When the buyer's credit card is charged?
On a daily-deal site there is no simple answer. It depends.
- If the deal is not tipped yet:
- Funds are "reserved" on the card. This step ensures that there is enough funds on the card for the purchase, and "locks" them, so the buyer cannot spend them elsewhere before the deal ends.
- Then, after the deal is tipped, the purchase is finalized and funds are transferred from the buyer's card to the daily-deal site owner's account.
- And if the deal expires (never gets tipped), the purchase is canceled and the funds are "unlocked" on the buyer's card.
- And if the deal is already tipped, the purchase happens in one step – the funds are transferred from the buyer's card immediately.
This is how it works. Or at least this is how it is supposed to work. There is a complication: not all payment systems support two-step payments. While PayPal and Authorize.net support them, 2Checkout and several other payment systems only can perform one step payment, and there is no way to "reserve" funds.
In the case of using payment system which does not support "reservation", the funds are transferred from the buyer's card immediately, even if the deal is not yet tipped. If the deal expires the purchase is canceled, and since the funds cannot be returned back to the buyer automatically, the payment amount is added to the customer's balance on the site, so they can use that balance for the future purchases.
There is always a way to refund the payment manually via the payment system control panel. But it will be necessary to adjust the buyer's balance on the site as well. For example, if someone paid $10 and the deal did not get tipped, the buyer's balance will become $10. So if the payment is manually refunded through the payment system, it is necessary to add a corresponding transaction ($-10 adjustment) on the daily-deal site to get user's balance back to zero.