Question : Can I do a Pre-Authorization with Paypal?

We have a services based website where users can login and view steaming video.  They are charged based on the amount of time they spend watching the videos.  Some people watch a few minutes  and some watch for hours. After they have finished watching  I calculate  the time, assess fees.  Its set up now to charge credit cards which is working fine.  However, I would like to offer paypal as an alternative.    

My problem is I dont know how long the client will view the video so I wont know how much his charges will be until after the session is over.    With credit cards I can do a Pre-Auth to verify the clients card is good for a certain amount and then I let him watch away.   However, with Paypal I'm not sure there is the option to Pre-Auth.  We are be using paypal IPN but is there a way to verify the clients account is active or how much he has as a balance beforehand?  My questions are:

1) Is there a Pre-Auth feature in paypal that I can use to determine if the client has funds in his account?

2) If I choose to charge the client beforehand for a set amount (say $20) but they only watch $15 worth of video can I issue a refund back to them?  A sort of reverse IPN where I can return the unused amount back to them and get verification that it went into their account.

3) Given this business model (PAY AFTER) do any gurus out there have any ideas on how to implement paypal?   It's similar to pumping gas model.  I'm not sure how much gas you will pump beforehand, but I can use a baseline I would like to validate you can pay at least the baseline before I let you in.  I realize with this model I cannot eliminate all risk, I just want to mitigate it best I can while offering Paypal.    I just need a way to try to protect myself from somebody watching a ton of content and then only have twelve cents in their paypal account.  Thanks for the help.

Answer : Can I do a Pre-Authorization with Paypal?

Hi Codefaze,

I don't see how this can be done using Paypal as with your pumping gas scenario.  Paypal doesn't have a specific merchant option where you can do a pre-authorization by itself as I believe it's done automatically and internally.  There's sometimes a 'pending' status message on particular transactions. I'm not sure what Paypal's API offers though in terms of any possible manual pre-authorization of charges.

It might better suit you, if possible, to break down your content into time-framed chunks and base your charges in groups of time.  For example, for video ABC = 10 minutes $5.00, 15 minutes $10.00 and so on. You then could define this possibly as a recurring payment of some sort.

You might want to check into Paypal's 'Subscriptions and Recurring Payments' option available to Business and Premier accounts.  It's a low-cost way for you to accept credit card and bank account payments for content site subscriptions, newsletter fees, or recurring donations, and can be fully integrated with your website in a few easy steps.

I know at 2checkout.com they do pre-authorization and detail it as such.  And once you click on shipping the customer's card is fully charged.  2checkout.com also offers transactions for non-tangible and downloadable items.  But again, you would have to define the video into chargeable segments.

The bottom line is I believe you would have to know how much gas the customer will pump by first defining specific amounts that they can chose from to purchase.  Both Paypal and 2checkout will do their own immediate internal pre-authorizing of any charge you transact.  

But still whether you offer a tangible item or a downloadable one, it needs to be defined on your website.  2checkout does offer the ability to send an email invoice with a secured link, an invoice type of thing, for the customer to pay.  But again, you need to have somewhere on your site that defined amount.

Good Luck.