"The extra cost isn't tiny if you pledge small amounts to many creators. Pledging $100 to 1 creator will now cost $103.25 which is reasonable. Pledging $1 each to 100 creators will now cost $138 which is not reasonable"
$138 is unreasonable to me for one simple reason: When I pledge to 20 creators, Patreon batches my pledges based on arbitrary server-side criteria, such that they cannot guarantee how many charges will be made to cover my pledges.
So typically I see two charges per month. They can't charge me $0.35 per charge because the # of charges varies without any ability for the customer to predict and cannot be defended reasonably to customers.
Instead of revamping their billing groupings to ensure that each patron is charged once per month, they are charging $0.35 per creator, which is the absolute worst case scenario here.
So to me, the ripoff is that they charge me for two credit card transactions, but instead of $0.35 per transaction, they charge $0.35 per creator within a single credit transaction - when that $0.35 is not charged to them by their merchant processor for those individual creators.
I would have been fine if they'd simply tell me "X creators = Y transactions @ $0.35 each + 2.9% of amount", where Y is virtually always some tiny fraction of X, but that they instead say "X creators = X transactions @ $0.35 each + 2.9% of amount" to avoid regrouping their billing is a misuse of the word 'transaction' as they implement it.
EDIT: If Patreon has been charging $0.35 per patreon to their creators, then this is not new profit for them, but is instead the same profit now collected from patreons instead of creators. It's still unacceptable to me, because they're charging the worst-case scenario (one transaction, per patreon, per creator) and then optimizing for less than that and not crediting the excess (Y-X) x $0.35 back somehow. If their 5% take isn't enough to cover transaction costs, hiding a profit in (Y-X) x $0.35 is not the correct way to solve that.
EDIT: It's possible that Patreon was censured by Stripe somehow and is going to stop batching charges period full stop come January, and so then Y=X for all cases, at which point this all starts to make a lot more sense.
I would not call it "lazy" because that's a direct insult to the human beings, but I have not yet seen a reasonable defense of why they appear to be charging more than Stripe charges them, and encourage folks to seek that when asking Patreon questions about this issue.
Ok, yes that's fair. I shouldn't say lazy.. they could have an actual reason. but in 15 years of handling cc charges for my business, I can't think of a single one.
There's a rumor floating around that Stripe has taken issue with their batching model and that they're being forced to stop batching, which would absolutely justify this change since then Y=X, but I've not been able to find any solid evidence one way or the other about that.
EDIT: I filed a support ticket asking if my 2018-Jan charges will be batched or not. We'll see.
I mean, why wouldn't they say that in the messages they've distributed to creators and patrons, then? If that's the case, they have needlessly caused themselves a tremendous amount of public headache by being disingenuous about the reason behind the change.
Could be due to the coming EU regulations (PSD2) which places much stricter regulations around accepting money on behalf of someone else. See more in https://stripe.com/connect/eu-guide
Like Apple, they break up charges into arbitrary batches on their side, but I did not ask them to provide guidance on what their batch limits are. Apple sometimes waits days to charge me, and often distributes charges randomly across multiple transactions, so clearly there's some kind of optimization limit that's reached at scale.
Hadn't thought of this reason, but that might make sense - in essence, the standard AML rules have always required specifying the final beneficiary of a payment if you pay money to someone who'll hand it over to them.
If Patreon is being treated as or claiming to be a payment service provider (i.e. it passes money through to authors without owning it in between, the only revenue on their balance sheet is the fee they take) then it'd be wrong to state that Patreon is the beneficiary of a particular payment, since it's not; and they'd be required to list all the actual beneficiaries on every payment, which can't really be done for reasons, so they need to charge many small separate payments.
On the other hand, if Patreon is being treated as or claiming to be selling a service (i.e. it takes all your money, and pays it out to authors as a business expense) then that has major tax implications, namely, all the amount (as opposed to just their fees) is their revenue and thus subject to various sales taxes and VAT worldwide. This seems to be the current option, since they're charging VAT on the full amount for EU patrons.
It might be plausible that they're currently switching from option 2 to option 1 for financial reasons, and this precludes them from batching in the future.
They can list a beneficiary on the payment, not an arbitrary number of beneficiaries. They can list a beneficiary tax residence on the payment, and that'll apply for the whole payment. Two beneficiaries means two amounts (you have to specify how much goes to person A, anyway), and thus two payments.
They are being honest. They just aren't admitting why they would stop batching charges. And a large part of the answer is that they are a paywall service more than a donation platform, and everything follows from that.
I previously pledged between $2 and $5 to almost a dozen content creators. This change would have added quite a bit to my costs so I have withdrawn my pledges. I am billed by Patreon once a month - not sure why I need to pay fixed & percentage fees on individual pledges...
I'm at 11 now, 10*$1 and a $1.50. I forget what I was at when they were going to do this in April of this year, but when I emailed their support about the change and how it would make me decrease the number of creators I backed the individual I was working with suggested that most backers back a small number of creators. Individuals like ourselves aren't really accounted for.
If you haven't, I would suggest emailing support and noting your case. I think the more people that remind them about backers who back many creators.
Since we have ~10 days, I haven't gone through and cancelled any pledges, even the ones that I no longer want to support since I'm not getting anything from them.
I was watching the train wreck on Twiiter last night and I've seen what Lazy Game Reviews, and others, have witnessed since Patreon announced this change. They back peddled in April, so I'm hoping they'll do so again this time.
Patreon always has been bundling many small transactions into one large, that has been the major point from a fee perspective to use them. Their fees already included the processing fees for that.
$0.30 or so per credit card transaction (+ a percentage) is totally expected and what they did until now.
Patreon uses Stripe and Paypal. Both of their fees are 30¢ + 2.9% regardless of interchange fee for a specific card. Not sure where they got the extra 5¢, but it seems reasonable to charge what their paying.
The difference is that Patreon withdraws money from me once a month -- that is a single transaction. Yes, I'm OK with them covering the actual cost of the Stripe/Paypal fee. But for them to charge me $3.50 because there are theoretically 10 charges (when there is actually one aggregate charge) is in no way fair.
I wonder if the answer is to have levels within the pledging system? If you pledge only one backer we take x% or cents. If you back 2-10, we charge this x-t% or cents. If 100, no charges at all. This will provide incentive to people to back more creators too.
The solution is Patreonpoints. Sell vouchers and let supporters allocate those vouchers, lock the exchange rate to the currency used to purchase the vouchers and build the service fee into that exchange rate.
This is a much smarter idea, because it also locks their money into Patreon once they've stocked up on points to spend. Not sure why they didn't go this route, to be honest.
The points make it easy to build in the service fee. Public transit here maintains an “account balance” in USD, you set the max and when your account dips below what is required for fare it refills to that max.
Steam does some something similar with an account balance but I don't think it refills. I believe a lot of businesses have a similar concept. I think you can maintain an account balance at Amazon (and probably other retailers) too.
"The extra cost isn't tiny if you pledge small amounts to many creators. Pledging $100 to 1 creator will now cost $103.25 which is reasonable. Pledging $1 each to 100 creators will now cost $138 which is not reasonable"