This is the response I received from PayPal. How do I fix this?
In a typical marketplace, the seller will become responsible for the entire customer payment including issuing refunds and resolving any chargebacks. The platform owner would receive their commission or fee that is split simultaneously when the customer’s payment is received by PayPal. The example for Chained Payments on https://developer.paypal.com/docs/classic/adaptive-payments/integration-guide/APIntro/ basically indicates that the primary receiver retains only their commission and allocates the remainder of the payment to the secondary receivers. The example on that page applies more to a travel agency type of business as opposed to a marketplace with a payment sent to one vendor only. With Instant Chained Payments, the primary receiver utilizes the Third Party Permission “Refund a transaction on your behalf” in order for the seller to be responsible for a customer’s refund or resolving their chargeback. We cannot support Chained Payments in a multi-vendor marketplace as the primary receiver/platform owner was the merchant of record and as a result, would assume the total financial risk of every payment from the PayPal customers using your website.
Parallel Payments is the solution for a multi-vendor marketplace as each receiver (up to a maximum of 6) would be responsible only for their portion of a customer’s total payment in terms of refunds and chargebacks. You would implement coding for your commission into the app integration. With Parallel Payments, the buyer will see the amount sent to each seller. For example, if the customer’s order has 5 vendors, they will see 5 parts to the order with one payment sent to PayPal for the entire amount. Each seller will only see their part of the order. In order for you, the platform owner, to collect your fee, there are two options available with Parallel Payments.
1. If you are ok with the sender seeing your commission for their order, you would need to be one of the receivers in the checkout flow. The customer’s order will show an entry for each vendor and another one showing a deduction for your commission.
2. If you are not ok with the sender seeing your commission, you would use Parallel Payments for the order and Preapprovals to collect your commission from each vendor.
I hope this helps. I apologize if my explanation was not communicated satisfactorily for you. Please feel free to contact our Merchant Technical Services Team at https://ppmts.custhelp.com/ if you would prefer a more technical flow for the process outlined above.