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How to avoid chargebacks on personal donations|tips|contributions|sponsoring

Discussion in 'Payment Processing' started by Dirk the Web Phoenix, Dec 3, 2019.

  1. #1
    Hi, everybody:

    I am looking for up to date advice from people with experience. (not found in recent forum searches)

    I want to give visitors on one of my websites the option to leave a tip, in other words: make a donation, sponsor the site, fund me so I can pay for the hosting service and over time improve the website they can use for free. I'd like to set up an uncomplicated account with a money transfer service and simply link to it. (I live and work in the Americas and Europe, currently as freelancer.)

    I want it to be easy and safe (for both them and myself).

    ___Two Worries:___

    (1) chargeback fees: crooks can demand a chargeback on a donation, not only taking the money back but costing me a big fee.
    (2) tax mess: payment services may send info on my received donations to tax agencies (wrong info to wrong agencies in the case of a professional nomad like me)

    So, what is a good service without any of these problems? :)
    SEMrush
     
    Dirk the Web Phoenix, Dec 3, 2019 IP
    SEMrush
  2. Dirk the Web Phoenix

    Dirk the Web Phoenix Greenhorn

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    #2
    ___Why I ask:___
    (some background info and links to stuff I came across leaving me bewildered and worried)

    When I searched the Internet on it, I came across only charity-blabla connected to the term "donations" and chargeback stories mostly connected to sales, but SCARILY also sometimes chargebacks in cases of donations. For example, here is a young youtuber telling how he was assaulted with PayPal chargebacks (and their FEES!) on donations to his Youtube channel:


    And here is an article I came across which explains donation fraud: https://www.thebalancesmb.com/keep-donors-safe-preventing-online-credit-card-fraud-4148333

    So, with an unsafe service or faulty account setup I might end up with a big pile of $20 chargeback fees instead of a handful of actual donations/tips/contributions or whatever the correct word to use actually is. And, as mentioned before, I need to juggle the tax agencies of different countries, so any reporting to any agency by a money transfer service could get me into trouble by the discrepancy between my correct filing and the faulty filing of such a third party transaction service that won't know when I was where.

    Encountered services:

    (A) PayPal -- I found the policies I read on PayPal far too vague and convoluted for me to grasp. A forest invisible for all the trees: "PayPal.Me", "personal payments", "gifts", "donations", "Money Pool"; "friends and family" "personal payments" that may have no chargebacks possibility, but am I a "friend" of my free site users getting a "personal payment" from them? If yes, how to set it up, as a PayPal.Me or a Money Pool, or what?

    (B) Patreon: no idea about chargeback risks, but it definitely insists on messing with taxes. (at least in Europe, but possibly the U.S., too)

    (C) Escrow.com claims "buy and sell anything safely without the risk of chargebacks"... But does it handle donations?

    (D) Stripe Offers SMBs Chargeback Fraud Relief... but apparently only to registered businesses.

    (E) GoFundMe, no idea about it, yet. Is it only for humanitarian aid? Maybe it's identical to crowdfunding sites like Kickstarter that make contributions complicated and insist on time limited and amount-goal-plagued "campaigns"...?


    All I want is a harmless tip jar.


    Thanks a million for any hints or clues, especially when backed up by experience. :)
     
    Dirk the Web Phoenix, Dec 3, 2019 IP
  3. qwikad.com

    qwikad.com Illustrious Member Affiliate Manager

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    #3
    I doubt that you can find a service that can completely protect you from chargebacks, since they will be dealing with digital / virtual goods. IMO PayPal will be your best bet and as you have mentioned if you can receive it via friends / family option, the donators won't be able to start a dispute. Although, they still can stop the payment if they paid using their CC. You should overcome your worries and give it a try.
     
    qwikad.com, Dec 4, 2019 IP
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  4. Dirk the Web Phoenix

    Dirk the Web Phoenix Greenhorn

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    #4
    Many thanks for your tip, qwikad. Do you happen to know how to best set up a "friends" payment? As a PayPal.Me or a Money Pool, or something else? (PayPal is such a jungle nowadays)
     
    Dirk the Web Phoenix, Dec 12, 2019 IP
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  5. raj p

    raj p Greenhorn

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    #5
    Well It's difficult anyone can chargebacks unless platform takes the liabilities like Airbnb and Uber. If you are a platform there is a way to avoided chargebacks using PayPal connect. Simply on board the sellers to PayPal connect on your platform and then platform will have control to their payments. The good thing is all happens on sellers account and nothing really touches platform server.
    May be you can create legal document to get identity and electronic sign and submit that as evidence to dispute chargebacks.
     
    raj p, Dec 20, 2019 IP
  6. Dirk the Web Phoenix

    Dirk the Web Phoenix Greenhorn

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    #6
    I frankly don't understand this statement. (maybe because I am so ignorant about money issues)
     
    Dirk the Web Phoenix, Dec 28, 2019 IP
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  7. PayOp

    PayOp Peon

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    #7
    if you provide your services with high quality, on time, give feedback to your customers, then you have nothing to worry about chargebacks.
     
    PayOp, Jan 2, 2020 IP
  8. Dirk the Web Phoenix

    Dirk the Web Phoenix Greenhorn

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    #8
    When accepting donations the worry is not about dissatisfied customers (since there are no customers) but donation-fraudsters who make insincere donations from stolen credit cards and then demand a chargeback into their pocket, thereby not only stealing money from the credit card owner but also resulting in a chargeback fee from payment services.
     
    Dirk the Web Phoenix, Jan 8, 2020 IP
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  9. JEET

    JEET Notable Member

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    #9
    There is something you can do, see below,
    but if a credit card is used, then you will always have the risk of charge backs. You cannot avoid the risk itself.
    Some scammer used a stolen credit card to make a donation to you. When the original card holder recieved information, they cancelled it.
    This can always happen...

    Similar thing happened to me long ago, when I sold something for 200USD, delivered it, and some 90 days later I got a charge back email from paypal.
    If I remember correctly, I was charged a USD 10 charge back fee, not 100% sure, might have been slightly more.

    Just watched the video you posted, and it seems 20USD is charge back penalty fee.
    ok, no problem.

    This can happen with any provider, except may be with krypto bit coin type something.
    In krypto, people cannot ask back what they have paid, so this is in your favor,
    but not many people use or have krypto, so not a usable option.

    You can use paypal donate buttons, but with a different approach.
    The best option for you is to have more "valid" donaters, than "scam" donaters.
    Here's what you can do to achieve this:

    1. Instead of allowing the "donater" to choose amount to donate,
    "you" decide the amount they will donate.
    Make 5 donate buttons, each with a different donation amount.
    50USD, 100USD, 150USD, 200USD, 250USD.

    2. Accept only "one" donation from "one" donater, not multiples.
    If someone makes 2 donations, then return the second one immediately, without any delay.
    They can donate again a month later, 2 months later, but not immediately.

    Here's what will happen.

    5 people donated to you.
    4 donated 50USD.
    1 donated 250USD.

    Those 4 were valid people.
    The 5th one was a scammer, the 250USD one.

    He tried to scam you by donating 3 times, but you have already returned 2 of his additional donations. So he cannot charge back on those.

    2 days later, he charged back on the one payment you have accepted from him.
    250USD is sent back, and paypal charged you additional 20USD in penalty.

    Your total paypal balance is:
    50 x 4 = 200 - 20 (penalty) = 180 USD.

    Even with a 1:1 ratio of valid:scammer, you will still be making money, not losing it!
    And the ratio will certainly be better in favor of valid donaters.

    I never made a donate button with paypal, so am not sure if they allow you to set a pre-fixed amount on each donate button made or not.
    I am guessing this will be an option. You won't face issues with this...


    If someone wants to donate more than 250USD, ask them how much they want to donate, send them a "money request" from friends and family option.
    So they cannot charge back now.
    If they are valid donaters, you get that big amount, without fear of chargeback.
    If they wanted to scam you, they will not make the payment in the first place...
     
    JEET, Jan 9, 2020 IP
  10. Dirk the Web Phoenix

    Dirk the Web Phoenix Greenhorn

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    #10
    Thanks a lot for your comment, JEET. :)

    (sorry I noticed it so much later... been very busy... time can go fast)


    I am afraid this wouldn't necessarily work, because in my case donations would likely be very small, like between 1 and 5 USD. So a single chargeback fee of $20 or $25 would wipe out a whole bunch of honest donations. Also, sending back multiple donations minus the first one from people per month could take a lot of my time; not something I want to spend my time with.



    That sounds interesting, but I don't quite get how this would work. How does one send them a "money request" and how does this eliminate a chargeback possibility?
     
    Dirk the Web Phoenix, Jan 24, 2020 IP
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  11. JEET

    JEET Notable Member

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    #11
    Even I am not 100% sure about the last one, haven't used paypal in a long time now.
    I read somewhere that paypal has something called "Friends and family" option, where you can request money and chargeback/refund is not possible in that, because it was not a item you sold.
    But then again, I am not 100% sure about it, I never used it.
    It was just something I read, either in another topic in this forum, or somewhere else.
    May be someone else can tell you more about that.
     
    JEET, Jan 24, 2020 IP
  12. Dirk the Web Phoenix

    Dirk the Web Phoenix Greenhorn

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    #12
    Thanks, JEET.

    Still waiting for someone with full experience and ideally a perfect solution to chime in.

    That's been exactly my experience, too. Occasional mentionings of a "friends and family" option here and elsewhere, too. But when I tried to find a confirmation in PayPal's official rules, I only came across a confusing jungle of wishy-washy rambling, for example not explaining who they accept as "friends and family".

    This obtrusiveness makes me look out for alternatives to PayPal. One that looks a little less risky is "ko-fi" (ko-fi.com). Chargebacks are specifically mentioned as prohibited in their terms, so even if one DOES happen, the chargebacker will apparently be banned from using that service so he/she can't at least repeat the process (except via a newly created account and -- I'd hope -- a different credit card or whatever money faucet). That might make such attacks less likely. OTOH, any transaction facilitated by Ko-fi is paid by the donor to the receiver via PayPal or Stripe, making me wonder how protective it really is. At least tax reporting is left to the receiver by ko-fi, avoiding dangerous third-party meddling in my complicated tax reporting situation, but will the involved PayPal or Stripe not do that meddling anyway?

    It's quite hard to understand why all these payment services are so unclear about what they will or won't do to their customers.
     
    Dirk the Web Phoenix, Jan 31, 2020 IP
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  13. etc

    etc Well-Known Member

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    #13
    Been a victim of these dispute charges of paypal. I lose about 3500USD and that was the time when all the funds I got in paypal were sent to the bank already when the scammer suddenly filed a dispute to me, he got his $3500 back while I got a negative balance of $3500 in my paypal account. This is when I started using BITCOIN. Bitcoin solves everything and avoided chargeback scams since its irreversible.
     
    etc, Jan 31, 2020 IP
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  14. JEET

    JEET Notable Member

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    #14
    Hi @etc
    I am reading that one bit coin is equal to over 9000 dollars. So if someone wants to donate 5 USD, then how will they do that in bit coin?
    Also, which service would you recommend to start accepting bitcoin on website?
    If that service can also transfer bitcoin money to paypal in USD, that would be specially beneficial.
    Thanks
     
    JEET, Feb 1, 2020 IP
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  15. etc

    etc Well-Known Member

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    #15
    you would be spending about $10 fee for donating $5, you might as well just send more than $5. He best use the coinbase wallet and recommends his donators to use the coinbase wallet as well for the fee to be as low as possible. I can recommend setting up Lightning Network but that would be too advance. My suggestion is to just ask ETHereum or XRP for donation instead. A bitcoin holder usually have ETH and XRP with them as well.

    To start accepting BTC, some recommends Bitpay for they do have plugins and apps. Not sure if it allows paypal though.
     
    etc, Feb 3, 2020 IP
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  16. JEET

    JEET Notable Member

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    #16
    @etc thanks for all the info. I will look into this little more. Might start accepting bitcoin on my website as well...
    Thanks again!
     
    JEET, Feb 3, 2020 IP