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Given a market place that has buyers and sellers exchanging goods. What is the best way to allow a buyer to make a purchase and with hold the money from the seller until the shipment has been received?

Chain payments force the primary recipient to be receive the majority payout. But if that is the case, we end up being force to pay the seller at point of sale instead of what the shipment is complete.

Buyer - pays the total amount MarketPlace - receives percentage Seller - receives majority of sale (after delivery confirmed)

Any thoughts on how to accomplish our goal with Paypal?

Thanks!

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There are lots of things you can do and any of them could be the best solution. It seems like you are already on the right track with is adaptive payments. The type of adaptive payment I would go for would be a delayed chained payment. A delayed chained payment as described by paypal is

Delayed Chained Payments

By default, payments to all receivers in a chained payment are immediate. However, you can choose to delay a payment to a secondary receiver. For example, as primary receiver, you may require secondary receivers to perform some action, such as shipping goods or waiting for expiration of a return period, before making payment. To complete the payment, you must explicitly execute a payment to secondary receivers after the sender pays you. The payment must occur within 90 days, after which you cannot complete the payment as part of the original chained payment.

You can find more info about this about a quarter of the way down the page here.

Hope this helps!

p.s. checkout their samples included with their sdk for the classic api here.