I just learned of a startup that has a unique approach which might be of value to those wishing to trade locally.
The service started out in L.A. but now lists the following cities:
- Los Angeles
- New York
- San Francisco
- Washington D.C.
How it works is individuals (or businesses) post items for sale. When a buyer places the order, the payment form is through PayPal and the individual seller's own PayPal account is listed as the seller who will receive the proceeds of the sale. So it is a direct payment between the buyer and seller. HipSwap does charge a fee for using the site -- 3.75% which is a separate transaction that eventually gets billed to the seller's credit card (and does not go through PayPal).
Now here's the great part though. For an extra $5 (added to the invoice that the buyer pays) HipSwap will deliver. The seller chooses the time and HipSwap sends a van to pick up the item. They then deliver that item to the buyer at the time of the buyer's choosing.
HipSwap's terms of service state that they are a neutral party in the transaction.
I was trying to figure out a way that this would work for someone wanting to do an in-person exchange without the in-person part. Simple ... the bitcoin seller uses HipSwap to get cash delivered from the buyer!
So here's how this would work. Let's say Bob has bitcoins for sale.
Bob posts a listing on Craiglist (or anywhere else) describing bitcoins for sale, $5 each, cash, with fulfillment through HipSwap.
Alice sees the ad and inquires, she would like to buy 20 BTC. Bob provides instructions for Alice to place a listing on HipSwap where she lists a special paperclip or some other item for a $1 price and to specify delivery as the only option for the buyer.
Bob then purchases the paperclip listing on HipSwap, using the checkout form which pays $6 to Alice's PayPal account.
Alice prepares an envelope containing the paperclip plus $100 in cash plus another $6 to reimburse for the purchase and delivery charge. She also includes her bitcoin address, seals the envelope and schedules the time for pickup.
Bob, when placing the order, specified time slots for delivery -- with next-day delivery being the earliest delivery, I believe. When the envelope does get delivered then Bob sends bitcoins to Alice's address.
Alice's credit card will get charged $5.04 from HipSwap ($5 for the delivery plus 3.75% of the sale amount), but she got $6 from Bob via PayPal (well, $6 less PayPal fees, so about $5.66) so that charge isn't out of her pocket a send time.
So for a total of $106 she gets 20 BTC, and this all happens in the same day or next. This is better than sending cash in the mail as this delivery method is probably more secure.
This isn't totally anonymous -- Bob knows the e-mail address Alice's uses for her PayPal account. If Bob paid the $6 using his own PayPal account, Alice knows the e-mail address for his PayPal account. If Bob paid the charge using a credit card without a PayPal account, Alice won't know Bob's identity I don't believe.
The risk I suppose is if Bob buys the paperclip and truly only gets the delivery of a paperclip. It could happen -- so on average the bitcoin seller is going to want to charge enough to make up for times where something like that happens. There also is a short period of time after the price is negotiated and when the cash is actually delivered. I suppose listing the price as market price + $X or something to that effect will protect the seller if the price moves after the sale begins.
I'm sure eventually HipSwap will add to their terms of service that the delivery cannot include cash. At present they do not.
If someone wishes to simply use HipSwap to sell bitcoins and accept PayPal, here's an example of how that could be done (at least, until PayPal figures it out, freezes the seller's account and claws back the funds):
HipSwap lets the seller indicate delivery options of "meet the seller" so this could be used as a method for soliciting in-person trades as well. The seller can even opt to offer using the "will ship" option as well, if that's wanted.
And, of course, my disclaimer. I've no idea on the legality of this. Maybe the laws in your jurisdiction are such that the use of a third party for this type of transaction defines you as a money service business. Also, if there is a dispute -- say the person doesn't send any cash in the envelope and then blames HipSwap for it not arriving, etc. I couldn't guess where that all would end up.
I do think this is an interesting development though.