne, FL