Taking un-refundable payments by Paypal. Possible?

[dctrpl]

If I was to run an online/email competition for which a player pays to take part, would I be mad to take money off them with Paypal?


I'm thinking that, ordinarily, a customer could ask for their money back from Paypal within 60 days. But if they pay, play and lose (or win) then its not going to work if they can just get a refund.

Can you cancel out Paypal's guarantee by issuing the customer with T & Cs that they have to opt-in to agree to?


Or is there just a much better solution for taking payments which cannot be refunded? :)

[Recover My Image]

Have you tried Nochex or Google checkout ? also don't forget A player may file a chargeback with their card issuer .

[Just_a_bloke]

I initially started my online store with Paypal,

I had a customer spend a couple of hundred pounds with us, then about six weeks later he bought another expensive item off us. Just after we had despatched the goods he contacted us to say he'd had a problem with paypal (too long a go to remember exactly what). The next thing we knew Paypal clawed back his payment, and asked for proof of delivery when we tried to explain the goods had gone they asked for Proof Of Delivery....., but paypal don't provide an easy way to provide pod's as they won't accept attachments to emails, so we had to fax it. Paypal still would not accept the transaction as a genuine one and still wouldn't pay us. Luckily the customer was genuine and very upset about the paypal issue and quickly sent us a cheque.

After months of complaing to paypal and getting standard 'go away' replies which did not relate to the problem we encountered, a person from paypal did ring up, though wasn't interested in my sistuation. At the time my monthly tranactions via paypal were around £20K. We quickly changed our payment provider and got an excellant deal via the FSB.

So... be warned accepting payments via paypal won't be safe, though if your buying anything, you can be assured your payments will be safe if you have a problem.

[Made4Print]

Hi,

I am involved in the software development for an online competition (http://www.take-a-view.co.uk/) that uses PayPal, they havent had any problems with paypal for the 3 years its been running. If a payment is refunded for any reason the callback is made to the site which invalidates the entries.

You could set the terms and conditions indicating that the results/draw etc are worked out more than 60 days after the competition closes, this would take care of any refunds after that date?

HTH

Mark

[That Guy]

Hi,

I am involved in the software development for an online competition (http://www.take-a-view.co.uk/) that uses PayPal, they havent had any problems with paypal for the 3 years its been running. If a payment is refunded for any reason the callback is made to the site which invalidates the entries.

You could set the terms and conditions indicating that the results/draw etc are worked out more than 60 days after the competition closes, this would take care of any refunds after that date?

HTH

Mark

Thats a good idea and probably the best way round chargebacks :)

[RobF]

If I was to run an online/email competition for which a player pays to take part, would I be mad to take money off them with Paypal?

Be careful with PayPal - strictly speaking they do not permit the use of their services for 'gaming' transactions. This is because they aggregate transactions on shared Merchant Accounts (which puts individual business models under the radar) yet the card schemes specifically need gaming transactions identified separately so that countries with applicable laws (the US being a bloody big example) can block the transactions.

Of course you'll probably say you're a UK-facing proposition but it doesn't change a massive risk to PayPal. You could be okay for as long as you go under the radar but you'll be infringing their terms and I wouldn't risk that when you're trusting them with your money (particularly since your stated aim is they don't give money back to the consumers, which is probably what they'd do if your activity was found to be in breach of their terms).

Of course this all comes down to the interpretation of your business model but it sounds close to gaming to me. To answer your original question, you could find a PSP where you remain in full control of refunds and who can let you selectively enable card scheme acceptance such that you can allow only Visa Debit, Maestro and Solo (i.e. debit cards the where opportunity to chargeback is much smaller since they are not credit cards).

Your other option might be looking to new alternative payment schemes where the consumer is better protected in making the transaction (i.e. is in total control and does not share any credentials) and therefore has no divine right to a refund. A good example is PayPoint.net PayCash. With this your customer would initiate the transaction on your website, pay for it in cash at one of over 22,000 outlets in the UK, you'd get an instant notification of their entry but because they've willingly handed over cash the transaction is guaranteed from your perspective as a Merchant.

[usercart]

Hi,

I am involved in the software development for an online competition (http://www.take-a-view.co.uk/) that uses PayPal, they havent had any problems with paypal for the 3 years its been running. If a payment is refunded for any reason the callback is made to the site which invalidates the entries.

You could set the terms and conditions indicating that the results/draw etc are worked out more than 60 days after the competition closes, this would take care of any refunds after that date?

HTH

Mark


What do you offer the goods before download ?

[dctrpl]

Oh - didn't notice replies. Thanks to everyone, especially Rob F with the warning about paypal and gaming... I didn't know that.

The prject we're planning is *kinda* gaming and I would say it's SKILL but, of course, I would think that and someone else may well interpret it as gaming so I'll certainly be looking at other options... I don't want to get stung later.

So far, our Paypal experience has been pleasant enough (no gaming at all - just selling downloads) but you do hear some nasty tales...

Gotta hand it to them, everyone on the net is Paypal's *****es. They OWN the net!

[dctrpl]

You could set the terms and conditions indicating that the results/draw etc are worked out more than 60 days after the competition closes, this would take care of any refunds after that date?

HTH

Mark

As the other person said - that's probably a smart option for the situation

Paypal is 60 days, but does anyone know what the chargeback times are for credit cards? Are they roughly the same-of-a-sameness. Are there any gigantic exceptions, or - if a transaction IS through Paypal, can you safely assume that everything is OK if you get past 60 days - no matter HOW the customer paid paypal?

[RobF]

the warning about paypal and gaming... I didn't know that.

The prject we're planning is *kinda* gaming and I would say it's SKILL but, of course, I would think that and someone else may well interpret it as gaming so I'll certainly be looking at other options...

I should qualify my previous comment to say that PayPal do and will support gaming for some large gaming or betting brands, but only after massive due diligence and evidence from the Merchant of performing real-time KYC to eliminate customers in forbidden countries (US, Turkey) or underage.

The reality of this means they only support it for a few blue-chip gaming clients (with up to a year of negotiation) and everyone else (i.e. startups) can only sustain a gaming model on PayPal by flying under the radar. This makes it a very real risk that if you're spotted you'll be shut down by them for breach of contract.

In card payments there is an age-old battle by startups to classify as skill game (Visa/MasterCard Merchant Category Code 7994) rather than gaming (the infamous 7995) and you sound like you feel you have a case there too. It might be worth instigating discussions about a Merchant Account with a PSP or Bank, just to get their feedback on where they see you fit as this would at least give you confidence with PayPal or beyond.

Any PSP that offers Merchant Accounts themselves (a complete or 'bureau' solution) would innevitably have a risk and compliance department which can evaluate your business and give you an assessment of whether you are skill or gaming. This might make it easier for you to decide whether to go with PayPal or the PSP, and whether to be upfront with PayPal or not.

[RobF]

As the other person said - that's probably a smart option for the situation

Paypal is 60 days, but does anyone know what the chargeback times are for credit cards? Are they roughly the same-of-a-sameness. Are there any gigantic exceptions, or - if a transaction IS through Paypal, can you safely assume that everything is OK if you get past 60 days - no matter HOW the customer paid paypal?

Traditionally it's 90 days according to the terms of most cards but it really comes down to a case by case basis and the willingness of some issuers to look after their customers and pursue older disputes. I've seen some banks pursue year old claims and others pursue claims on behalf of debit card holders where no liability really existed for the issuer but presumably looking after a good bank account holder was important.

The other thing to take into account is that the claim period starts not at the point of purchase but at the point of fulfilment, so the plan proposed above besides blocking PayPal claims, will not work for credit card claims as most issuers will view the point of fulfilment as being the draw date and hence customers will have 90 days from the draw onwards to make a claim. Here is one area where a credit card / PSP solution might benefit you as you could use 3D Secure to authenticate customers during the card authorisation and that removes your chargeback liability for them claiming they didn't make the transaction if they're unsuccessful in the draw.