Quote from: AmnesicWeasel on February 14, 2011, 05:42:58 PM

That's all an immediate-settlement payment processor is -- an escrow service.

+1 insightful...however I don't know if I'd call that an escrow service. Maybe more generally a trusted third party, immediate settlement service (escrow to me generally means you don't want immediate settlement...you need time for both parties and the trusted third party to agree that the exchange of some good or service is satisfactory before settling the payment).

Immediate payment accounts could have minimal bitcoins on deposit...enough to cover the maximum value of transactions anticipated over some period that would allow for reasonable verification in the bitcoin network. The accounts might not even need that minimum if the settlement service is comfortable extending momentary credit to the payer for an amount that covers the transaction. The payee would trust the settlement service. The payer would make a bitcoin transfer into the settlement account and the settlement service would immediately transfer that amount to the payee. The payee trusting the settlement service and the settlement service either trusting the payer or requiring the payer to have a prior balance of bitcoin on deposit would allow the entire transaction to be conducted immediately.

Edit: let me add that the three accounts involved are all just regular bitcoin wallets...one the payee controls, one that the trusted third party controls (and is held on behalf of the payer) and one that the payer controls. Payment goes from the payer wallet to the 3rd party wallet and from the third party wallet to the payee wallet. Payee trusts that the 3rd party won't double spend and third party trusts that the payer won't double spend (and third party indemnifies the payee against any double spending by the payer).