4 ms·

I totally understand that this inconveniences you a lot. Be that as it may, your conspiracy theory has no basis in fact whatsoever. Paypal will, in fact, not

by patio11 13y ago

I totally understand that this inconveniences you a lot. Be that as it may, your conspiracy theory has no basis in fact whatsoever. Paypal will, in fact, not make large amounts of money on transaction float -- they're already probably losing money on your account by talking to you too darn much. Interest rates are presently something like 15 basis points ($150 per year on $100k). Even if we count their underwriter as free, if you've spent an hour on the phone total, they're already in the red. They'd like nothing better than for you to be riskless and for them to be able to release all your funds tomorrow and for you to sell another $100,000 every day this year. (It also isn't clear to me that Paypal can licitly get any float on your money, due to banking regs, but that is deeply technical and not the kind of technical that I'm good at.) But that isn't the world we live in. In the one we do, pre-sales is an incredibly high-risk business model. f they were only concerned about risk they could withhold fractional amounts for reasonable periods of time, on a rolling schedule As I mentioned in a separate comment, while rolling fractional reserves do insure against risk in some business models, they don't do a great job of insuring for the risk of software not getting written or not meeting expectations. Assuming you have a multi-month development timeline, every risk your business is exposed to at N-1 days (your team members or your families falling ill, the project being technically beyond the capabilities, the money running out and you guys needing to delay shipping while mixing in freelancing to stay afloat, etc etc) is still a risk at N+1 days, unless you have shipped on day N. You're totally within your rights as a businessman to try to fight this in the court of public opinion or attempt to convince Paypal's legal department or a court of competent jurisdiction that they're in breach. I sympathize with you because I sympathize with people who are making things, but I think that Paypal has a better understanding of the risks involved in your enterprise than you do (and, unfortunately for the both of you, their upside being sharply less than your upside means they will tend to have more of a hair trigger with regards to that risk than you will).

HerraBRE 13y ago
Oh, I am sure PayPal are doing what they believe to be in their best interests. However, I think you overestimate their competence. The people we spoke with on the phone didn't even know what Open Source software is, let alone have an understanding of the risks involved. They were just following procedure.
- mseebach 13y ago
  What does the license of the software have to do with the risks involved? What is the special case that they didn't understand that makes your project a smaller risk? What are the exact mechanisms in place that will prevent the project from failing miserably in any of the myriad ways software projects routinely fail after most of the money is spend and trigger a non-trivial number of chargebacks?
  - Xylakant 13y ago
    That for example this is not a software project where people for receiving the software. For example the perk for the $4096 backer tier is "In addition to the previous perks you and your logo will be the most prominently featured in our credits. You also get a custom feature / design theme per your specs (see the FAQ for some fine print). In addition, if you fly to Iceland we'll meet with you to discuss the implementation and then take you on a road trip through the Icelandic countryside, taste fermented shark and our traditional alcohol Brennivín, whilst we talking tech, politics and security." That's a pretty expensive chat to have, even if it includes the flight. Yet, two backers were willing to pay that price. All other tiers have a similar relationship between price and value provided. This cannot be explained in a rational business relationship - a solid gulp of idealism is included here. That influences the risk of chargebacks - backers paid to see this project worked on, not to receive their individual copy of the software.
    - orclev 13y ago
      That last paragraph is I think they key people aren't getting about IndieGoGo and Kickstater. You aren't paying for goods or services when you fund something on those sites, you're essentially donating towards the development of something, and gambling that in the future you'll receive something. The expectation is that the company/people you back will make a good faith effort to provide what they've said they will, but there's no guarantee you'll ever actually receive anything.
- zach 13y ago
  I'd say that's because they're the people who talked to you on the phone, and a major part of their job is to be a liason to walk businesses through their rules. You should look at them as someone who can inquire within the organization on your behalf, rather than someone to challenge the competency of. Such people can be pretty handy. Yes, I know, it's frustrating that they don't understand a lot about your business, but again, their job is communication, so it probably just means they don't have experience with talking to projects like yours. Why not educate them so the next project down the line has an easier time? Finally, the people who actually set those policies are very likely experienced and I'm going to guess are also pretty competent. If you are reasonable and have a positive attitude with the people you speak with on the phone, you might get to talk directly with such a person. I personally think that would have probably been the easiest way to resolve this matter.
pm24601 13y ago
If it is such a problem for PayPal then they should get out of the business.
- anigbrowl 13y ago
  That argument goes both ways, no?
adam-a 13y ago
I don't know a lot about finance, I also don't believe in conspiracy theories, but how is it that I can open a savings account with my local bank and easily earn 1.5% interest but you're saying PayPal can't do better than 0.15%?
- ry0ohki 13y ago
  What bank are you using, are you in the USA? The best rates I know of right now are Ally Bank at .84%. My local bank pays .01%
  - adam-a 13y ago
    No, in the UK. I may have been exaggerating a little, but without searching at all, my current bank, Halifax, offer 1.3% http://www.halifax.co.uk/savings/accounts/easy-access/online-saver/ http://www.halifax.co.uk/savings/accounts/easy-access/online... I'm curious about what I'm missing, I'm sure I have some misunderstanding here. EDIT: that's a 12 month rate! I suppose I'm just a victim of misleading advertising.
    - dangrossman 13y ago
      Not only is it a 12-month rate, but it's also only on balances of under £50,000. The extra interest is a bounded cost the bank is willing to pay for customer acquisition knowing the average value of a new customer in terms of fees and other revenue generated. A business that wants to earn some interest on millions of pounds without agreeing to switch revenue-generating services to that bank as well is not going to get the same offer.
    - jarek 13y ago
      In addition to customer acquisition and introductory rates and so on, also be aware that interest rates differ by currency. I can get significantly more interest in CAD (1.35% - 1.9% in Canadian banks, up to 3% with some limited accounts) than in USD (in either Canadian or U.S. banks). AUD has different rates still and so would GBP.

by patio11 13y ago

HerraBRE 13y ago

Oh, I am sure PayPal are doing what they believe to be in their best interests. However, I think you overestimate their competence. The people we spoke with on the phone didn't even know what Open Source software is, let alone have an understanding of the risks involved. They were just following procedure.

mseebach 13y ago
What does the license of the software have to do with the risks involved? What is the special case that they didn't understand that makes your project a smaller risk? What are the exact mechanisms in place that will prevent the project from failing miserably in any of the myriad ways software projects routinely fail after most of the money is spend and trigger a non-trivial number of chargebacks?
- Xylakant 13y ago
  That for example this is not a software project where people for receiving the software. For example the perk for the $4096 backer tier is "In addition to the previous perks you and your logo will be the most prominently featured in our credits. You also get a custom feature / design theme per your specs (see the FAQ for some fine print). In addition, if you fly to Iceland we'll meet with you to discuss the implementation and then take you on a road trip through the Icelandic countryside, taste fermented shark and our traditional alcohol Brennivín, whilst we talking tech, politics and security." That's a pretty expensive chat to have, even if it includes the flight. Yet, two backers were willing to pay that price. All other tiers have a similar relationship between price and value provided. This cannot be explained in a rational business relationship - a solid gulp of idealism is included here. That influences the risk of chargebacks - backers paid to see this project worked on, not to receive their individual copy of the software.
  - orclev 13y ago
    That last paragraph is I think they key people aren't getting about IndieGoGo and Kickstater. You aren't paying for goods or services when you fund something on those sites, you're essentially donating towards the development of something, and gambling that in the future you'll receive something. The expectation is that the company/people you back will make a good faith effort to provide what they've said they will, but there's no guarantee you'll ever actually receive anything.
zach 13y ago
I'd say that's because they're the people who talked to you on the phone, and a major part of their job is to be a liason to walk businesses through their rules. You should look at them as someone who can inquire within the organization on your behalf, rather than someone to challenge the competency of. Such people can be pretty handy. Yes, I know, it's frustrating that they don't understand a lot about your business, but again, their job is communication, so it probably just means they don't have experience with talking to projects like yours. Why not educate them so the next project down the line has an easier time? Finally, the people who actually set those policies are very likely experienced and I'm going to guess are also pretty competent. If you are reasonable and have a positive attitude with the people you speak with on the phone, you might get to talk directly with such a person. I personally think that would have probably been the easiest way to resolve this matter.

pm24601 13y ago

If it is such a problem for PayPal then they should get out of the business.

anigbrowl 13y ago
That argument goes both ways, no?

adam-a 13y ago

I don't know a lot about finance, I also don't believe in conspiracy theories, but how is it that I can open a savings account with my local bank and easily earn 1.5% interest but you're saying PayPal can't do better than 0.15%?

ry0ohki 13y ago
What bank are you using, are you in the USA? The best rates I know of right now are Ally Bank at .84%. My local bank pays .01%
- adam-a 13y ago
  No, in the UK. I may have been exaggerating a little, but without searching at all, my current bank, Halifax, offer 1.3% http://www.halifax.co.uk/savings/accounts/easy-access/online-saver/ http://www.halifax.co.uk/savings/accounts/easy-access/online... I'm curious about what I'm missing, I'm sure I have some misunderstanding here. EDIT: that's a 12 month rate! I suppose I'm just a victim of misleading advertising.
  - dangrossman 13y ago
    Not only is it a 12-month rate, but it's also only on balances of under £50,000. The extra interest is a bounded cost the bank is willing to pay for customer acquisition knowing the average value of a new customer in terms of fees and other revenue generated. A business that wants to earn some interest on millions of pounds without agreeing to switch revenue-generating services to that bank as well is not going to get the same offer.
  - jarek 13y ago
    In addition to customer acquisition and introductory rates and so on, also be aware that interest rates differ by currency. I can get significantly more interest in CAD (1.35% - 1.9% in Canadian banks, up to 3% with some limited accounts) than in USD (in either Canadian or U.S. banks). AUD has different rates still and so would GBP.