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August 01, 2014, 02:29:05 PM
TIGSource ForumsDeveloperBusinessWhy people use eCommerce instead of direct PayPal?
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Author Topic: Why people use eCommerce instead of direct PayPal?  (Read 4736 times)
Archibald
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« on: May 24, 2012, 11:35:33 PM »

Things like BMT Micro and Plimus (http://forums.tigsource.com/index.php?topic=257.0 ), I have seen many games use it, why?

- It costs a lot more than any normal payment processor.
- They usually add VAT, which is pointless because if you were to do it on your own you are basicly exempt from VAT until you reach a certain thereshold ($30,000 per year in Poland, in most countries this is even higher) and as an indie you are unlikely to reach that volume. So it's only a cost to the player.
- They have horror pages that scare consumers (one page full of fields to enter and even your phone number, compare this with one simple, clean "Pay via PayPal" button).
- Overall, these eCommerce services feel like they are from the XX century and time stopped for them (a prominent option to order a CD with the game, which today in digital era does not make much sense)

I understand these made a lot of sense in the past, but today? PayPal coverage is not shabby at all anymore (and you can add AlertPay for full coverage if you sweat about about it). The script to the processing is a simple one, you can manage all this from a $2/month host with ease, so technical obstacles are really meager.


Is there something I overlooked? Some other important reason to use these?
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RudyTheDev
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« Reply #1 on: May 25, 2012, 12:17:45 AM »

For one, PayPal doesn't support every country; this is especially a problem if the dev is in such country.

Also, are you sure it is VAT exemption (i.e. sales tax) and not income tax exemption? I always thought it is the latter for many countries.
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Oddball
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« Reply #2 on: May 25, 2012, 12:47:58 AM »

I'd be worried if my game didn't gross $30,000. After costs that wouldn't leave me with much to feed my family.

These sites also handle file hosting and download distribution in a more professional manner than emailing the customer a .zip file.

I agree that some of these site are a bit stuck in the past. I think that's what prompted the Humble Store, which looks to bring eCommerce bang up to date.
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nico
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« Reply #3 on: May 25, 2012, 01:15:36 AM »

I think you pretty much made the case for PayPal. And I also tend to take the "If it was good enough for Minecraft (with $60+ million in sales)" mindset...

Archibald already said he's able to handle the technical host scripting. Emailing zip files is pretty outdated when you can slap together something much better with PHP and Amazon S3 in a couple of hours.
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Christian Knudsen
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« Reply #4 on: May 25, 2012, 01:28:46 AM »

And I also tend to take the "If it was good enough for Minecraft (with $60+ million in sales)" mindset...

You are aware of the many issues Notch had with Paypal, right? Such as Paypal withholding a big sum of money from him? Not getting the money you've earned could potentially be devastating to an indie developer.
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Laserbrain Studios
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« Reply #5 on: May 25, 2012, 02:10:55 AM »

I think you pretty much made the case for PayPal. And I also tend to take the "If it was good enough for Minecraft (with $60+ million in sales)" mindset...

Archibald already said he's able to handle the technical host scripting. Emailing zip files is pretty outdated when you can slap together something much better with PHP and Amazon S3 in a couple of hours.
Archibald's question was why others use eCommerce sites so his level web development skill is irrelivent. I for one have no idea how to 'slap together something much better with PHP and Amazon S3 in a couple of hours'.
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bateleur
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« Reply #6 on: May 25, 2012, 03:05:26 AM »

The other huge problem with PayPal (and the reason I'd never use it) is that you have to do all the admin yourself. International tax handling, chargebacks, creating and maintaining user lists for purposes such as downloads of bugfixed versions... there's a lot to do.

And sure, somewhere like Fastspring which charge more than PayPal, but their charges aren't high in absolute terms if they free you to get on with making games.
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moi
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« Reply #7 on: May 25, 2012, 07:56:06 AM »

under some circumstances, using a service like that turns you from being a business entrepreneur to being a contractee earning royalties, which can be more interesting for some people under certain situations.
« Last Edit: May 25, 2012, 04:03:40 PM by moi » Logged

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Archibald
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« Reply #8 on: May 25, 2012, 12:40:54 PM »

For one, PayPal doesn't support every country; this is especially a problem if the dev is in such country.
Yes, that might be true for some very few cases. But after 2006 they added so many countries that it is not that important (actually, I have heard myths that PayPal is not supported for many years after it was fully implemented, the old knowledge dies slow :D).

Also, are you sure it is VAT exemption (i.e. sales tax) and not income tax exemption? I always thought it is the latter for many countries.
Yes, I'm sure, I'm in direct contact with the government (each time I pay taxes :D). They have this nice paper (usually posted on a wall so you don't even need to ask) with information what is the thereshold this year.
Of course this might be not true for your country, but I doubt, it's rather universal.

I'd be worried if my game didn't gross $30,000. After costs that wouldn't leave me with much to feed my family.
So, I'm highly underestimating the potential money I can earn? That's the case when I'm delighted to turn out to be incorrect :D

And I also tend to take the "If it was good enough for Minecraft (with $60+ million in sales)" mindset...

You are aware of the many issues Notch had with Paypal, right? Such as Paypal withholding a big sum of money from him? Not getting the money you've earned could potentially be devastating to an indie developer.
Clarification here. Witholding the money (which has nothing to do with losing the money) is a standard procedure of theirs and it is ressolved within days (not weeks nor months). You are simply asked to provide more information, that you are a real person, that you live where you told you live, that the money do not go to some mafia, etc. It's a really trivial and easy thing. And you do it only once in a lifetime Smiley

Also, I investigated the "horror stories about PayPal taking away your money" and a huge majority of these (actually, all of these I could track) comes from the time when PayPal frozen the funds of financial pyramid schemes websites. Yes, they were all (again, those I could track) funds of at least questionable ventures. I have not found any trace of this happening to any fully legal business.

The other huge problem with PayPal (and the reason I'd never use it) is that you have to do all the admin yourself. International tax handling, chargebacks, creating and maintaining user lists for purposes such as downloads of bugfixed versions... there's a lot to do.
About the chargebacks part. I never encountered a problem here (5 years of accepting money via PayPal). Plus, the chargebacks fees are not that terrible (way below $100 IIRC), definitely this alone is not worth paying any additional commisions for "no chargebacks guarantee", it simply is too rare.
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Christian Knudsen
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« Reply #9 on: May 25, 2012, 01:54:21 PM »

Also, are you sure it is VAT exemption (i.e. sales tax) and not income tax exemption? I always thought it is the latter for many countries.
Yes, I'm sure, I'm in direct contact with the government (each time I pay taxes :D). They have this nice paper (usually posted on a wall so you don't even need to ask) with information what is the thereshold this year.
Of course this might be not true for your country, but I doubt, it's rather universal.

Here in Denmark, it's about $10,000 before you have to get a VAT number, FWIW.

You are aware of the many issues Notch had with Paypal, right? Such as Paypal withholding a big sum of money from him? Not getting the money you've earned could potentially be devastating to an indie developer.
Clarification here. Witholding the money (which has nothing to do with losing the money) is a standard procedure of theirs and it is ressolved within days (not weeks nor months).

19 days. After which they required a 5% reserve of all his sales.
« Last Edit: May 25, 2012, 02:02:39 PM by Christian Knudsen » Logged

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« Reply #10 on: May 25, 2012, 02:12:39 PM »

more info about payment processors (along with various indies and who uses what) can be found here: http://www.pixelprospector.com/the-big-list-of-payment-processors/

anyway, as others mentioned, paypal doesn't do a lot of things that these do. to me, those extra things are essential, and worth the extra 5%. they handle refunds, file hosting, sometimes re-downloading, VAT, chargebacks, fraud detection, affiliate networks, discount codes / temporary sales, and offer more customizability in general

also, there are plenty of horror stories about paypal similar to notch's. sometimes people never get their money back. sometimes paypal just randomly closes your account and takes all your money. they can do that for any reason, check the terms of use
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Hima
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« Reply #11 on: May 25, 2012, 07:02:39 PM »

What Paul said. Also, eCommerce website usually come with an easy way for you to look at many statistic. For example, number of sales of each game, number of sales from each country, etc. This is a lot easier than having to go through Paypal and make a spreadsheet by yourself.

It all comes down to are you willing to do all these non-game development task by yourself?If you can and you have time, then of course there is no reason to use eCommerce and give them extra money. But if you want more features and you want to spend more time on something else, then you might want to consider eCommerce services.

Another reason is, not everybody use Paypal. These eCommerce services usually allow you to pay in more than one way. For example, BMT Micro allows Amazon Payment and Google Checkout. You could say that you can also accept these payment by yourself. But that means more work. Also, your income will be distributed to many accounts. With eCommerce, they'll put all your money in one place and transfer it to you. You don't have to care whether those money are from Paypal, Google Checkout, Amazon or credit cards.

As for Paypal horror stories, if they have a reason to believe that you're doing money laundry or involving in a pyramid scheme, then they'll close it. It sounds good but sometime they really go crazy about it. That's what happened to Notch, I think, since he got small amount of money from so many people so they suspected it was a money laundry. Another case of frozen account happened to Regretsy's charity program.
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ஒழுக்கின்மை
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RinkuHero
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« Reply #12 on: May 25, 2012, 07:54:40 PM »

the stats thing is a good point, it's pretty useful

also, another benefit of e-commerce services is that you can automatically split the profit between multiple team members: you can set up fastspring, for instance, to give 50% of the money to one person and 50% of it to another person (say, the artist and the programmer), or whatever other percents you like. that makes things a lot simpler than having to figure out the percentages to give to someone if you have lots of tiny amounts of sales to add up and count, and avoids paypal feels for the multiple transfers involved

another small benefit is phone orders and back-up cds. most people don't use this, but e-commerce services allow people to order your game on a cd (just a plain cd-r with the game on it) for an extra charge, and they also allow people to order by phone rather than using an internet form. the % of people who use either of those features is relatively small, but i like that they are there for the few people who want them
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Christian Knudsen
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« Reply #13 on: May 26, 2012, 02:09:19 AM »

As for Paypal horror stories, if they have a reason to believe that you're doing money laundry or involving in a pyramid scheme, then they'll close it. It sounds good but sometime they really go crazy about it. That's what happened to Notch, I think, since he got small amount of money from so many people so they suspected it was a money laundry. Another case of frozen account happened to Regretsy's charity program.

It also happened to both the Indie Stone with Project Zomboid and Goldhawk with Xenonauts. They were accepting preorders via PayPal, then PayPal decided to lock their accounts and hold their money in reserve for 180 days!
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Laserbrain Studios
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tomek_grochowiak@op.pl
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« Reply #14 on: May 26, 2012, 03:15:44 AM »

- Ability to accept more payment methods than just PayPal (credit cards, Google, Amazon). According to my stats, they make for almost half of the sales.
- Ability to see those various stats in the first place.
- Designed solely for the purpose of selling software, so includes specific features like full version hosting, refunds, registration keys, re-downloads, gift codes, discount codes and all such.
- Affiliate networks!
- Possibility to do a split-pay as Paul said. Much more convenient and cost-effective than taking the money yourself and then paying salary to your team members.
- Quick and dedicated support for both you and customers.
- Customizable web-stores. In case of BMT, they even make one for you themselves.
- Only a tiny bit more expensive than PayPal and without the randomness. I had an account closed randomly by them too. Normal private account with some small bucks on it. They just closed it and took the money.


It should also be mentioned that this statement is not true:
Quote
They have horror pages that scare consumers (one page full of fields to enter and even your phone number, compare this with one simple, clean "Pay via PayPal" button).

Take a look at my store. Just a single "Checkout with PayPal" button. No forms unless you switch payment method to credit card. And the store looks and works like a part of my website, which is nice too.
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Tom Grochowiak
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