I’m looking for general guidance - or to know if patreon would actually be able to help with this problem.
I’ve run an ad supported community site for ~15 years, with some success, but the advertising model has dropped to below break even (vs server costs), there is a active engaged user base that would support the site.
I’d like to use patreon to help address the funding gap. Any gotchas?
I’d like to set up a rewards system – how would I integrate with Patreon? - is it easy to query an api via email address to know if a user is supporting and at what level? It would need to be automated. Is there another preferred way to do this?
Patreon is a paid membership platform, they’re a middleman between creators and patrons, their service is a layer on top of a payment processor and is valuable for people who don’t have the ability to run or interest in running their own paid membership platform.
If your patrons are members of your website and you’re going to be rewarding patrons through your website then by using Patreon would you be building your own paid membership platform on top of another paid membership platform, so not only would you pay the payment processing fees you would also pay Patreon their 5% and then your paid membership platform would be beholden to the decisions Patreon make about theirs.
You’d save yourself time, money and unnecessary limitations if you were to cut out the middleman and implement payments yourself given that you already have the main component: membership. The payment processor used by Patreon, Stripe, is very easy to get set up with and implement and you could build out your own paid membership system using Stripe faster and more flexibly than you would be able to with Patreon.
The only value Patreon would bring to you is the trust consumers have for the Patreon name, but that would come at a financial cost and a development cost. Patreon is great but I don’t believe it’s right for your use case, unless you believe that within your community there is enough value in the Patreon brand to cause 10% higher conversions than running the system yourself.
Patreon collects the payments from end users and then sends it out to the creator in a lump sump transaction.
This means that sales tax, EU digital vat, any similar tax stuff is Patreon’s problem to deal with. Patreon handles these stuff.
The creator receives one lump sum which s/he can show Patreon as the payer, and can file his or her tax quite easier because of that.
Otherwise the creator (or anyone running their own membership system) would have to handle digital vat, sales tax etc for all their subscribers, file them as necessary per their country’s laws. Which considerably increases the accounting burden and expense. And its especially not feasible for subscribers who pay $1-$3 etc.
EU Digital Vat is a major issue which didnt catch on yet. Eu requires anyone selling to anyone in Europe to determine where their customer is located, by using 3 reliable info to determine location, then to know the actual vat applied to that class of service/product in that country on that day, accurately charge it, and then file it with their MOSSVAT system and pay it accurately. Even if you are a non Eu seller.
The info they want for determining location is ridiculous - it includes stuff like bank address, residence address, real name etc in addition to IP. Info which no one would give to anyone on internet.
When using Patreon, all of this stuff goes away.
Surely local laws are important and they may require the creator to file their patron’s payments one by one. But i see it quite unlikely.
That’s a good point, however, it’s worth noting that any payment gateway would provide the information needed to comply (ip address, country in which the card was issued, billing address) and there are many services that integrate with payment gateways to generate the necessary tax returns. If someone did wish to comply with the VAT MOSS rules when running their own membership system then they certainly can but you’re right that it’s something worth considering.
Nope, actually it is far more complicated than it looks.
When you handle vat yourself, you are legally liable for your filing. So in case the service that handles the vat rate per country, or the payment plugin or system you have in your website, or any integrated part fails in providing accurate data at the given date for identification of the customer’s location or accurate vat rate, you are legally liable.
Sam and Codebard! Thank you for the thoughtful responses - and yes - VAT. I’m very unlikely to hit the collection thresholds, but the reporting hits everyone.
Stripe/Braintree others - fees would be 2.9% + 30c per transaction.
Patreon - 10%
So modeling that; (back of envelope style)
200 subscribers at $5 a month – $12,000 (estimated support after surveys)
Patreon: fees $1200
monthly aggregation, takes care of VAT!, single accounting entry
Stripe: fees $950
$720 (per transaction) + $348 (2.9%) - but full control
$250 difference or so on those projections - probably would be eaten up in hours or accounts for the tax related tasks.
On 500 subscribers; would be $30,000 with stripe at ~$2,700, patreon ~$3,000 (unlikely to see that, but again the difference isn’t crazy)
Does anyone have experience with the integration part with the API?
Would pulling “is this an active subscriber?” - via email address be sensible? (cached results maybe every 24hrs)
I also have to minimize the amount of work I put in! (full-time job, small child…)
The API is new and has limited functionality. The documentation is short enough to read through and get a good idea of what capabilities there are, but in summary based on my own experience the following functionality of the API will be relevant to your implementation:
Receive a webhook when someone creates a pledge to your campaign
Receive a webhook when someone updates a pledge to your campaign
Receive a webhook when someone deletes a pledge to your campaign
Send a request to the API to retrieve a list of all pledges to your campaign
Routinely poll the pledges endpoint, iterating through each pledge, determining based on the declined_since and total_historical_amount_cents if the user has been charged for this month and is still eligible for their reward.
Notes:
I highly recommend reading through not just the developer documentation but also the Patreon help center, it’s filled with very interesting information that is aimed at creators and patrons but will help you understand how the system works which is useful when implementing the Patreon API. There are edge-cases you might not expect, e.g: not charging upfront.
Patreon starts billing on the first of the month at midnight PST and retries failed payments over the next few days, encouraging patrons to fix incorrect billing information, so a patron could show as being declined_since on the 2nd of the month but then their payment may succeed on the 3rd.
You will need to decide how you handle whether or not a user is eligible based on their patronage status, Patreon does not default to charge upfront (and I believe enabling charge upfront is currently invite only, this page mentions it’s in beta) so people will be able to become patrons without being charged, do you grant their rewards once they’ve been charged? do you grant upfront and trust they’ll pay?
There will be situations in which your users will use different email addresses for their account on your website and their Patreon account, therefore, you will need to include functionality that either allow a user of your website to authenticate with Patreon (to identify them accurately) or allow the user to specify their Patreon email (or user id) in a profile field on your site which you can then use to cross reference.
There are some parts of the Patreon system that aren’t documented, and/or aren’t obvious if you’re unfamiliar with the platform, this thread covers some of the questions I had and has helpful answers from the Patreon team, it may be of value to you too.
Personally, as much as I am a fan of Patreon, as a developer who has worked with both the Stripe platform and the Patreon API (and as a developer who values the least code that requires the least maintenance), if I was in your situation I would not choose Patreon, but if the accounting considerations are that important to you then certainly you can achieve what you need to achieve with the Patreon API, and certainly based on what has been shared by the Patron team the Patreon API is getting better, so you could improve your implementation in future once payment information is available.
As far as i know, there exists no threshold for reporting and filing as of now, it will be active in 2019.
HRMC in britain was doing something, allowing a threshold for Brit businesses or something, but i dont know how it works. I very much think it was about sales to Britain. So if your britain sales remain below HRMC threshold you dont have to pay to Britain.
But if you sell to any other Eu country, you have to file and pay since there is no Eu wide threshold.