PayPal adds distinction between crowdfunding and pre-sales

By Stephany Nunneley
15 March 2014 21:00 GMT

PayPal has updated its policies pertaining to releasing funds earned through crowdfunded projects.

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Speaking in an official blog post, the firm’s chief risk officer, Tomer Barel, the change is a distinction between preselling and crowdfunding.

“Crowdfunding is fundamentally different from regular ecommerce,” he wrote. “There is a distinction between crowdfunding and “preselling”. In crowdfunding, the process involves speculatively supporting a new concept that may, despite the best of intentions, not make it to market.

“PayPal has started to engage crowdfunding campaign owners early on to clearly understand their campaign goals and help them ensure their campaigns are compliant with our policies and government regulations. 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.”

In the past, PayPal and many developers who used the payment service, butted heads over the firm’s hesitancy to release funds raised due the possibility of customers seeking to reverse payments.

You can read the full blog post through the link and have a look at the new policy through here.

Thanks, Gamasutra.

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