4 ms·

Why does Indiegogo even continue using Paypal to disburse payments?

by t0 13y ago

rexreed 13y ago
Because it's easy for them and they don't directly suffer the consequences. They get their money either way. But if Paypal makes their business suffer by compelling folks to go elsewhere, it will be their problem. But they probably won't see it that way. They'll simply continue to offer Paypal as one choice for payments, and the problems their customers face are their customer's problems. I'd still use IndieGogo, just not Paypal. The only alternative, however, is to use IndieGogo's own credit card processor, which charges 3%, but it might be worth it because funds are automatically ACH'd and you don't have to deal with Paypal... and the customer feedback is more direct. But the big downside of this is that you don't get ANY of your money until the campaign is over (and up to 15 days after that), while with Paypal, you get your funds immediately (minus a 9% IndieGogo fee) if you elected for Flexible Funding. See http://support.indiegogo.com/entries/20578596 http://support.indiegogo.com/entries/20578596 for more. Given they only have two options: Credit Card from Indiegogo, which means no Paypal (yay), but also no money until the end (maybe boo) or Paypal (boo), but money right away (yay), it forces many folks to Paypal. They need to look at Stripe or Balanced or Braintree or something else.
- brokenparser 13y ago
  Bitcoins
- rgbrenner 13y ago
  "They need to look at Stripe or Balanced or Braintree or something else." That changes nothing. Indigogo has that policy to protect themselves from fraud. Any money they can't recover from a fraudulent project (or fraudulent charges because someone funded it using a stolen credit card, for example), comes straight out of Indiegogo's pocket. That's true whether they use a bank, Stripe, Braintree or anyone else. This is exactly what PayPal was trying to control, and they got criticized for it. At the end of the day, no payment processor wants to be on the hook for 100k+ that they get less than 1% of in profits, that goes to fund a project with no clear timetable, no guarantee of delivery to the customer, no budget, etc, etc, etc.
  - dublinben 13y ago
    How could anyone demand a refund from a project they funded with no clear timetable, no guarantee of delivery, and no budget? Projects don't have to be successful, so I see no way that Indiegogo could be held responsible.
    - dangrossman 13y ago
      The timetable, guarantees, etc. hold no relevance outside of a courtroom. Banks do not hold a trial before honoring a request to reverse a charge; they take the cardholder's word. Unless the merchant can provide a signature and proof of delivery of some item, they're not going to be able to dispute the chargeback either; the bank is leaving it up to the court system to resolve payment disputes outside of a few narrow circumstances. Nobody's going to take every funder that charges back a payment to court to prove they are not owed that refund, so in practice, everyone involved in crowdfunding has to deal with the fact that some of the money is going to disappear no matter what is written.
    - modoc 13y ago
      Credit Card Chargebacks. It's easier for a card company to agree with their customer who says "I paid for this thing on the internet and the company never delivered", than to dig into the details of a random crowd funded project, and read through any promises or lack thereof of deliverables, etc...
    - deleted 13y ago
      [deleted]
    - rgbrenner 13y ago
      You're assuming no fraud at all exists on Indiegogo. Someone could demand a refund because: 1) Their credit card was stolen and used to fund a project. They never agreed to the charge,they're entitled to a refund. 2) The project was fraudulent. The creators never intended to fund the project using the money. They ran off with it instead. Those people were deceived, and are entitled to a refund (in general, but also under the credit card associations rules). Some potion of transaction on Indiegogo will be fraudulent. Paypal or Indiegogo must have a way of recovering that money.. if they don't then they will have to cover it themselves. That's the way it works. That's why payment processors create reserves for high-risk businesses.
- johnx123-up 13y ago
  Having worked in crowdfunding domain in previous company, it iss extremely difficult to solve marketplace payments. It is now good that payment services like SudoPay start emerging to address these issues.
- Xylakant 13y ago
  > The only alternative, however, is to use IndieGogo's own credit card processor, which charges 3%, but it might be worth it because ... Nota Bene: PayPal also charges roundabout 3%. So the financial loss you're alleging doesn't exist, at least not in that magnitude.

Why does Indiegogo even continue using Paypal to disburse payments?

by t0 13y ago

Why does Indiegogo even continue using Paypal to disburse payments?

Because it's easy for them and they don't directly suffer the consequences. They get their money either way. But if Paypal makes their business suffer by compelling folks to go elsewhere, it will be their problem. But they probably won't see it that way. They'll simply continue to offer Paypal as one choice for payments, and the problems their customers face are their customer's problems. I'd still use IndieGogo, just not Paypal. The only alternative, however, is to use IndieGogo's own credit card processor, which charges 3%, but it might be worth it because funds are automatically ACH'd and you don't have to deal with Paypal... and the customer feedback is more direct. But the big downside of this is that you don't get ANY of your money until the campaign is over (and up to 15 days after that), while with Paypal, you get your funds immediately (minus a 9% IndieGogo fee) if you elected for Flexible Funding. See http://support.indiegogo.com/entries/20578596 http://support.indiegogo.com/entries/20578596 for more. Given they only have two options: Credit Card from Indiegogo, which means no Paypal (yay), but also no money until the end (maybe boo) or Paypal (boo), but money right away (yay), it forces many folks to Paypal. They need to look at Stripe or Balanced or Braintree or something else.

brokenparser 13y ago
Bitcoins
rgbrenner 13y ago
"They need to look at Stripe or Balanced or Braintree or something else." That changes nothing. Indigogo has that policy to protect themselves from fraud. Any money they can't recover from a fraudulent project (or fraudulent charges because someone funded it using a stolen credit card, for example), comes straight out of Indiegogo's pocket. That's true whether they use a bank, Stripe, Braintree or anyone else. This is exactly what PayPal was trying to control, and they got criticized for it. At the end of the day, no payment processor wants to be on the hook for 100k+ that they get less than 1% of in profits, that goes to fund a project with no clear timetable, no guarantee of delivery to the customer, no budget, etc, etc, etc.
- dublinben 13y ago
  How could anyone demand a refund from a project they funded with no clear timetable, no guarantee of delivery, and no budget? Projects don't have to be successful, so I see no way that Indiegogo could be held responsible.
  - dangrossman 13y ago
    The timetable, guarantees, etc. hold no relevance outside of a courtroom. Banks do not hold a trial before honoring a request to reverse a charge; they take the cardholder's word. Unless the merchant can provide a signature and proof of delivery of some item, they're not going to be able to dispute the chargeback either; the bank is leaving it up to the court system to resolve payment disputes outside of a few narrow circumstances. Nobody's going to take every funder that charges back a payment to court to prove they are not owed that refund, so in practice, everyone involved in crowdfunding has to deal with the fact that some of the money is going to disappear no matter what is written.
  - modoc 13y ago
    Credit Card Chargebacks. It's easier for a card company to agree with their customer who says "I paid for this thing on the internet and the company never delivered", than to dig into the details of a random crowd funded project, and read through any promises or lack thereof of deliverables, etc...
  - deleted 13y ago
    [deleted]
  - rgbrenner 13y ago
    You're assuming no fraud at all exists on Indiegogo. Someone could demand a refund because: 1) Their credit card was stolen and used to fund a project. They never agreed to the charge,they're entitled to a refund. 2) The project was fraudulent. The creators never intended to fund the project using the money. They ran off with it instead. Those people were deceived, and are entitled to a refund (in general, but also under the credit card associations rules). Some potion of transaction on Indiegogo will be fraudulent. Paypal or Indiegogo must have a way of recovering that money.. if they don't then they will have to cover it themselves. That's the way it works. That's why payment processors create reserves for high-risk businesses.
johnx123-up 13y ago
Having worked in crowdfunding domain in previous company, it iss extremely difficult to solve marketplace payments. It is now good that payment services like SudoPay start emerging to address these issues.
Xylakant 13y ago
> The only alternative, however, is to use IndieGogo's own credit card processor, which charges 3%, but it might be worth it because ... Nota Bene: PayPal also charges roundabout 3%. So the financial loss you're alleging doesn't exist, at least not in that magnitude.