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I think the clearest explanation of the change is in this tweet: https://twitter.com/TPRJones/status/938646263800705024 https://twitter.com/TPRJones/status/938

I think the clearest explanation of the change is in this tweet: https://twitter.com/TPRJones/status/938646263800705024 https://twitter.com/TPRJones/status/938646263800705024 "The extra cost isn't tiny if you pledge small amounts to many creators. Pledging $100 to 1 creator will now cost $103.25 which is reasonable. Pledging $1 each to 100 creators will now cost $138 which is not reasonable"

floatingatoll 9y ago
$138 is unreasonable to me for one simple reason: When I pledge to 20 creators, Patreon batches my pledges based on arbitrary server-side criteria, such that they cannot guarantee how many charges will be made to cover my pledges. So typically I see two charges per month. They can't charge me $0.35 per charge because the # of charges varies without any ability for the customer to predict and cannot be defended reasonably to customers. Instead of revamping their billing groupings to ensure that each patron is charged once per month, they are charging $0.35 per creator, which is the absolute worst case scenario here. So to me, the ripoff is that they charge me for two credit card transactions, but instead of $0.35 per transaction, they charge $0.35 per creator within a single credit transaction - when that $0.35 is not charged to them by their merchant processor for those individual creators. I would have been fine if they'd simply tell me "X creators = Y transactions @ $0.35 each + 2.9% of amount", where Y is virtually always some tiny fraction of X, but that they instead say "X creators = X transactions @ $0.35 each + 2.9% of amount" to avoid regrouping their billing is a misuse of the word 'transaction' as they implement it. EDIT: If Patreon has been charging $0.35 per patreon to their creators, then this is not new profit for them, but is instead the same profit now collected from patreons instead of creators. It's still unacceptable to me, because they're charging the worst-case scenario (one transaction, per patreon, per creator) and then optimizing for less than that and not crediting the excess (Y-X) x $0.35 back somehow. If their 5% take isn't enough to cover transaction costs, hiding a profit in (Y-X) x $0.35 is not the correct way to solve that. EDIT: It's possible that Patreon was censured by Stripe somehow and is going to stop batching charges period full stop come January, and so then Y=X for all cases, at which point this all starts to make a lot more sense.
- cdancette 9y ago
  Do you know why they batch the pledges into several payments and not just one big payment?
  - floatingatoll 9y ago
    Like Apple, they break up charges into arbitrary batches on their side, but I did not ask them to provide guidance on what their batch limits are. Apple sometimes waits days to charge me, and often distributes charges randomly across multiple transactions, so clearly there's some kind of optimization limit that's reached at scale.
  - huac 9y ago
    Money laundering rules
    - pavel_lishin 9y ago
      Can you go into some more depth?
      - huac 9y ago
        https://news.ycombinator.com/item?id=15872128 https://news.ycombinator.com/item?id=15872128 (just a guess)
      - PeterisP 9y ago
        Hadn't thought of this reason, but that might make sense - in essence, the standard AML rules have always required specifying the final beneficiary of a payment if you pay money to someone who'll hand it over to them. If Patreon is being treated as or claiming to be a payment service provider (i.e. it passes money through to authors without owning it in between, the only revenue on their balance sheet is the fee they take) then it'd be wrong to state that Patreon is the beneficiary of a particular payment, since it's not; and they'd be required to list all the actual beneficiaries on every payment, which can't really be done for reasons, so they need to charge many small separate payments. On the other hand, if Patreon is being treated as or claiming to be selling a service (i.e. it takes all your money, and pays it out to authors as a business expense) then that has major tax implications, namely, all the amount (as opposed to just their fees) is their revenue and thus subject to various sales taxes and VAT worldwide. This seems to be the current option, since they're charging VAT on the full amount for EU patrons. It might be plausible that they're currently switching from option 2 to option 1 for financial reasons, and this precludes them from batching in the future.
thisisit 9y ago
I wonder if the answer is to have levels within the pledging system? If you pledge only one backer we take x% or cents. If you back 2-10, we charge this x-t% or cents. If 100, no charges at all. This will provide incentive to people to back more creators too.
- mulmen 9y ago
  The solution is Patreonpoints. Sell vouchers and let supporters allocate those vouchers, lock the exchange rate to the currency used to purchase the vouchers and build the service fee into that exchange rate.
  - deleted 9y ago
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  - hidenotslide 9y ago
    That is what Twitch does with "bits", it should definitely work here as well.
  - cmonfeat 9y ago
    This is a much smarter idea, because it also locks their money into Patreon once they've stocked up on points to spend. Not sure why they didn't go this route, to be honest.
    - mulmen 9y ago
      The points make it easy to build in the service fee. Public transit here maintains an “account balance” in USD, you set the max and when your account dips below what is required for fare it refills to that max. Steam does some something similar with an account balance but I don't think it refills. I believe a lot of businesses have a similar concept. I think you can maintain an account balance at Amazon (and probably other retailers) too.
adrr 9y ago
Debit card(Durbin covered banks) interchange is 0.22 fixed fee + the variable amount. Add on processing fees and its easily 0.30. Visa has a microtransaction(sub $10) framework where you can roll up 3 auths into one interchange but most processors don't support it.
- detaro 9y ago
  Patreon always has been bundling many small transactions into one large, that has been the major point from a fee perspective to use them. Their fees already included the processing fees for that. $0.30 or so per credit card transaction (+ a percentage) is totally expected and what they did until now.
  - jopsen 9y ago
    > Patreon always has been bundling many small transactions into one large Yeah, from what I understand they are planning to stop that. So that's the end of patreon as a micro payment platform.
    - quadrangle 9y ago
      It was always (and remains) a paywall service first and foremost. It wasn't meant to be a micro payment platform.
- andymcsherry 9y ago
  Patreon uses Stripe and Paypal. Both of their fees are 30¢ + 2.9% regardless of interchange fee for a specific card. Not sure where they got the extra 5¢, but it seems reasonable to charge what their paying.
  - tasty_freeze 9y ago
    The difference is that Patreon withdraws money from me once a month -- that is a single transaction. Yes, I'm OK with them covering the actual cost of the Stripe/Paypal fee. But for them to charge me $3.50 because there are theoretically 10 charges (when there is actually one aggregate charge) is in no way fair.
cstrat 9y ago
I previously pledged between $2 and $5 to almost a dozen content creators. This change would have added quite a bit to my costs so I have withdrawn my pledges. I am billed by Patreon once a month - not sure why I need to pay fixed & percentage fees on individual pledges...
- james-skemp 9y ago
  I'm at 11 now, 10*$1 and a $1.50. I forget what I was at when they were going to do this in April of this year, but when I emailed their support about the change and how it would make me decrease the number of creators I backed the individual I was working with suggested that most backers back a small number of creators. Individuals like ourselves aren't really accounted for. If you haven't, I would suggest emailing support and noting your case. I think the more people that remind them about backers who back many creators.
  - lewisl9029 9y ago
    That's a great idea. I'll go do that now. I just cancelled most of my lower monthly pledges, but I suppose it doesn't hurt to speak in action _and_ words.
    - james-skemp 9y ago
      Since we have ~10 days, I haven't gone through and cancelled any pledges, even the ones that I no longer want to support since I'm not getting anything from them. I was watching the train wreck on Twiiter last night and I've seen what Lazy Game Reviews, and others, have witnessed since Patreon announced this change. They back peddled in April, so I'm hoping they'll do so again this time.
  - breakingcups 9y ago
    I'm in exactly the same boat and I've done the same.

floatingatoll 9y ago

$138 is unreasonable to me for one simple reason: When I pledge to 20 creators, Patreon batches my pledges based on arbitrary server-side criteria, such that they cannot guarantee how many charges will be made to cover my pledges. So typically I see two charges per month. They can't charge me $0.35 per charge because the # of charges varies without any ability for the customer to predict and cannot be defended reasonably to customers. Instead of revamping their billing groupings to ensure that each patron is charged once per month, they are charging $0.35 per creator, which is the absolute worst case scenario here. So to me, the ripoff is that they charge me for two credit card transactions, but instead of $0.35 per transaction, they charge $0.35 per creator within a single credit transaction - when that $0.35 is not charged to them by their merchant processor for those individual creators. I would have been fine if they'd simply tell me "X creators = Y transactions @ $0.35 each + 2.9% of amount", where Y is virtually always some tiny fraction of X, but that they instead say "X creators = X transactions @ $0.35 each + 2.9% of amount" to avoid regrouping their billing is a misuse of the word 'transaction' as they implement it. EDIT: If Patreon has been charging $0.35 per patreon to their creators, then this is not new profit for them, but is instead the same profit now collected from patreons instead of creators. It's still unacceptable to me, because they're charging the worst-case scenario (one transaction, per patreon, per creator) and then optimizing for less than that and not crediting the excess (Y-X) x $0.35 back somehow. If their 5% take isn't enough to cover transaction costs, hiding a profit in (Y-X) x $0.35 is not the correct way to solve that. EDIT: It's possible that Patreon was censured by Stripe somehow and is going to stop batching charges period full stop come January, and so then Y=X for all cases, at which point this all starts to make a lot more sense.

cdancette 9y ago
Do you know why they batch the pledges into several payments and not just one big payment?
- floatingatoll 9y ago
  Like Apple, they break up charges into arbitrary batches on their side, but I did not ask them to provide guidance on what their batch limits are. Apple sometimes waits days to charge me, and often distributes charges randomly across multiple transactions, so clearly there's some kind of optimization limit that's reached at scale.
- huac 9y ago
  Money laundering rules
  - pavel_lishin 9y ago
    Can you go into some more depth?
    - huac 9y ago
      https://news.ycombinator.com/item?id=15872128 https://news.ycombinator.com/item?id=15872128 (just a guess)
    - PeterisP 9y ago
      Hadn't thought of this reason, but that might make sense - in essence, the standard AML rules have always required specifying the final beneficiary of a payment if you pay money to someone who'll hand it over to them. If Patreon is being treated as or claiming to be a payment service provider (i.e. it passes money through to authors without owning it in between, the only revenue on their balance sheet is the fee they take) then it'd be wrong to state that Patreon is the beneficiary of a particular payment, since it's not; and they'd be required to list all the actual beneficiaries on every payment, which can't really be done for reasons, so they need to charge many small separate payments. On the other hand, if Patreon is being treated as or claiming to be selling a service (i.e. it takes all your money, and pays it out to authors as a business expense) then that has major tax implications, namely, all the amount (as opposed to just their fees) is their revenue and thus subject to various sales taxes and VAT worldwide. This seems to be the current option, since they're charging VAT on the full amount for EU patrons. It might be plausible that they're currently switching from option 2 to option 1 for financial reasons, and this precludes them from batching in the future.

thisisit 9y ago

I wonder if the answer is to have levels within the pledging system? If you pledge only one backer we take x% or cents. If you back 2-10, we charge this x-t% or cents. If 100, no charges at all. This will provide incentive to people to back more creators too.

mulmen 9y ago
The solution is Patreonpoints. Sell vouchers and let supporters allocate those vouchers, lock the exchange rate to the currency used to purchase the vouchers and build the service fee into that exchange rate.
- deleted 9y ago
  [deleted]
- deleted 9y ago
  [deleted]
- hidenotslide 9y ago
  That is what Twitch does with "bits", it should definitely work here as well.
- cmonfeat 9y ago
  This is a much smarter idea, because it also locks their money into Patreon once they've stocked up on points to spend. Not sure why they didn't go this route, to be honest.
  - mulmen 9y ago
    The points make it easy to build in the service fee. Public transit here maintains an “account balance” in USD, you set the max and when your account dips below what is required for fare it refills to that max. Steam does some something similar with an account balance but I don't think it refills. I believe a lot of businesses have a similar concept. I think you can maintain an account balance at Amazon (and probably other retailers) too.

adrr 9y ago

Debit card(Durbin covered banks) interchange is 0.22 fixed fee + the variable amount. Add on processing fees and its easily 0.30. Visa has a microtransaction(sub $10) framework where you can roll up 3 auths into one interchange but most processors don't support it.

detaro 9y ago
Patreon always has been bundling many small transactions into one large, that has been the major point from a fee perspective to use them. Their fees already included the processing fees for that. $0.30 or so per credit card transaction (+ a percentage) is totally expected and what they did until now.
- jopsen 9y ago
  > Patreon always has been bundling many small transactions into one large Yeah, from what I understand they are planning to stop that. So that's the end of patreon as a micro payment platform.
  - quadrangle 9y ago
    It was always (and remains) a paywall service first and foremost. It wasn't meant to be a micro payment platform.
andymcsherry 9y ago
Patreon uses Stripe and Paypal. Both of their fees are 30¢ + 2.9% regardless of interchange fee for a specific card. Not sure where they got the extra 5¢, but it seems reasonable to charge what their paying.
- tasty_freeze 9y ago
  The difference is that Patreon withdraws money from me once a month -- that is a single transaction. Yes, I'm OK with them covering the actual cost of the Stripe/Paypal fee. But for them to charge me $3.50 because there are theoretically 10 charges (when there is actually one aggregate charge) is in no way fair.

cstrat 9y ago

I previously pledged between $2 and $5 to almost a dozen content creators. This change would have added quite a bit to my costs so I have withdrawn my pledges. I am billed by Patreon once a month - not sure why I need to pay fixed & percentage fees on individual pledges...

james-skemp 9y ago
I'm at 11 now, 10*$1 and a $1.50. I forget what I was at when they were going to do this in April of this year, but when I emailed their support about the change and how it would make me decrease the number of creators I backed the individual I was working with suggested that most backers back a small number of creators. Individuals like ourselves aren't really accounted for. If you haven't, I would suggest emailing support and noting your case. I think the more people that remind them about backers who back many creators.
- lewisl9029 9y ago
  That's a great idea. I'll go do that now. I just cancelled most of my lower monthly pledges, but I suppose it doesn't hurt to speak in action _and_ words.
  - james-skemp 9y ago
    Since we have ~10 days, I haven't gone through and cancelled any pledges, even the ones that I no longer want to support since I'm not getting anything from them. I was watching the train wreck on Twiiter last night and I've seen what Lazy Game Reviews, and others, have witnessed since Patreon announced this change. They back peddled in April, so I'm hoping they'll do so again this time.
- breakingcups 9y ago
  I'm in exactly the same boat and I've done the same.