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>>It doesn't affect the "good guys", because we value their craft more than other crafts.

This is wrong. It's more expensive for very boring reasons; there's more fraud and therefore more risk for the payment processor. This means lower margins or higher prices. It's all actuarial science determining if serving a given market makes business sense. There are plenty of businesses which are this way, see for example flood insurance. High risk thus low margin thus nobody wants that business.

Good guys and bad guys doesn't come into it, and pretending that this is somehow oppression of the poor helpless craftsperson does nothing to help anyone.

I agree with you, and I said as much when I said:

>I am not only wanting to criticise the individual payment processors, because I understand the risk of doing business with such things.

My point is more that we shouldn't be tolerating this kind of behaviour in society, and that people use these justifications (that such business is high risk) to say that this is the way the world works, and there's no way out of that - that's just the way things are. But I reject this line of reasoning, because it is dangerous, it fosters a sense of complacency and not a sense to challenge the way that things are. These kind of crafts are looked down upon, and that stigma goes a long way in justifying what payment processors etc. are currently doing, even if it does appear to be for rational reasons. I very much doubt there would be such a problem on the side of payment processors if there were a large enough outcry about this. But there won't be.

>I want to criticise the whole system in which people must rely upon several centralised services in order to get by with their craft.

It's sad that some people can't earn a living because their "craft" is deemed to high risk by The System, but what's the alternative? That everyone else subsidize their high risk "craft" by paying higher processing fees?

There are dozens of easy alternatives, I can think of several off the top of my head

1. Allow no-chargeback services that must be text-message verified.

2. Accept adult-content payments, but don't release the money until after a chargeback window (e.g. 60 days), thus isolating the credit card from any risk.

3. Pass-on the chargeback rate (I imagine it can't be higher than 20%) to those wishing to do business as a cost-of-business fee.

The fact that these aren't happening to me suggests it's not primarily about money.

I agree that your solutions are obvious; so obvious in fact that I find it highly unlikely that they didn't occur to patreon. What does the likelihood that they thought of these things and didn't do them suggest?

Consider: All of those options require patreon to do significant work to accommodate that business on their platform. All of them also have significant profitability implications for everyone involved. All of them require vigilance to ensure that all content which should be subject to those rules is, and that you have clearly communicated the nuance of which charges are subject to which rules and fees.

Still sound easy? Maybe you should apply for a job there!

>1. Allow no-chargeback services that must be text-message verified.

Doubt this is possible, considering the payment processor and the customer's bank are separate entities. Although 2 factor authentication for credit cards kinda exists in the form of 3d-secure, but even that's really flakey in terms of adoption (merchant, payment processor, banks).

> 2. Accept adult-content payments, but don't release the money until after a chargeback window (e.g. 60 days), thus isolating the credit card from any risk.

chargebacks can be initiated up to 120 days from time of purchase, so that's quite a long waiting time. plus it does nothing to prevent people using stolen credit cards to get stolen content. why pay $50/month to access "patron only" content when you can buy a stolen credit card for $1 and use that instead?

>3. Pass-on the chargeback rate (I imagine it can't be higher than 20%) to those wishing to do business as a cost-of-business fee.

this ignores the fixed chargeback fee ($25?) that merchants get hit with when a chargeback occurs. what will you do when a carder sends all his stolen credit card your way?

finally, doing any of the above costs support reps, engineering time, etc., which only caters to a small % of potential merchants. so you end up with the situation we have today. "mainstream" processors who handle the 99% of non-risky merchants, and a few select payment processors that target the risky 1% niche.

Please do look outside US market. In India two factor authentication via a text message to bank registered mobile number of the customer is mandated by law. Chargebacks here are virtually unheard of, probably most customers here don't even know what a 'chargeback' is.

The US is keeping its banking system primitive intentionally, as the government is hand in glove with greedy banks. Sending money whether to a business or an individual is free in India, for both parties.

Not having a process for chargeback removes buyer protection. This will make people risk averse and only deal with big and trusted companies like Amazon and Flipkart.

But in the US, I give my card to many small businesses knowing that I've chargeback as a tool. The businessess also ensure quality and delivery timing because payment processor is closely monitoring their chargeback rates.

One friend told me that in India, banks can freeze your account without a court order, I am not talking about a loan or credit card default.

Sending money is never free, there is always a cost associated with the activity. So which exact transaction is free?

It took me quite a bit of reading and re-reading to understand the point you are trying to make (at least I think I understand now).

Nobody is owed a living. I wouldn't try to justify this move just like I'm not going to try to justify gravity to you: it just is that way.

How many of the great artists in the history of the world were able to earn money from their art during their lifetimes? It certainly is a more recent phenomenon. The starving artist is not a cliche for no reason.

If you would like to get specific and look to solve a problem I bet many on HN would be willing to help, but simply decrying the state of the world over this seems melodramatic and not worthy of HN.

What is going on here is a blatant market failure. There are people producing content, and people willing to spend enough money on that content to justify its creation. In an ideal market, these transactions would go through, and everyone becomes wealthier.

To be clear, there was a market failure before Patreon entered the scene because there was simply no market for these transactions to take place. But now, Patreon is deliberatly re-introducing that market failure. Further their reason for doing so is a generic excuse of "porn bad for payment processors"; not some specific "we noticed that the porn monetized on our platform results in an unacceptably high level of chargebacks". From the outside, it looks like this is a market failure that has no reason to exist other than institutional bias that is no longer grounded in reality.

The market hasn't failed, it's perfectly possible to sell adult content online, it's just relatively more expensive.

"From the outside, it looks like this is a market failure that has no reason to exist other than institutional bias that is no longer grounded in reality."

I think you're being a bit naive there. Surely those companies would have no objection to tasteful nudity or educational content, but if you want to process actual porn you'll have accept a lot of seriously offensive content that you definitely don't want to directly associate with your brand.

We have a situation where people are are trading money in exchange for goods. Presumably, this is happening because the people spending money value the goods more than the money; and the people selling the goods value the money more than the effort to produce the goods [0]. This means that these trades not happening is, by definition, an inefficiency. By definition, a situation causing an economic inefficiency is a market failure. Unless you are arguing that every transaction Patreon is now blocking will still occur without Patreon, then Patreons decision is causing (or, rather, worsening) a market failure.

Creating an entirely efficient market is a hard problem, so the existence of market failures should not be surprising. But, when we see a clear example of a market failure being introduced, we should question what is the reason, and if there is a way we can avoid it.

[0] Even after the 5% fees Patreon charges. There are also cases where the transaction is not entirely quid-pro-quo (eg. people donating to support the creation of free content), which mucks up the Econ 101 analysis, but I don't think effects the broader point.

It's actually an example of the market mechanism solving the problem, you're just ignoring a few actors here:

The payment processor of Patreon has an interest not to deal with the porn, therefore declines the business.

The payment processor of competing actual porn platforms has a market niche to take exactly that business.

All the middlemen that are required here (for complex reasons) get paid for making it happen.

Nothing is lost, therefore no inefficiency, therefore no failure. The money not spent on one performer through Patreon can instead be spent on any other performer wise enough not to rely on Patreon for payment.