14 DAY TRIAL // PayPal has revised its policies on crowdfunding, updating them to reflect a clear differentiation between preselling and crowdfunding in order to streamline the pledging process.
Tomer Barel, PayPal's chief risk officer has posted a new official blog post revealing the updated policies on releasing money to crowdfunded projects.
The decision to streamline the process was made on account of several projects such as Skullgirls, Dreamfall Chapters and many others being affected by issues regarding getting hold of the funds pledged by their fans.
The popular money-moving service is used by many people all around the world to home-grow various products, and specifically utilized by many people in regions where Kickstarter or Indiegogo payment options are unavailable or by those who are late to the party or still want to contribute.
PayPal has been hesitant to release the entirety of the funds raised in the past because of the possibility of dissatisfied customers asking for their money back, which could have posed several problems if the funds would have already been disbursed.
As such, the company has moved to now draw a clear distinction between pre-ordering a product and contributing to a crowdfunding campaign.
"In crowdfunding, the process involves speculatively supporting a new concept that may, despite the best of intentions, not make it to market. In preselling there is an expectation that you will get something tangible for your money... even if it takes months for delivery," Barel explains.
This decision will now allow PayPal to work with the people running their crowdfunding campaigns to make sure that the funds can be delivered in a timely manner without incurring any potential hurdles farther down the road, given the risky nature of crowdfunding projects.
"Together with the crowdfunding sites, we identify if campaigns are strictly fundraising or preselling merchandise. We enable their campaigns without interrupting payments under the condition that the campaign owner is explicit and transparent to their contributors that there is no guarantee of delivery regarding the rewards being offered upon contribution," Barel further clarifies.
The updated rules now state in very clear terms the kind of campaigns PayPal supports and the kind of rewards to be offered to campaign donors, asking that campaign runners are very transparent regarding the destination of the acquired funds and that a clear list of rewards for each type of backer transaction is made available beforehand.
Additionally, the company lists a number of additional identity information required from some individuals or organizations, in order to verify the campaigns, and points prospective developers wanting to make use of its services and develop a campaign platform to the dedicated PayPal Developer page.