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I understand why they do it: they trying to bring down transaction costs with payment processors. These fees on small amounts is death by thousand cuts. But, I

• ryanatallah 9y ago
  It seems very likely that the change was motivated by payment processor fees. Patreon uses Stripe to process payments, which charges a flat rate of 2.9% + $0.30 per successful charge. Compare that to the proposed fee patron fee structure of 2.9% + $0.35 — where presumably the extra $0.05 per transaction is the cut Patreon takes off the top for themselves.
  • conductr 9y ago
    Don't forget it's now 2.9% of $1.37 instead of $1.00. Reducing their piece by another 1 or 2 cents depending on how Stripe rounds
    • ceejayoz 9y ago
      Patreon does enough volume to qualify for discounts - their Stripe rate is 1.9%, not 2.9%. (This used to be on https://patreon.zendesk.com/hc/en-us/articles/204606125-How-do-you-calculate-fees- https://patreon.zendesk.com/hc/en-us/articles/204606125-How-..., but it's gone now.)
      • nojvek 9y ago
        Looks like they wanna be nice guys running a marketplace at 5% and claiming to be good guys. And then VC dogs biting them to make fatter profits so they find ticket master like shoddy processing fee scams.
    • hutzlibu 9y ago
      minus their likely bargain with Stripe. I doubt they pay as much as a small customer.
      • dawnerd 9y ago
        Weird that they’d even use stripe as they could likely skip the middleman and save more money. Stripe is great for small business. Patreon isn’t that.
        • BillinghamJ 9y ago
          Stripe isn't really a middleman. In fact, as they also handle the acquiring process with efficient high-volume rates, generally fewer parties are involved than normal. Even for very large businesses, actually processing cards directly is pretty difficult and generally not worth doing. Instead you can just get a processor like Stripe or Adyen to give you good rates on an interchange-plus model.
  • sago 9y ago
    > the proposed fee patron fee structure of 2.9% + $0.35 The problem was that was per pledge. So if, like me, you support a couple dozen creators at $1-$3 each, you would expect to pay 24 x $.35. But all those payments are charged in one transaction. So they are only paying $.30. It isn't 5c per transaction they were planning to skim, but $8.
    • stormbrew 9y ago
      Part of the change was no longer aggregating the charges but running them through individually. They wouldn't have been pocketing most of the fees. Which honestly makes it even more baffling an idea.
      • deleted 9y ago
        [deleted]
      • nojvek 9y ago
        I believe the idea was to give the money to creators immediately rather than end of month when they charged everyone.
        • stickfigure 9y ago
          ...which is still baffling! The core value of Patreon is microtransaction aggregation. This isn't just "product management screwed up a feature", it's product management doesn't understand their own product at all. Crazy. It's like designing a fancy new electric car but leaving off the wheels.
          • kalleboo 9y ago
            It's like designing an electric car, but requiring you to use a diesel generator to recharge it.
    • Pyxl101 9y ago
      You're assuming that Patreon will issue all of those charges at once. However, they talk about that problem in the article. What if a Patreon supporter pledges/makes a subscription on Day 1, then another on Day 2, and a third on Day 3, and so on? In their original blog post [1], they spoke about how, ideally, they'd issue each of those charges to the supporter immediately; and then begin recurring billing 30 days later after that date. However, if those charges are made on different days, and the anniversaries occur on different days going forward, then they don't have the opportunity to condense them into a single transaction. Patreon are looking for a solution where someone can create a subscription, be billed for it immediately (i.e. not wait for beginning of next month), and then continue from there with recurring monthly payments. With a naive system each subscription would have its own cadence, preventing transaction consolidation. They also talk about how, if they have a standard monthly billing period, then there are issues with waiting until the next period to make the first charge. Perhaps they didn't explain this as well as they could have, but it made sense to me. It seems like a "Patreon Wallet" could indeed be a solution to a lot of these problems. Refill your wallet with a single large transaction, then draw funds from it when pledging to support creators. [1] https://blog.patreon.com/updating-patreons-fee-structure/ https://blog.patreon.com/updating-patreons-fee-structure/
  • dsr_ 9y ago
    Whereas Paypal will apparently do 5% and 0.05, which makes the dollar go to $1.10 instead of $1.38.
  • ceejayoz 9y ago
    Patreon's docs until recently noted that they get charged 1.9% by Stripe, so there's more than $0.05 being skimmed there.
• javajosh 9y ago
  If you keep people's money and move it around for them, you start looking like a bank, and you get regulated like a bank. I think this is why online games let you buy tokens with real money, and the tokens sit in your account. (It's probably of critical importance that there exist no way for the tokens to be converted back into currency - which is why regulators were and are far more concerned about online gold farming than the game devs themselves. It's good to be the bank.)
  • chipotle_coyote 9y ago
    Having worked many years ago at There, a now defunct-in-all-but-name Second Life competitor: you're absolutely right. We could let people buy "Therebucks," but it would have been illegal for us to let them convert Therebucks back to cash. WRT Patreon, I'm 99% sure that this is the reason they didn't propose something like a "balance card" where patrons just give them $X and both pledges and fees get deducted from that -- since that money's being held and then paid to someone else, it could end up being too close to a "money transmission service." (I'd thought there was a non-zero chance that this was a motivating factor in this change to start with, actually; coming so soon after a huge investment round sure makes it seem like there was a condition to that investment that spurred this change. Christie Koehler wrote a good post about that on her blog, although I don't have the link handy.)
    • thedirt0115 9y ago
      How do this work for services like Playstation or Steam, which have wallets like you're describing? Is it just the fact that you can't take money back out or what? (I have no idea about laws regarding banking/finance/etc)
      • caf 9y ago
        Or indeed Apple App Store, Google Play.
        • chipotle_coyote 9y ago
• viraptor 9y ago
  Would that put any extra requirements on them? They're not just a middleman in that situation, they actually hold the funds. That sounds close to the PayPal for a long time: we've got accounts and transactions and deal with real money but we really really are not a bank, promise, please don't regulate us as one!
  • jordanb 9y ago
    Alternately they could have patrons pay in arrears: You give your donations and then you pay at the end of the month. One transaction on the card and then it gets divvied up.
    • thatfunkymunki 9y ago
      That is how it currently works... I get one patreon transaction a month even though I have weekly pledges. That's part of what made this change so frustrating and greedy
    • jogjayr 9y ago
      Maybe they felt the cost of fighting fraud there would be too high? Scammer signs up as a patron to his own account with stolen credit card, gets paid, Patreon can't charge the (now-cancelled) card at the end of the month? They could delay payments to creators by a month to combat this but then they're holding the funds for a month, which brings you back to the original problem of seeming like a bank. This seems like something Stripe could address, maybe. EDIT: Just saw the other reply that explained this is how it currently works. I'll leave my original comment up though
  • caf 9y ago
    Isn't that how Apple App Store / Google Play end up working as well, though?
• breakingcups 9y ago
  That's what they did before the announced fee changes. After the fee changes were supposed to go into effect they we're no longer aggregating pledges. Madness.
• ajkjk 9y ago
  Maybe it's just me, but, I think it's so fucking stupid that it costs money (which goes to private businesses) to spend money in the modern world. (and no, bitcoin doesn't fix that at all) I think if we were in an alternate universe where the government managed a free utility for digital payments no one would find it strange for a second.
  • spookthesunset 9y ago
    It has always costed money to to spend money and there are pros and cons to each method. All that stuff isn't free even if it isn't directly measurable most of the time. Cash costs money too--you have to count it, handle it, deposit it, protect it from theft, verify it's authenticity, make sure you have enough change, spend time counting change, etc. As a consumer, if a merchant fucks you over you have little recourse besides suing. Cash takes no time to clear so you can spend it right after getting it, it is anonymous, it is hard to trace so you can skip on taxes, etc. Checks can bounce, you have to deposit them, they take time to clear, they take forever to write, they can be fake, etc. However, it is hard for your cashiers to skim off the top, it uses exact amounts so no change to keep, it is a single slip of paper to carry around instead of a pocket of paper currency, as a consumer you can stop payment on a check if the merchant fucks you over, etc... Credit cards are super quick to use at the register. They don't require any change (unless handing cash back). As a consumer, if a merchant fucks you over you can issue a chargeback. It is easy to track your spending as a consumer because all transactions are recorded electronically. As a merchant you don't have to handle change or cash, your cashiers can't easily skim off the top, etc... It's all trade offs and I'll bet if you did an NPV on all the different methods taking into consideration all their pros and cons, they'd all wind up "costing" similar amounts.
    • jimmaswell 9y ago
      >Credit cards are super quick to use at the register. At least they used to be. Chips ruined that. Now I have to stand there staring at the screen for half a minute waiting to respond to prompts and to pull the card out at the end. For most transactions, cash is probably faster than using a chip.
• geofft 9y ago
  > I understand why they do it: they trying to bring down transaction costs with payment processors. These fees on small amounts is death by thousand cuts. Then they should have never strayed from the original model, where they charge you once per month for all your pledges, causing only one fee paid to the payment processor. (If they needed to accommodate people pledging small amounts to very few creators, they could have introduced some sort of quarterly, biannual, or even annual payment option instead of just monthly. I'm curious if they evaluated this option and what they concluded.)
  • hinkley 9y ago
    My coffee shop has a sign: $0.50 fee for card transactions under $5. I’ve seen that sign over the years at a dozen places. The idea isn’t entirely novel. And you’re right, in that perhaps they should send $3 every three months or. $6 every six if you’re only giving to one person.
    • DrJaws 9y ago
      That's illegal on my country, they cannot change the price for different payment methods.
      • vetinari 9y ago
        Which country it is? Payment cards are not a legal tender, so you can do whatever you want, provided you didn't sign a contract not to do.
        • francoisfeugeas 9y ago
          In France for instance if you accept credit cards, it is illegal to add a fee for accepting it. You can impose a minimum purchase amount for accepting it though. Certain professions (i.e., taxis) are even forced to accept credit cards.
          • vetinari 9y ago
• LoSboccacc 9y ago
  The problem if I understood correctly their previous strife is when you finance patrons across taxation boundaries. If they have to collect vat, they need separate transactions, even if that drived up transaction costd
  • Denvercoder9 9y ago
    > If they have to collect vat, they need separate transactions At least in Europe that's not true. If I buy milk (6% VAT) and beer (19% VAT) in the supermarket here (The Netherlands), I don't have to split that in two transactions.
    • LoSboccacc 9y ago
      sure it's true for goods and services if sold to a single state, but if you sell across state boundaries you're required to register and pay your vat to each state where the sale happened and track those transactions along with the source
• protomyth 9y ago
  > put $10 in a single transaction, then charge the wallet once it is a time to pay to creator They already group the transaction on the 1st of the month for me. I use PayPal, is it different for other payment types?
• Obi_Juan_Kenobi 9y ago
  You do not understand what happened. They did aggregate up until this point, at least for most patrons and creators. If you did a regular pledge with a monthly charge, you only made one transaction a month. Similarly, each creator got paid once a month with one transaction. The exception was per-post patronages, which do indeed have more fees and are less suited to the micro-payment model. That is NOT what this was about, though. The real motivation was to support gated content. They want to bring creators into their subscription system, where you pay a fee to access content. They had a problem, though, in that people could pledge, access content, and then simply cancel their pledge before getting charged. To avoid this, they needed to do Charge Up Front (CUF) to ensure that any access to gated content was paid for. But that creates some confusion about when people get charged (do you pro-rate the first charge, with or without the next month, etc.) because people would pledge a certain amount and see a different amount charged. The alternative is to have people on their own billing cycles, which is much less confusing for customers, but eliminates the possibility of aggregation. Basically, they want to abandon the goodwill/patronage model and become a subscription service, likely because the latter model is far more lucrative.
  • sgdread 9y ago
    > They did aggregate up until this point Still an issue if most people support 1-2 creators with $1-2 pledges.
  • eridius 9y ago
    You're ignoring the fact that increasing the number of distinct fees charged to Patrons translates directly to more money for Patreon (because Patreon was charging a much higher fee to Patrons than they themselves are actually paying on the transaction). Their public explanation was that a traditional subscription model is simpler, but it's obviously worse for users and the only reason to do that instead of the alternatives (such as the wallet approach) is so Patreon can get their cut of those extra fees.
    • chipotle_coyote 9y ago
      As Wikipedia would say, "[citation needed]". The transaction fees to patrons that Patreon proposed of 35¢ plus 2.9% are real familiar to anyone who's worked on a payment processor. Patreon was essentially passing the transaction fees they would have paid onto patrons, and they would not have been making a material amount of extra money for themselves if they'd stuck with the new system.