Comment by rexreed | Hacker News Reader

Comment by rexreed | Hacker News Reader

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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 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.

"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.

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.

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.

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...

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.

This. As much as I hate PayPal (esp their "customer service"), this policy makes perfect sense to me.

With stories of fraud on Kickstarter, due diligence is your friend! So with Kickstarter (and IGG, I don't know their policy) taking 5% and no responsibility, users only have chargebacks as a course of action. I don't think it is the $25 donationsusers that care, what about the users who donate $2500?

http://www.polygon.com/gaming/2012/6/27/3099051/backers-righ...

http://www.dailydot.com/business/why-kickstarter-ripe-scams/

I'm not sure how Indiegogo or Paypal are on the hook for anything. Suppose for the sake of discussion for a second that MP is a complete and overt fraud, and they intend to do nothing but take the money and run. So I contributed to the project, in hope to get the product eventually, but instead I just out of $X and have my faith in humanity dinged. But both Indiegogo and Paypal are just middlemen, as far as I can see, they guarantee me nothing. How are they on the hook for anything?

Don't know where you are... but in the US, visa/mc/etc all protect their customers from fraud. In fact, in US law, consumers are not liable for more than $50 of a fraudulent charge on a credit card (and most banks reduce that to $0). So first, the consumer WILL get their money back because they have a contract that says they will in the case of fraud.

Your bank recoups that money from PayPal/indiegogos processor, and that processor will recoup the money from Indigogo, and indiegogo recoups it from the project. Whoever can't recover their money in that chain, is where it ends. That company is out of luck.

Saying, 'Oops.. we let one of our customers commit fraud, too bad for you'... isn't a permitted excuse.

And this applies to PayPal as well.. since consumers get their money into a PayPal account using a credit card or bank transfer. So PayPal is no different than any other processor in this case.

So you funded mailpile, and you want them to have your money. Seems cut and dry... but it's not.

If it's a credit card, you might not pay your debt. That's a risk borne by Visa and MC.

If it turns out to be a stolen card, all parties on the receiving end might be obligated to return the money. If Mailpile is honest, they will comply, but if Mailpile is responsible for the fraudulent payment, they just successfully laundered some stolen credit into their bank account.

Maybe they can't get the whole $100k in cash, so it's not realistic since AML says they can't have more than 10k at a time. I would be very suspicious if I was mailpile's bank and they came in to close the account tomorrow. But, I don't think that's how AML works.

> 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.

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.

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