What is a Moderator / What are moderated payments?

A moderator is a type of user on the OpenBazaar network who helps offer a secure payment method called moderated payment.

There are two types of ways for buyers to send payment to vendors in OpenBazaar:

1. Direct Payment - The buyer sends his bitcoin directly to the vendor.
2. Moderated Payment - The buyer sends his bitcoin into an escrow account and they are released when the transaction is finished.

Direct payment is risky because once bitcoins are sent the payment cannot be reversed. If the vendor is dishonest they can take the payment and not send the product. We recommend that buyers only use direct payments if they completely trust the vendor and are dealing with small amounts of bitcoin.

Moderated payments are much more secure. The buyer pays into an escrow account which is jointly controlled by the buyer, the vendor, and a third party called a moderator. In order for the funds to leave the escrow, any two of these parties need to agree how to release the funds.

In most cases a transaction will go through smoothly, the buyer and vendor are both happy, and they agree to release the funds. The moderator is never brought into the situation. The moderator doesn't receive a fee and isn't even aware they were chosen to provide escrow.

If the transaction doesn't go smoothly and the buyer or seller open a dispute, then the moderator provides dispute resolution. The moderator will determine which party is at fault, and will then join with the winning party to release the funds (either release payment to the vendor or refund the buyer). In return for offering this service, the moderator will receive a percentage of the transaction called a dispute fee. These fees are displayed when selecting a moderator and can be viewed by visiting the moderator's page as well.

It's very important to select a trustworthy moderator. If a moderator is dishonest he can join with the other party to release funds regardless of the situation.