Money Minute: Slaying the Chargeback Dragon

Hi! I’m Aaron.

Some of you might know me, others might not. I make sure that GameWisp operates effectively, and part of that means making sure that the flow of money through the system is efficient and safe. If you have a billing question, it’s usually me that answers it, and I’m the one who presses the button in PayPal to send you your money. So, what question do I get most often?

“Why was this subscription put on hold, and how long will the hold last?”

Not a day goes by that I don’t get asked that question, so here’s the deal with holds, in detail.

Holds exist solely because chargebacks are so common in the streaming community. There is no other reason.

Since we sit between the subscriber and the streamer, we’re the first line of defense against the streaming community’s most frustrating dragon: chargebacks. We fight them on behalf of the streamers, and we’ve actually gotten pretty good at it.

But, whenever a chargeback is issued, we have to put a hold on the amount of money that is being disputed so that the channel cannot cash it out. If we lose the dispute, the money is subtracted from the streamer’s holds balance, which prevents the available cash out balance from reaching a negative amount. If the money was never placed on hold and the streamer cashes it out, which, unfortunately, still occasionaly occurs, then the available cash out balance could drop below zero. Such balances are paid back when subscribers pay the streamer.

What about when a channel sees a negative balance, and decides to just stop using GameWisp? In this case, this leaves us on the hook for the lost money, not the user. This has happened in the past, and is the reason holds were first put into place.

“My account has a lot of holds, are each of these holds chargebacks that are being fought?”

The answer: No.

As we’ve fought chargebacks, we’ve started to learn patterns that help us to identity subscriptions with a higher than average chance of being charged back.

Some of these include:

• High priced subscriptions
• Subscriptions from unverified accounts
• New subscribers paying lots of money to multiple channels
• Subscriptions with a high risk score, as marked by a third-party service.

Chances are that if you see a low priced subscription that was held, it was because the user did not verify their account when they signed up, or software has identified them as a potential risk. High priced subscriptions, meanwhile, are held automatically, since we receive more chargebacks on higher subscriptions than lower ones.

We often get emails about holds that say “This person has been sending me tips and donations and has been an active part of my community for a long time. They won’t charge back!” Unfortunately, we’ve found, time and again, that this just isn’t always the case. Payment disputes arise, regardless of the extent of the viewer-creator relationship. It’s just the name of the game.

But, these types of holds are all temporary, unless we lose a chargeback. Eventually the money will be available to cash out.

“So, when will the money come off hold?”

There is no definite answer to when a particular subscription will come off hold. In some cases, a subscriber just needs to verify their account. In others, it’s much harder, such as if a new user decides to spend hundreds of dollars on several channels, right away.

It’s all about context. Generally, if a subscriber has been on GameWisp for multiple months with no history of chargebacks, the hold period will be shorter. If we can gather enough information about a subscriber, then the hold time can drop to almost no time at all.

But you WILL get your money. We will not hold it forever, and in general, most holds last no longer than a month.

However, we know that chargebacks are a frustration, and in the near term, we will be working to improve the holds system.

We are in the process of revamping the holds system to make it more efficient, and to attempt to save both streamers and GameWisp the headaches that come along with dealing with too many holds. We are hard at work on this, so look for new announcements soon.

And keep an eye out for more from me! I’ll be back next month with another discussion about the behind-the-scenes business of GameWisp. See you then.

Originally published at blog.gamewisp.com. Feb 9, 2016 8:30:00 AM