I have no experience with Stripe, but Amazon Payments was a huge pain in the ass for me when trying to set up my Kickstarter. Kickstarter verified me just by asking for a bit of personal info. When I tried making an Amazon Payments account, it locked me out after one failed attempt of verification with absolutely no reason for why it failed. I was pretty sure I should've gotten 3 attempts, but nope.
I then had to fax a bill proving I exist to Amazon in order to unlock it and try again. Got another attempt, and it locked me out once more. I then got a warning saying the next failed attempt would permanently disable my account.
Called up Amazon and they unlocked it for me. The rep was about to hang up, but I made sure she stayed on the line to walk me through the issue step-by-step. Turns out Amazon's system didn't like the way I input my street address, even though it verified just fine on Kickstarter. Verification normally takes a few hours/days to tell you that you failed, but the rep stayed on the line and made sure it went through fine that time.
Sorry for rambling on, but Amazon Payments gave me more trouble than any other payment service. Even Paypal was better. Googling for answers to my problems gave me countless results from other people who had the same mysterious problems, and it seemed many couldn't even get a response from customer service. If Stripe is even marginally better, then I'm glad they're moving on to them.
I used Amazon Payments for about 6 months for little freelance projects when I was 18. I loved it. Quick deposits to my bank, super-low fees, and I convinced a lot of people to join it.
Then they started saying they couldn't verify me. There was no "Talk to support," only "try verifying again." I tried about 3 times, and then it finally locked me out. I finally found a way to call up support and they said "Okay, we'll get back to you in a few days about what's wrong."
A few days later I got an email saying my account had been banned, would not be unbanned, and any further requests for information would be ignored.
Still wish I knew what I did wrong.
In the meantime, I've never been able to support Kickstarters because I couldn't use Amazon Payments.
Somebody said the main reason to PayPal's success was their ability to limit fraud. Maybe that is true. Strict policies lead to this kind of problems. And when dealing with thin margins and small customers personal service is bad for profit.
Of course, they spent ~60 million "buying" customers to get their network effects to scale (join and get some $$ free) according to Elon Musk, so fraud limiting wasn't the whole story.
The silent majority uses it, is not interested in the workings of the system and the small amount of gone bad edge cases.
Imho it's sloth - or exactly the same reason, why all these "great leaders" (aka politicians) get voted into office time after time. ;-)
And I am as guilty as everybody else.
Same exact experience as well. We ended up creating a new Amazon account linked to a different bank account and EIN (subsidiary of the main company) just to get around the lockout after submitting information to verify and waiting quite awhile. Months later we received a notice saying the first account was unlocked after review but by then the Kickstarter was over and the money already deposited in our other account.
I had the exact same experience. I have to have my friends buy things on Kickstarter for me since I don't feel like faxing Amazon proof of my existence (which they don't seem to require when I want to Amazon Prime some more USB cables).
yes, it's bad; not just bad, it's borderline insane, given the resources they have to make something awesome.
there are no fewer than 4 different APIs and endpoints to do the same thing, each with strange feature omissions / quirks and differing names for the same variables (sometimes just case). there is a separate sign-up for each service, with all-new verification; it's like they absorbed 10 different competing payment services, kept their original APIs and rapidly churned each of them into some additional shitty branded product. what's worse is that FPS was the best option as it could do what you wanted, how you wanted without being forced into a specific UI/pipeline.
now FPS is being discontinued [1] and everyone is being shoved into the widget-only "Login and Pay with Amazon"
if anyone knows of a way to retain the "leave-to-log-in -> select funds source -> come-back-with-token" process, please let me know. we're trying to keep our UI the same for all payment processors/methods, this widget requirement is not going to work for us.
I hate selling on Amazon. Hate it. Ebay fees are 11%, Amazon fees are 40-50%. I've seen a seller almost cry watching amazon take over $140 in fees out of a $300 transaction. And ruetinely take 50% of gross receipts. Yes this is normal. I read the email customer service sent back about it. Sellers have started canceling large transactions and directing their buyers to the same product listing on etsy, ebay, or their own store. Don't get me started on the inability to control shipping rates like every other marketplace. Amazon is the dinosaur of online shopping.
And the biggest insult is Amazon saying they make so little profit. Where is all this money going?
> Amazon fees are 40-50%. I've seen a seller almost cry watching amazon take over $140 in fees out of a $300 transaction
That's a little exaggerated. My company sells a lot of stuff on Amazon... for a Pro Merchant account ($40 a month and gets you no per-item listing fees), Amazon commission rates are based on which selling category you list your items in... they range from 10% - 30% generally, but do fluctuate from time to time. For any items on Amazon that is listed at or less than $6 there is a minimum commission rate of $1 or $2 depending on the category (the reason most cheaper items have disappeared from amazon lately).
Regardless, you have to bake the Amazon commission rate into your sale price, otherwise you will lose money.
It's often considered an "insider secret" that almost everything listed on Amazon is more expensive than if you just did a search for the seller's actual website. Few people do this, and a lot of people just assume Amazon is cheaper always (which is absurdly false).
The pricing formula is often:
product cost * 2 == your normal markup for selling on your website
So, say you acquire a product for $10. Your website will probably list it for $20 retail price. On Amazon (assuming a 20% commission rate) you will likely list it for $25 (10 * 2 / .80 = $25)
Amazon then takes their 20% commission cut ($5 in this case), which leaves you back at your original target retail price, $20.
>It's often considered an "insider secret" that almost everything listed on Amazon is more expensive than if you just did a search for the seller's actual website. //
See, I'd assumed that, but at least in the UK the things I've looked at buying on Amazon have been equitably priced and sometimes cheaper on Amazon that on the sellers own sites. Didn't Amazon get in trouble for having a contract term that requires that they be able to sell at the low price offered to anyone else .. or did I dream that.
Once you factor in postage and having to make a new account Amazon has worked out cheaper for me [versus sellers own site] each time I've looked.
> requires that they be able to sell at the low price offered to anyone else .. or did I dream that.
That's very false, at least for regular products on Amazon, ebooks and books have special rules and maybe that's what you recall...
You can list your products at any price you want. Browse to any product that has the "More from $xx" button below the main listing, it will take you to a list of all sellers listing that same product
(matched usually by UPC or similar, but can also just be hand selected when the listing is being created, however usually only small-time sellers bother with that since it's very difficult to manage a catalog of 20K+ products and handle each one by hand)
Each will list it at different prices. Some sellers even list the same item multiple times at different prices. There's no perfect strategy, but obviously they think it benefits them somehow.
> Once you factor in postage
Well, it seems you are overseas and not in the US, so shopping on amazon.com is probably not going to save you a lot because your shipping fees will be much more significant than most people buying domestic. Have you tried shopping on amazon.co.uk? These should be mostly domestic sellers (if you are in fact from the UK). There's also a Japan amazon and a few others.
> and having to make a new account Amazon has worked out cheaper for me
Making an account is free on almost all (sane) ecommerce websites. So this is just a laziness thing (no really it is, I'm not being smart with you, we go through great pains to make account creation as simple and easy as can be since it often does turn away customers). I do agree that having a common account is nice and simpler... which is why a lot of ecommerce websites now allow you to checkout with an amazon account (well, maybe not anymore?), Facebook account (to grab you name, email, address, etc), google account, etc.
> Any examples you can give?
There's loads. Some categories and really really big sellers (think Target/Walmart sized sellers) get special deals/treatments on Amazon and are called "Platinum Sellers". The electronics items generally will be round-about what you will pay on newegg.com or similar, but in my experience newegg.com will be a few bucks cheaper and/or have more selection that is easier to browse.
Another dirty little secret is the Buy Box (what the "Add to Cart" button on the main product page is called) is not always the cheapest offer for an item. You often have to click the "More from $xx" link to see all offers and find the cheapest one. The Buy Box is awarded based on a convoluted algorithm that weighs a lot of factors including feedback ratings, email message response times, number of feedbacks in the past 12 months (it's average to have about 4%-8% of sales leave feedback), on time shipments, on time deliveries, etc etc etc... They all add up and allow some sellers to list an item at a higher price than others, but still get awarded the Buy Box.
>> requires that they be able to sell at the low price offered to anyone else .. or did I dream that.
> That's very false, at least for regular products on Amazon, ebooks and books have special rules and maybe that's what you recall...
As per Amazon's guidelines: "General Pricing Rule: By our General Pricing rule, you must always ensure that the item price and total price of an item you list on Amazon.com are at or below the item price and total price at which you offer and/or sell the item via any other online sales channel."
> Business practices, such as any reduction or elimination of shipping charges on an order, or of any other order-related fees and expenses
"Other order-related fees and expenses" is what would be considered the Amazon commission.
This isn't something worth debating... it's a fact that most things on Amazon are more expensive than if you found the seller's own website... I've been doing this for a long time. You are free to throw your money away based on some sense of "trust" you feel at Amazon.
Do some due diligence the next time you go to make a purchase on Amazon; I'd say 9 times out of 10, you will find a better deal elsewhere.
As a consumer, I'm aware that Amazon is often more expensive. It's often less expensive as well. It varies wildly based on product, merchant, category, etc. But I never debated any of that nor made any claims along those lines. I simply quoted Amazon's own Terms for merchants. Merchants are required to make the lowest price available in their Amazon listings and can have their product or account pulled if they do not. As a consumer (or competitor), feel free to report any merchants who refuse to comply. As a merchant myself, these terms are actually the reason we don't sell on Amazon at all at present.
Like I pointed out, that policy clearly allows you to "bake in" the commission rate.
Nobody would sell on Amazon if they had to sell it at the same price as their own website but take an additional 10%-30% loss (sometimes that 30% is the entire margin on a sale). This isn't "App Store" sales where the cost of the product can be fudged a bit... these are physical products that have a fixed cost of acquisition plus a lot of overhead (manpower, stock space, packaging, etc).
Majority of people who shop on Amazon do not price shop. They either feel everything is cheaper always (I hear this from friends and family all the time even though it's provable otherwise), or they feel some sort of "trust" with the website (not understanding majority of products sold on Amazon are from 3rd party sellers).
Amazon's products sold by Amazon are often cheaper than found elsewhere in my experience, usually due to them being willing to lose a lot of money on a particular product line to either gain long-term market-share or bolster some tertiary service of theirs.
3rd party sellers cannot compete with someone who is literally willing to lose millions of dollars for several years at a time just to snuff out a market.
When it comes to 3rd party sellers vs. 3rd party sellers, it's a more even playing field, but you will more often find the product listed on their site for cheaper since they are baking in the commission rate.
re: geography. Yes, I meant considering the parallel situation in the UK with Amazon.co.uk.
re: making accounts, it takes time; if pricing is comparable then using your established account is usually quicker. Yes that's "laziness" if you like; I prefer to consider it consideration of the value of time.
However SparkFun, which aren't even in the list - despite it saying "by sparkfun" in the product header [what's with that?] do sell that item at a lower price from their own website. Digi, the manufacturers, don't appear to sell it at all.
With your jewelrydisplaysandboxes.com I tried ordering 4 from their website and the subtotal with shipping (to mainland USA) + taxes comes to $10.77. That's more than the vastly inflated Amazon price!
//
I never said you couldn't find things cheaper elsewhere, just that IME the _sellers_ external price was pretty close to the Amazon price for things I'd looked at buying. We're one-all on your examples. I suspect niche products probably have more Amazon markup?
Looking at top sellers in Home & Kitchen (http://www.amazon.com/gp/bestsellers/home-garden) for example NutriBullet sells at $69.99 whilst it's 6 x $19.99 + $39.50 on their own website ... that's probably a special case. The top 2 items in that dept. weren't available via the sellers own site.
Even "sunk" or "disappeared" money must end up somewhere. In Amazon's case, they have a shitload of investment costs (warehouse/datacenter building and staffing, both need massive upfront investment and take quite a time to go black) and costs for failed/under research-projects like the Fire Phone.
The reason is right there in the footnote: the user only charges a penny for the items. The user is doing a hacky trick, and firing off a higher percentage take by amazon.
Bullshit. Look up their fees, they're nowhere near that much. You're making shit up.
> I've seen a seller almost cry watching amazon take over $140 in fees out of a $300 transaction.
If a loss of $140 is making him cry, I strongly recommend you encourage him to meet with a personal financial advisor, or have him seek the mental health resources he needs. No person of sound mind/finances should be broken by a loss of a few hundred bucks.
> And ruetinely take 50% of gross receipts. Yes this is normal.
Again, you're fabricating data.
> Sellers have started canceling large transactions and directing their buyers to the same product listing on etsy, ebay, or their own store.
I've bought and sold hundreds of items via Amazon used items and have never experienced this. You can't sell handmade items from Etsy on Amazon either. (Etsy is for handmade items only)
> Don't get me started on the inability to control shipping rates like every other marketplace.
The only valid complaint, though it actually works out well when you're buying.
You can kinda tell when a process is designed around fraud prevention, rather than being designed around user experience. Big companies make big targets and so they naturally become more risk averse.
Yet they also have the resources and manpower with skills to smooth it all out if they wanted to. That is, if it's even possible; the financial system's burdens may be insurmountable to provide a good UX.
You can kinda tell when a process is designed around fraud prevention, rather than being designed around user experience. Big companies make big targets and so they naturally become more risk averse.
You can kinda tell when a process is designed around fraud prevention, rather than being designed around user experience. Big companies make big targets and so they naturally become more risk averse.
You can kinda tell when a process is designed around fraud prevention, rather than being designed around user experience. Big companies make big targets and so they naturally become more risk averse.
i had a similar experience. i was locked out for 6 months, during which time i couldn't even make payments to others with amazon payments. i missed out on several interesting kickstarter projects. i'm glad they're switching to stripe. have had no problems with them, buying or selling.
I'm shocked that Amazon is killing off their payment service. I'm also shocked that the first I'm hearing about it is Kickstarter moving away from that platform.
From my vantage point, I can't imagine why they would kill off that service. It seems like easy money, with very little risk involved for them. The only thing I can think of is some change to the PCI rules that make it a less appealing business to be in. Anybody know why they're exiting that market? Google searches haven't turned up anything useful.
It appears they are killing of the person to person payments much like PayPal.
It is good for Amazon because Amazon Payments was not the best service from Amazon, probably had the most non Amazon like experiences within it mainly bad customer service and worse than Paypal fraud false positives. For doing such a good job in all other areas they enter usually, here they made a worse PayPal, exactly the thing they were trying to better.
Stripe is such a better alternative to Amazon (and paypal which Amazon payments was supposed to rival). Amazon payments is now more business to business or person to business and no more person to person payments.
I'm not sure if it's related, but a lot of people used to use Amazon's person to person payments to churn credit card offers. If that was as prevalent as it seemed, then they may have been losing a tidy bundle to it.
"Late last year Amazon decided to discontinue the payments product that we have used."
I'm not necessarily saying you're wrong, I'm just not sure what else that could mean. When I see a button to pay with Amazon, the button says "Amazon Payments" on it, which I, as a layman, would call the Amazon Payments product if I had to call it anything.
Of course, Kickstarter may have just misspoke. Or, like you said, it's a specific product that only applied to Kickstarter. Either way, it's quite confusing from where I'm sitting.
I think the specific "product" they are referring to is Amazon's willingness to accept the authorization at a certain point and then only actually charge the card later when Kickstarter signaled that the project was funded.
I remember hearing a long time ago that Amazon wasn't particularly happy with this arrangement, and had specifically declined to offer it to Kickstarter competitors.
Not sure what exactly they've dropped, but I know Amazon Payments haven't been accepting new crowdfunding sites for years. It's got to be a major fraud risk; the only reason they don't get more chargebacks is because most projects fail outside of the chargeback window offered by credit card companies.
The concept of chargebacks, as often applied in practice, seems absurd to me. If you have a credit card then you're also supposed to be a reasonably responsible adult. You shouldn't just get to use a mechanism intended for defense against theft and fraud just because you regret a purchase. Why can't the payment company simply accuse you of fraud when you attempt fraudulent chargebacks?
OK, here's an example of how chargebacks have worked in my favor.
I order a PC. Vendor happily takes my info and CC number. Few days later, no shipment information. Call vendor. They say it will be there in a week. A week later, no PC, call vendor. They say they have no idea when it will ship. I say cancel. They say, OK, but we have to charge you 15% restocking fee. I say "you're nuts. You haven't shipped anything, how can you charge a restocking fee for stock you never had? Cancel my fucking order." They say OK. I buy PC from other supplier and it arrives in a few days. A few days after that, I get a PC from the original vendor and find that they charged my card after all. I call Citibank, tell them the story, Citibank immediately reverses the transaction and tells me to send it back at vendor's expense and send them a copy of the shipping paperwork.
That's why you need chargebacks: for fuckwad vendors out to rip you off.
I find the usage of that phrase really interesting, because calling a contribution to a kickstarter a 'purchase' is exactly why people may feel entitled to a chargeback when the project goes casters-up and ceases contact with their customers. In their eyes, they purchased a certain product; the fact that it's not currently finished doesn't matter- they paid for it and expect to eventually get what they paid for.
Thought about this way (which is exactly how I believe the vast majority of people think), it is exactly like any other fraudulent purchase where the seller fails produce after payment.
Well to be fair, with most Kickstarters, a promise is made. You contribute $5, we thank you. You contribute $100, you get the product early. You contribute $1000, we fly out and thank you personally. The Kickstarter TOS might say something else, but in effect the purchaser did purchase something. Yes, they donated their money, but they were promised something in return.
I'm not sure I'm reading the tone of your comment correctly so I apologize if I'm just repeating what you said, but your use of the words "in their eyes" and "how the people think" makes it seem like you don't believe the same thing. If I back a project that promises X and they don't deliver, they took my money without delivering what they promised. I believe even Kickstarter themselves says that failed projects have to give the money back.
Yeah, I agree that the tone of my comment was difficult to understand. Mostly, this is due to the fact that what I described in my post, that people think they're buying a product, also occurs in my own mind every time I think about contributing to a Kickstarter campaign.
However, if I sit and think about it, I realize that what I'm doing is funding an idea. Kind of like donating to a political campaign. There's no promise that my chosen candidate will win, and if they don't I wouldn't expect my money back. Obviously, this analogy breaks down somewhat because whether a candidate wins an election is ultimately outside of their control. Whereas for a Kickstarter project, presumably the vast majority are possible to achieve 100% of the time as long as they don't screw up somehow. And that's not even considering the quality of the final product- that the game is fun, the fancy electronic gizmo isn't a cheap POS, etc. (This is obviously buyer's remorse, although one could also argue these are fraudulent too if they promise a "fun" game, or a gizmo that's not a POS.)
Either way, if you read the TOS for Kickstarter, they actually only require that projects do their best. If they fail, they have various outs to continue compliance with Kickstarter. One of those outs is explaining where everyone's money went, and why they aren't able to issue refunds. Of course, they also go on to say that backers may still seek legal action against them for a failed project, but in most cases these LLCs are probably out of business anyway at this point. Regardless, they're in the clear from Kickstarter's point of view.
Because the "security model" of credit cards involves shifting all seller-fraud risk onto the sellers using chargebacks. It's far easier—and good for business!—to trust customers' complaints 100% of the time, than it is to actually figure out whether a purchase is real or a spurious charge.
Especially now that virtual goods exist: as far as the credit card company can see from its vantage point, those are effectively spurious charges that the customer happens to say are okay.
> Because the "security model" of credit cards involves shifting all seller-fraud risk onto the sellers using chargebacks.
This is actually one of the two primary services that credit cards sell themselves on -- mitigating risk, primarily by protecting consumers from fraud, and permitting purchases on credit rather than out of available cash balances -- and its the feature that is most heavily sold to higher-end customers (the you can buy stuff you can't otherwise afford feature is sold more heavily, at least more equally to risk mitigation, to lower-end customers.)
There's been a number of questions in this thread about Amazon killing off a payment product. Here's an excerpt from the email I got from them back in October:
"We want to let you know that we are retiring the payment processing features of FPS as we transition to our new solution, Login and Pay with Amazon. FPS will not be available for processing payments after June 01, 2015."
FPS = Flexible Payments Service.
I've been using it on one of my sites. Yes, it's extremely annoying that they're killing it off.
this really sucks. they're pushing everyone towards the widgets-only page-integrated checkout process "Login and Pay with Amazon".
the problem here is that it kills the uniformity on our site. paypal has a leave-to-login & come-back-with-token process if you need auth-only charging or physical goods. we prefer this because our UI is the same for all payment methods, including paypal, our own processor and amazon.
Look at Amazon Simple Pay. That's what we've been using in lieu of FPS for the past few years, the process is identical to PayPal with regards to the checkout experience and integration, and it doesn't seem to be discontinued (yet).
their Simple Pay guides point to FPS functions for "advanced" usage. do you auth first and capture on shipment without relying on FPS functions (or widget checkout)?
This has probably been stated several times by now, but the amazon documentation is absolutely horrible. Braintree, Stripe, and Paypal all have fantastic tech and reliable services in addition to fantastic documentation. I don't have an opinion for any other payment-processing vendors.
Now for the war story: Business was focused on deploying amazon-payments because of the cheap fees. In order to change their minds, I had them call into tech support. After 3 hours and 5 hangups, business opted for another vendor. The implementation was effortless and only took me a few hours.
> Braintree, Stripe, and Paypal all have fantastic tech and reliable services in addition to fantastic documentation.
Paypal sucks for merchants. You're basically at their whim without any legal recourse. Just see what happened to Wikileaks or hundreds of merchants having their accounts frozen and their funds locked without any real reason!
PayPal isn't really that bad. Most of the horror stories are from people breaking the terms of service (donations without getting approval, long preorders etc). Wikileaks was blocked by MasterCard.
We've been in PayPals sights a few times (we had a site bug once that double-charged a bunch of customers, and charged one customer 28 times! We had to do over 1000 chargebacks.) We got a massive rolling hold but the whole time PayPal were willing to talk to us. We've even won some customer card chargeback disputes on digital goods through PayPal.
For a short while we switched to a traditional merchant account but that was hell from day one. Aside from the paperwork to get set up, they hated the fact that 40% of our sales were outside the U.S., that our sales are highly seasonal, etc.
That said, to someone starting today, I'd still probably recommend Stripe instead.
You don't use auth and capture -- you create a customer (with the card/token) in stripe and then create a charge against the customer.
Having a customer allows you to charge the user without entering in their info each time.
EDIT: I built beaconreader.com which is a crowdfunding site and we use stripe. One thing to note about creating customers is that on the backend Stripe (and other payment providers) tells the banks that it's a recurring charge, even if only charged once, which I believe allows them not to deal with the auth and capture step. I could be wrong, but there's something like that lets processors get away with it.
Hi zmitri: Do you have any more details on how Stripe and banks signal recurring charges. What you're describing sounds interesting, but with our app we see decent churn from the use of debit visa/mastercards
No details whatsoever but I can across this because customers at certain banks asked why their one time charges were showing up as recurring in their bank statements. I emailed in to stripe asking what was up and they let me know it was standard practice to do that, and it would do so if I used a stripe customer.
Presumably the "real" auth will be at the end of the project, which means it could still fail. This is also the case with kickstarter projects right now - typically a few % of your pledges fail and you can't collect the money from them.
I'm fairly confident that they will simply tokenize credit cards/customers and use that info to process the charge once the project has succeeded.
This could result in the funds not being available when the payment is submitted, but is still a much cleaner implementation and does not require that you hold funds and leave the period at the mercy of the bank.
I'd also like to know about this. The only way Stripe can provide the functionality needed by Kickstarter is to change the capture period to 90 days (campaign length), which was something that Amazon did as a one-off change for Kickstarter.
Does this mean Canadians (and other non-Americans) can finally launch a Kickstarter denominated in USD ?
From what I understand, unlike Amazon Payments which required a physical US address, to accept USD Stripe only requires a bank account denominated in US funds.
To accept USD Stripe only requires a bank account denominated in US funds.
I can confirm this is the case. We're a Canadian company and we have a USD account within our RBC business account. A week after getting a charge processed through Stripe, the funds end up in the USD account.
Does your Canadian USD account have access to the US domestic payments system, so you could make deposits into it over ACH with a routing number and account number?
Back in Denmark I had a USD account, but it could only send and receive USD by SWIFT wire transfer, so it wouldn’t function in the same way as an American USD account.
Does your Canadian USD account have access to the US domestic payments system, so you could make deposits into it over ACH with a routing number and account number?
Don't quote me on it, but I think deposits can be made to it through ACH. The relationship in transferring funds between Canadian and American banks is only quasi-international.
For European companies it is required to have a US-based bank account for USD with Stripe. A USD account is not sufficient. The alternative is to be hit by a 2% conversion fee when charging in USD.
Processing credit card transactions is a hard enough problem that it rarely makes sense for any non-payments company to do it themselves. Dropbox and Airbnb use Braintree (a Stripe competitor) for payments, and they are both much bigger than Kickstarter. Even Twitter and Facebook have been known to use Stripe for various products, and they are obviously much bigger than Kickstarter as well.
Kickstarter may feel that for the audience for this announcement it is better to use an approximate percentage alone rather than a percentage plus flat fee description, and if you assume that $15 is at the low end of Kickstarter contribution levels, its pretty close to the point where 2.9%+$0.30 is 5%, so "about 3-5%" may well be a reasonably accurate description of the fee structure.
2.9% + $.30 of a $1000 purchase is ~3%. 2.9% + $.30 of $15 is closer to 5%. I'm not sure what the minimum purchase is on Kickstarter but that could explain it.
That hysterical because my Kickstarter got denied because they said my project was 'prohibited' because it was a financial service. It's actually an Open Source project: https://www.github.com/stackmonkey.
That hysterical because my Kickstarter got denied because they said my project was 'prohibited' because it was a financial service. It's actually an Open Source project: https://www.github.com/stackmonkey.
That hysterical because my Kickstarter got denied because they said my project was 'prohibited' because it was a financial service. It's actually an Open Source project: https://www.github.com/stackmonkey.
That hysterical because my Kickstarter got denied because they said my project was 'prohibited' because it was a financial service. It's actually an Open Source project: https://www.github.com/stackmonkey.
That hysterical because my Kickstarter got denied because they said my project was 'prohibited' because it was a financial service. It's actually an Open Source project: https://www.github.com/stackmonkey.
Depending on the size of the average transaction, that $0.30 could move the fee (taken as a percentage) into that bracket. Possibly kickstarter is just being a bit loose with the phrasing here, and possibly they're under a enterprise agreement with a different fee structure (they are going to do $1billion+ a year, so that wouldn't be a complete surprise).
It does make sense, but it is not factually correct.
Typically, (big) payment processors deal with different interchange fees for different card types (based off the BIN number-- premium cards, debit cards, reward cards).
Processors commonly group fee percentages into an easier scheme to sell to people.
"2.9% + .30" is a lot easier to reason and understand than "2.2% for Debit, 3.5% for AMEX, 2.9% for Bank of America" and so on.
So yes, different cards charge different interchange rates -- but the answer to the question lies in the fact that with small enough purchases, the 30 cents on top of the 2.9% could effectively increase the percentage to a higher rate.
The simple formula to calculate fees as a percentage of purchase would be y= (x*.029+.30)/x and it intercepts with 5% at about $14.28, which would suggest that the minimum contribution would be set around $15 to make their statement correct. A a much higher contribution of $300 would have a lower rate of approx 3%, as the cents become a rather unimportant part of the fee.
Why do processors like doing this? It's a way to subsidize micro-payments without creating convoluted fee schedules. They can collect ~33% of a $1 payment without advertising it as such.
It looks like Amazon discontinued WebPay (person-to-person payments) in October 2014. Maybe Kickstarter was using that (or an API version of it) to pay the funds from themselves to the project organizers?
I imagine they were using Amazon Flexible Payments, which is being sunset in a few months. I am glad to hear that other groups using Flexible Payments have decided to jump ship from Amazon rather than continue to migrate to Amazon's replacement.
Nah, I'm pretty sure Amazon paid the project directly as part of the transaction - the payments page always showed it as going to both the project and to Kickstarter. I think they used Amazon's product for multi-seller marketplaces: https://payments.amazon.com/help/201364500
It's amazing that a company switching their payment processor is this big of news. It really says something about the state of payments right now, it's exciting!
I tried backing a kick starter once (the oculus one actually) but Amazon gave me a bunch of problems. I ended up giving up. I'm glad they're changing, I might actually try backing something again in the future.
As someone who has built products that used both Amazon Payments and Stripe, I have to say this is definitely the right move, even if the impetus was that the former service is meeting its end.
I built essentially a Kickstarter copycat in all but positioning and the amount of work involved there was dramatically more difficult than setting up a non-trivial implementation of Stripe marketplaces. But the developer pain is not nearly as strong as the customer pain. Amazon sucked for creators, and Stripe is pretty painless.
The right move, and further cements Stripe as the rightful market leader.
Sounds like good news. I can understand why they would choose amazon payments since amazon has more credit cards on file than anybody else including Paypal. But Amazon payments or Paypal (I am not referring to their gateway offering) is often something you use to complement a more classical credit card processor (i.e. users are able to input their CC infos directly on your site) like Stripe or Authorize.net. I really do not understand, until now, their choice of going exclusively with Amazon Payments for all this time. Preferred rates maybe?
Only downside is that Amazon has smaller fees for micropayments than other payment providers at 2% + $0.05 for debit cards and 5% + $0.05 for credit.
For comparison, Stripe has a rate of 2.9% + 30¢ -- but I'm sure KS will get a better deal due to the magnitude of their throughput.
Given that the average pledge size is $25 it won't that much of a problem, but any of those $1 pledges are close to halved from KS+Stripe fees before they get to the creator.
Great news. As a 2x Kickstarter creator and having backed dozens of projects the Amazon payment process has always been the worst part of the experience.
Stripe is a great company to work with. I am part of the team that runs https://cottonbureau.com, a crowd funded apparel site.
We launched with Amazon in 2013 and quickly transitioned to Stripe after only two weeks with Amazon. It has been smooth sailing ever since. The APIs, customer support, and overall ease of use make this the right move for Kickstarter too.
> We’ve worked with Amazon Payments from the very beginning of Kickstarter — a year before we launched, in fact. They’ve been an excellent partner, processing $1 billion in pledges. Late last year Amazon decided to discontinue the payments product that we have used.
Killing a payments product that racked up $1bn+ in payments boggles my mind. That is a level of profit to /keep/ a product, come what may.
> Killing a payments product that racked up $1bn+ in payments boggles my mind. That is a level of profit to /keep/ a product, come what may.
Processing $1 billion in payments doesn't tell you anything about what the profits were. If the fees on those billion in payments weren't enough to cover the costs, it could still have been a loss, and even if it was profitable, it may have been only just barely so.
$1 billion transactions, 5% of that in fees, so $50 million in fees. Minus maybe $30 million in cost of payments (credit card transaction fees) which amazon eats, that only leaves maybe $20 million. Out of which amazon ends up having to handle a lot of bullshit like chargebacks, fraud issues, etc, which further erodes their profit down to a fraction of that $20 million.
Meanwhile, amazon.com retail earns probably $20 million an hour during the day, give or take.
Presumably the feature that is being discontinued is for authorising payments that aren't actually taken until later in the future. I could certainly imagine this has a disproportionately high support cost.
Kickstarter-like services with both a payer and a recipient are exactly the kind of case where I hope cryptocurrencies can contribute and unlock all sorts of unfulfilled potential.
People who have only been on the customer side and are in the (small) majority that haven't encountered major problems think credit card systems are working fine. The truth is that there are major problems. First, the fees are substantial and even prohibitive for some types of services. Second, fraud including "friendly" fraud is prohibitively expensive in some industries such as those selling highly re-sellable items and/or accepting payments from certain countries. There are various vague arbitrary rules that fall under anti-fraud or anti-money laundering imposed by payment processors, bank or jurisdiction (which is ambiguous) that can suddenly deal a mortal blow to the service. Things are often dealt with callously penalizing people for being statistically suspicious.
The downside is the loss of all the fraud protection and guarantees offered by CCs. But, the onus moves to the wallet owner who is really the only person who can do something about it.
I wonder, can you start or contribute to a kickstarter in Nigeria or is that whole country effectively banned?
Do I understand this correctly that you need a credit card to support a Kickstarter project?
Different countries have a different credit card culture. In the USA you absolutely need one. In Germany you can find a lot of people who don't have one just because you don't need it in your day to day life.
This is one of the top things people always asked Kickstarter. In general Braintree now seems like a better choice since it lets people pay with Payapl. Though I don't know if it could meet Kickstarter's needs to hold onto the money until a certain point.
All - Could you please share what credit card processor you are using? I tried 2Checkout but they are asking me to remove certain features from my website which I can't do. I can't let a bank be the product manager of my website.
Just to state something a bit different from the herd: I use Amazon Payments (not FPS) for LiberWriter, and I'm happy with it. It makes particular sense since our customers have to have an Amazon account in any case.
I was going to support the new 3doodler project after their launch email calling in for support, and then I saw that I needed my credit card at the payment step. I figured, they could reach their goal without me anyway...
If he's European, uh, we use things like inter-bank (SEPA) payments (prepaid) - usually arrives within one banking day, when both use the same bank or bank group, even instant. Or SEPA invoices where I as the customer only have to input my IBAN account number and be done. Or (not applicable here) pay when the postman arrives with the package.
I've had a totally opposite experience. Stripe has been amazing for us. Clean API, good documentation, a slick dashboard, responsive support team, etc.
Backing projects is going to get easier—your card details will be saved. Not only will you not have to re-enter your payment information when you back a project, but you won't even have to go to Amazon each time.
I mentioned in another part of this thread, the payment page as shown on the blog entry does not indicate that my CC# is stored with Stripe, rather from all appearances it appears to be stored with Kickstarter.
Now having read this thread I get that in fact Stripe is storing it, but if I hadn't read the responses to my initial post, I'd just assume Kickstarter was asking to store my CC# which I wouldn't agree to.
What Kickstarter save is a unique token, ex. da39a3ee5e6b4b0d3255bfef95601890afd80709 (not a real token, just an example).
The token can only be used with the private / public key pairs that Stripe provided to them, so even if a hacker got access to Kickstarter's database, they would still need the private/public keys to make use of the tokens.
Also, my expectations are that only whitelisted IPs should be able to access Stripe with the key pairs of Kickstarter.
Not only that. The hacker could only use the token to transfer money between you and KickStarter, not to another account. So unless they also had access to make withdrawals from KickStarter - they couldn't do anything useful other than annoy KickStarter with a bunch of erroneous charges.
Basically, the only important information Kickstarter gets from any card are the last 4 digits, whether it's Visa, Master Card, AMEX, etc., and the expiration date.
The box on Kickstarter does not indicate data is stored with stripe, it looks like it is stored with Kickstarter.
As others have indicated, this is one more place that my CC# is stored. I have more trust in Amazon's security than in Kickstarter's, although from what I have gathered reading this thread it sounds like the data is stored in Stripe, which I have a tendency to trust based on name recognition.
If the page is to be presented as is though, with no other information, I am not going to store my CC# with yet another .com that hasn't been around that long.
If the page is to be presented as is though, with no other information, I am not going to store my CC# with yet another .com that hasn't been around that long.
Why not? Any fraudulent activity is your CC company's problem, not yours.
You don't have to get your wallet if they have sophisticated Stripe support - now you can get your Stripe card info by entering in a code that is texted to you.
I then had to fax a bill proving I exist to Amazon in order to unlock it and try again. Got another attempt, and it locked me out once more. I then got a warning saying the next failed attempt would permanently disable my account.
Called up Amazon and they unlocked it for me. The rep was about to hang up, but I made sure she stayed on the line to walk me through the issue step-by-step. Turns out Amazon's system didn't like the way I input my street address, even though it verified just fine on Kickstarter. Verification normally takes a few hours/days to tell you that you failed, but the rep stayed on the line and made sure it went through fine that time.
Sorry for rambling on, but Amazon Payments gave me more trouble than any other payment service. Even Paypal was better. Googling for answers to my problems gave me countless results from other people who had the same mysterious problems, and it seemed many couldn't even get a response from customer service. If Stripe is even marginally better, then I'm glad they're moving on to them.