>It doesn't affect the "good guys", because we value their craft more than other crafts.
I am not only wanting to criticise the individual payment processors, because I understand the risk of doing business with such things. I want to criticise the whole system in which people must rely upon several centralised services in order to get by with their craft. The fact that such things are difficult to fund is the crux of the issue here, and the point is that it's a sad state of affairs to be in that the alternative options are scarce and expensive/difficult to procure.
But the point is still lost. I will reiterate: people would much rather use their knowledge and skill for a craft than to work a minimum-wage job or even in between jobs; peoples' livelihoods are at stake, and it's disappointing to see a comment along the lines of "just use another service" or justifying the situation as simply being the way the world works. The point is that the world shouldn't work that way, and as soon as we realise that, the sooner we can put pressure in the relevant places to change it. The mere suggestion of alternatives (either in the crowdfunding platform or the payment platform) does nothing to help the people who, even if they could afford to move, would suffer a massive loss in audience and revenue.
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 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.
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?
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.
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!
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.
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.
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?
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.
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.
"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.
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.
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.
oh please, stop making it sound like one artisanal widget maker's livlihood is being destroyed by The System. the truth is that they're producing and selling adult content, which (among other things) is riskier to transact than artisnal beads. the "mainstream" payment processors simply do not want to deal with the hassle, pure and simple. as other commenters have mentioned, there are payment processors that cater to such "high risk" businesses, but they don't come cheap.