All or nothing payment processing

[proggR]

I have a kind of strange need from a payment processing service. If you look at Kickstarter.com you'll have a better idea of what I mean since the payment model is similar.

 

Users donate money to a project, but their donation only actually gets taken if the project gets 100% of the funding they requested. Even though that's the case, I need to process the user's donation up front so at the time the project is finished the transaction can be completed all at once. If the project doesn't get 100% of the funding they need, none of the users pay anything and I would hope that I wouldn't be stuck with transaction fees for what wasn't a transaction as well. I'm wondering if anyone knows of any services that allow something like this.

 

Kickstarter uses Amazon but that limits you to only US customers. I'm hoping for something that doesn't have that limitation and obviously the lower the transaction fees the better, especially since some of the donation amounts could be only $5.

 

Any pointers would be great. I've done very little with online transactions before so taking a stab at such an unusual model makes it tricky to find what I need.

[Pikachu2000]

You might want to check with some of the other payment processors, possibly even your bank, and see what they have to say. At the very least, they might know which company would be likely to handle something like that.

[proggR]

Ya I do intend to arrange a meeting with my bank. It would be convenient if they have some kind of ability to handle this.

 

I have been looking around at other processors. They all seem to do the payments upfront which doesn't exactly work. Since I only want to commit the transaction if the project reaches 100% of its requested funding, if people donated to it and it didn't reach the funding I'd be paying transaction fees for taking the money and transaction fees for returning the money and wouldn't have actually made any money in the first place so it would be a loss for me for every failed project.

 

I did just stumble across FreshBooks and sent them a message explaining what I'm looking for. They're more of an invoicing app but it may work still for what I need. We'll see. I'll keep checking back and update if I find anything as well.

[PaulRyan]

If you use PayPal, you can refund any payments in full and will not incur a transaction fee, as far as I am aware of anyhow.

You could look this up for better clarification.

 

Regards, PaulRyan.

[gizmola]

There simply isn't going to be anything like this, because payment processors earn their money on transaction fees, and have to work with banks, credit cards, and all the regulations that go along with those.  For example, if you are dealing with goods, and a credit card, you can do an auth for an amount of money, but regulations stipulate that the card is not suppossed to be charged until good are shipped, so the auth can be used in a period of time to complete the transaction.  However, the money is not cleared until later when the banks involved actually transfer the money to cover the charge, and those charges have a period of time where the client can decline. 

 

For something like you're talking about, you really will need to treat these transactions like electronic goods, complete the transaction and bank the money.  You will have to refund the money later under your model and deduct the transaction fee.  If these are micro-transactions.... well you can probably understand why there is no viable micro-transaction solution -- the fees themselves make micro transactions seem absurd, as the cost of the transaction could easily be more than the cost amount of money involved.

 

I think you're more likely to have something working if you simply disclose your fees, and inform people that you'll have to deduct transaction fees from their original amount should you need to refund the funds.  Either that or plan on eating the fees. 

 

Everyone who deals with ecommerce will tell you about issues of fraud/declined charges, and resulting chargebacks, which have to be managed carefully.  See http://en.wikipedia.org/wiki/Chargeback.  Payment processors and banks account for your chargebacks and track rates and reasons, and you can easily get into trouble if your chargeback rates get too high, as the payment processors have to deal with visa/mc/amex. 

 

It sounds like you are planning to do a form of managed escrow, and there might be escrow related laws involved.  I would highly recommend you get some expert accounting and legal advice for something like this.

[proggR]

Thank you for the insight Gizmola. I work at a university so I may see if I can get some free advice from an accounting/legal prof.

 

I did get a reply from FreshBooks and they said they don't have anything explicitly like this but I could collect the information and save it as a draft invoice and on the successful completion of the project, loop through each drafted invoice and process the payment. The thing I can see not working with this is NSF at the time of the processing.

 

I know that Amazon FPS allows for this type of model because its what Kickstarter uses. But I don't want to limit myself to only US customers.