Agreed, my startup has a two sided payment process and was flagged by Paypal very early on for violating their Acceptable Use Policy. This was for the mere fact that the business model made my business a third party handler, which violates that agreement. Some companies fly under the radar on this, I wasn't one of those.

So, the realistic options left imho are ACH using something like AmazonPayments and sending out checks, which has its issues. Unfortunately there simply aren't as many options for paying money out as there is taking it in.

Btw my startup is Sponsorist.com, currently taking $ in through Stripe and sending out as checks. For now. :)

Great answer. This is essentially what most startups do, it's how Groupon handled things for a long time too (from what I understand).

Checks are fine but as a foreigner they seem really clunky and don't work once the company has a greater reach. Shame PayPal flagged you so early on.

I wonder how many other startups are in your position.

Absolutely agree. One of the prime reasons I asked this question was that although PayPal's chained payments would work it does require you to accept incoming money via PayPal. This isn't ideal in many cases, especially once startups start to see a little scale.

Food for thought.