PayPal PreApproved Payments

Question

I am using PayPal PreApproved payments for my crowd funding website, where project backers are only charged if the project is successfully backed.

I am worried that

Answer 1

Preapproval isn't the only thing they'll allow you to use. That's just one part of the Adaptive Payments API, but you could go with a delayed chained payment, too.

This way your account can be treated sort of like an Escrow. You can use the Pay API to create payments in the system that are split between receivers accordingly. Only the primary receiver would get paid at first, though, and then you can call ExecutePayment to submit the secondary payments from the primary account within 90 days.

This way the primary account holds all of the funds so they're available to pay out when the goal is reached. If the goal is not reached the payments could be refunded.

Answer 2

I've implemented Paypal Adaptive payments and used them for payments at http://www.wethetrees.com and we had the exact problems you are describing. The capture rate is almost random, we were down to 35% with one campaign and had to manually send all backers invoices.

When capturing we had backers with closed/unauthorized accounts, insufficient funds, unavailable payment methods etc. We switched to just doing direct capture for a while, which is great since we get 100% of all pledges, but Paypal closed our account without notice when one of our campaigns mentioned the word "Cuba".

The solution in the end was to scrap Paypal so now we're using Wepay and Dwolla, and we're considering Bitpay (Bitcoin) as well. Seems to like Paypal wants to kill crowdfunding or doesn't understand it. Anything less than a 90% capture rate is totally unacceptable and will cause projects to fail.