PayPal has become the GAME CHANGER - PayDotCom Will Change Soon

[MikeAmbrosio]

Originally Posted by lakshaybehl

Question for Mike...

You have always emphasized the importance and power of one click upsells and sales funnels. Does PDC have these things? As a seller can I simply upload a bunch of products and have them arranged in a funnel?

If not, will this be done anytime soon now that Paypal is opening up their API?

Thanks
-Lakshay

Lakshay,

PDC recently added both 1-click upsell and shopping cart technology. To use the 1-click, you still need an authorize.net account of your own.

When you log in to your account, click the News link at the top menu for all the details.

Mike

[Jill Carpenter]

Affiliates are going to have to pay attention to payments and what they withdraw or spend and when.

Can't someone technically charge back for up to 6 months?

If I get a payment on Monday for $47, I spend that money on Tuesday, and then Wednesday rolls around and someone wants a refund, Either Paypal will need to suspend the account if the funds are missing, and/or your bank will charge you an overdraft fee.

I don't know about anyone else, but I have my paypal linked to a checking account and no links to an actual credit card.

This is almost Paypal encouraging you to keep funds in their account for as long as necessary. Of course, if the money is sitting there it is paypal who benefits - unless the user signs up for the programs that can gain you some interest.

I'm also thinking if an affiliate decides to "hit the road" and run off, the original merchant will be responsible for the refund process. I can't imagine paypal making up the difference.

As a merchant on PDC, I would want to have control over which affiliates are allowed to promote. I think I'd want to see something in place that makes them all have to be personally approved, and I would want access to some information on them before they started selling.

As it stands right now, anyone can promote pretty much anything.

While the current model requires a bit more work, it is a better security feature for merchants to insure that buyers who request it (in the allotted time) do get a refund.

Overall you hope people don't refund - but they do it.

This seems to really support the argument for non-refundable monthly membership sites.

[Ashley Gable]

Originally Posted by NathanFalkner

From the perspective of computing, collecting, and
remitting appropriate sales/VA taxes -- nothing. It's
up to you, the last time I really researched this, to
figure out what (if any) your tax liability is. ClickBank,
by contrast, acts as the retailer and calculates and
remits relevant sales/VA taxes.

From the perspective of handling 1099's for productive
affiliates for whom 1099's must be processed, neither
PDC nor PayPal will handle this for you. By contrast,
ClickBank (for example) manages the payment and tax
compliance issues stemming from having affiliates.

. . .
Question: How do those of you who exclusively rely
on PayPal for all your processing deal with relevant
sales/VA tax compliance?
. . .

But it isnt me who is paying the affiliates with this new program, it would be the customer. Right?

If Joe bloggs buys something of mine through an affiliate, with this feature, $20 would go to the affiliate, the other $20 would go to me. The $20 for the affiliate wouldnt have to go through me at all, just paypal.

So it wouldnt be me paying the affiliate.

Ashley

[Ashley Gable]

Originally Posted by Steven Wagenheim

Because just using PayPal isn't going to bring you in any affiliates.

Remember, PayPal isn't an affiliate program itself. With PDC, your product
gets listed in the marketplace and thus has the potential to bring in
affiliates.

Naturally, you can run your own affiliate program if you like, but you'll
still have to go and recruit your own affiliates and without your product
being listed in some marketplace (PDC, Clickbank, whoever) this makes the
job a little harder.

Okay thanks, I get it now! I didnt realize paydotcom was a marketplace like clickbank.

Ashley

[FlightGuy]

Hey Mike,

Been a while since we've spoken, you seem to be pretty busy up there! Glad to hear this great news... I think it'll be an overall tremendous win/win for both you and everyone who uses PDC. AvenueGirl brings up a good point, though. There could be an influx of newbies/scammers to PDC and I'd be interested in to know how Paypal would work out where refunds come from if an affiliate cleaned his account every time a few sales were made.

Maybe a new affiliate rating system in PDC is in order.

I don't think this will be a huge issue, just one to think about.

Talk to you soon,

John Dennis

[seasoned]

Originally Posted by AshleyAA

So are you saying that the product owner will no longer have to treat an affiliate as an "employee"?

I would think that seeing as the customer is paying each of us seperatly, whether he/she knows it or not, that we wouldnt. Right? It would just be a purchase.

If that is the case then I love it. I absolutely hate dealing with tax forms and the like, any way to lessen that and I am happy!

But one other thing, if if is paypal that is doing this, then why would we need paydotcom?

I am honestly asking.

What makes using paydotcom better than using just paypal?

Like I said, I was just shooting questions off the top of my head. That is a GREAT point!!!!!!

You sell an item for $100, and CA wants 6% sales tax(example), WA wants 10% sales tax(example only), and VA wants 8% sales tax(example). The money goes to YOU in CA, an affiliate in WA, and the author in VA. WHO pays WHAT sales tax? It is ILLEGAL for Paypal to do it, because THEY don't know enough about the whole thing. But the states COULD make a case that, since THEY got the money, they are ALL places of business. In a way, they ALL got paid for the product. AND, if money isn't reported, WHERE do they go? YOU better keep records in case others don't.

BTW the tax forms are to allow the vendor to report the tax "obligation" FOR YOU! EVEN if you fail to fill out that ONE TIME form, you STILL need to report the tax, etc... If you don't, they could audit! You have income tax and NOW, possibly, SALES TAX!

BTW Sales tax, HISTORICALLY, has NOT been an issue, but for the past 10+ years, states have been redefining what is taxable. So non tangibles and out of state mail order USED to NOT be taxable! NOW, sometimes, they ARE!

There are also potential liability questions. I am certainly NOT a lawyer, but you know how lawyers are!!!!!

Steve

[garyv]

I think what people are starting to realize here, is that ClickBank keeps track of a very large refund/chargeback buffer zone. This is something that over the years they've perfected, because it prevents not only an increase in chargebacks, but it also prevents their own trouble w/ their merchant accounts. Affiliates on their own are not going to be disciplined enough to keep a buffer in their account for future refunds & chargebacks.

Personally I see a future filled w/ frozen paypal accounts unless they figure this one out.

[samstephens]

Originally Posted by Sid Hale

Thanks Sam,

...but did you test parallel payments or chained payments?

From your results, I would guess parallel, but would suspect that chained payments are more appropriate for handling instant affiliate commissions.

Good point Sid, I tested parallel as it seems reasonable to split the initial payment into the appropriate accounts.

As you aluded to, chained payments seem to keep this info private.

The benefit I see of parallel over chained is that the money is sent directly to the appropriate parties, where with chained the payment goes to the vendor, and is then sent from the vendor to the affiliate.

This would simply the tax issues about different states/countries that a few people have mentioned, but it would also mean that your affiliate would probably be seen as an "employee".

(Of course I'm not a tax accountant, but this seems like a reasonable guess to me)

Pros and cons on both sides...

cheers
Sam

[samstephens]

Originally Posted by seasoned

...

BTW Sales tax, HISTORICALLY, has NOT been an issue, but for the past 10+ years, states have been redefining what is taxable. So non tangibles and out of state mail order USED to NOT be taxable! NOW, sometimes, they ARE!

There are also potential liability questions. I am certainly NOT a lawyer, but you know how lawyers are!!!!!

Steve

...and then add different countries in:

Say I'm your affiliate Steve, and we sell a product to another Aussie - you don't need to charge sales tax, but I do.

A lot of countries have GST, a whole lot more have VAT. I'd be really interested to see how it pans out!

By the way, my comments above about "chained payments" would solve this, but then raise the "employee" or "contractor" tax issue.

cheers
Sam

[seasoned]

Originally Posted by samstephens

...and then add different countries in:

Say I'm your affiliate Steve, and we sell a product to another Aussie - you don't need to charge sales tax, but I do.

A lot of countries have GST, a whole lot more have VAT. I'd be really interested to see how it pans out!

By the way, my comments above about "chained payments" would solve this, but then raise the "employee" or "contractor" tax issue.

cheers
Sam

The sales tax thing sounds like such a MINOR issue, but what if you make only $20 on a $100 item? With vat and all, the tax could eat your income up. Governments usually want to be paid on the FULL sale price. 8-(

Yeah, I have heard horrer stories, even from relatives, they THEY end up having to pay a "duty" on even GIFTS from the US. That stinks.

To come to think of it, I REALLY broke the law with some whiskey I brought to another country! Not only did nobody pay for the $100 product, but it had LIQUOR in it. NOBODY would ever drink it, as it is a collectors item, but there would STILL have been a SIN tax on it! Gee, I am a SMUGGLER and a tax cheat for simply bringing my uncle a present!

Steve

[Sid Hale]

Hi Sam,

Originally Posted by samstephens

Good point Sid, I tested parallel as it seems reasonable to split the initial payment into the appropriate accounts.

As you aluded to, chained payments seem to keep this info private.

The benefit I see of parallel over chained is that the money is sent directly to the appropriate parties, where with chained the payment goes to the vendor, and is then sent from the vendor to the affiliate.

This would simply the tax issues about different states/countries that a few people have mentioned, but it would also mean that your affiliate would probably be seen as an "employee".

Look at all the Independent Insurance Agencies out there. They're essentially paid on a "commission only" basis, and there are plenty of other industries where independent agents are used for marketing purposes. Their commissions are an expense to the Insurance company, and revenues to them. They pay their own income taxes after deducting their allowable business expenses.

Affiliates would be treated no differently by U.S. law. (Form 1099 required vs. W-2)

(I'm not a tax accountant either - but I've developed payroll taxing/reporting systems for small business and for State/Local governments all over the U.S. for the past 30+ years.)

[samstephens]

Originally Posted by seasoned

To come to think of it, I REALLY broke the law with some whiskey I brought to another country! Not only did nobody pay for the $100 product, but it had LIQUOR in it. NOBODY would ever drink it, as it is a collectors item, but there would STILL have been a SIN tax on it! Gee, I am a SMUGGLER and a tax cheat for simply bringing my uncle a present!

Steve

Heh, that's how it starts, Steve. First a bottle of whiskey, next you'll be the head of an international crime syndicate. It's a slippery slope, my friend!



cheers
Sam

[samstephens]

Originally Posted by Sid Hale

Hi Sam,

Look at all the Independent Insurance Agencies out there. They're essentially paid on a "commission only" basis, and there are plenty of other industries where independent agents are used for marketing purposes. Their commissions are an expense to the Insurance company, and revenues to them. They pay their own income taxes after deducting their allowable business expenses.

Affiliates would be treated no differently by U.S. law. (Form 1099 required vs. W-2)

(I'm not a tax accountant either - but I've developed payroll taxing/reporting systems for small business and for State/Local governments all over the U.S. for the past 30+ years.)

Hi Sid,

Ah yes, that's the form I was thinking of: the 1099. I've heard about it, but not being a US citizen I haven't needed to look too far into it just yet.

It's good to know it's still a relatively simple process then, from your reply.

I think a lot of accountants are going to be getting phone calls from clients over the next little while, as this becomes more and more popular!

cheers
Sam

[seasoned]

Originally Posted by Sid Hale

Hi Sam,

Look at all the Independent Insurance Agencies out there. They're essentially paid on a "commission only" basis, and there are plenty of other industries where independent agents are used for marketing purposes. Their commissions are an expense to the Insurance company, and revenues to them. They pay their own income taxes after deducting their allowable business expenses.

Affiliates would be treated no differently by U.S. law. (Form 1099 required vs. W-2)

(I'm not a tax accountant either - but I've developed payroll taxing/reporting systems for small business and for State/Local governments all over the U.S. for the past 30+ years.)

The rules have changed a LOT even in the last 10 years! Technically, because affiliates don't have specified hours, are paid by several companies, etc... they ARE contractors. STILL, lawyers aren't interested in the law. Sorry if I offended any lawyers but, AS A GROUP, IN THE US, that is FACT! They twist things around to keep their clients happy. THAT is why so many lawyers get off on technicalities, etc...

And there HAVE been cases where companies have gotten in trouble for what their affiliates have done. That is why so many companies stipulate affiliates are NOT employees, and are not to represent themselves as such.

ALSO, insurance applies to a given area and is taxed according to that, and reported according to that. You generally won't see a NY insurance agent that is even legally able to sell insurance in CA. And INSURANCE companies must be "ADMITTED" to the state.

I once saw a lincoln Life insurance employee that was one of the people in like a 3 person office in NY! I asked them WHY they were there! I mean it was a BIG company, and based in Indiana at the time. WHY!?!?!? She said they could not be admitted to NY unless they had a PHYSICAL presence there!

Steve

[mrdomains]

Thanks for sharing this info!
Cutting CC payments and keeping the whole transaction chain inside PP system makes sense but it will be interesting to see how they handle the refund issue. PP escrow with delay perhaps. "Paid immediately" might just mean immediate accounting/balance report. Time will tell

[Sid Hale]

Hi,

Originally Posted by seasoned

ALSO, insurance applies to a given area and is taxed according to that, and reported according to that. You generally won't see a NY insurance agent that is even legally able to sell insurance in CA. And INSURANCE companies must be "ADMITTED" to the state.

I once saw a lincoln Life insurance employee that was one of the people in like a 3 person office in NY! I asked them WHY they were there! I mean it was a BIG company, and based in Indiana at the time. WHY!?!?!? She said they could not be admitted to NY unless they had a PHYSICAL presence there!

Absolutely true - and probably interesting to someone concerned with the regulation of the insurance industry, but I don't see what it has to do with the question of whether an independent agent in any industry would be considered an "employee" of the company they represent.

[Sid Hale]

Hi,

Originally Posted by mrdomains

Thanks for sharing this info!
Cutting CC payments and keeping the whole transaction chain inside PP system makes sense but it will be interesting to see how they handle the refund issue. PP escrow with delay perhaps. "Paid immediately" might just mean immediate accounting/balance report. Time will tell

I don't think there is anything in the Adaptive Payment processes that would change the existing refund process (except that the funds would be drawn from multiple payees), and I see no indication in the documentation currently available to indicate that there would be any sort of escrow or delay of payments.

The same issues discussed here with regard to account balances (as they might impact Paypal's ability to process a refund) already exist today, but with fewer "players" involved in one transaction. Paypal is already aware of their risks on any given financial transaction, and their fees anticipate a certain degree of risk.

I think that there is a lot of supposition here in this thread, with very little actual research having been done to understand how the various processes would work.

[mikefilsaime]

Originally Posted by entry

Dont the rich marketers reply to their subscribers, or even say hello back?

especially the ones who have purchased from them?

(infact it would be great to have a Private message from you Mike.... please sort it out- it would be like an autograph! and try and send me a cool personal message )

LOL -

I so my best to say hello to everyone.

Please don't make statements like "Don't the rich marketers..." etc..

That is unfair to me, you, and everyone.

I am not rich. I Was rich before I had money b/c I was happy.

Money only amplifies what you are. If you care an ass, with money your a bigger ass. If you are a generous person, you are even more generous when you have more money.

So please don't egg me or anyone on to respond to you and question if we do or do not having do do with being rich.

So for the record - Hello and thanks for being a customer!

Mike

[JayXtreme]

I have to be honest here....

Whilst I do believe it will be a game changer. I don't like the look of it so far... Maybe Paypal have really knocked one out of the park with this and I just don't see it yet.

I much prefer the RAP style alternation of payments...

As a product creator and an affiliate.. I can see it from both sides.

As a product creator, I do feel a duty to pay all refunds if necessary...

BUT

As an affiliate, if one of the customers that I send to the sales page is asking for a refund, then I am glad to pass that refund out of my commission... No questions.

I'm digging more into this x.com biznass for my own side of things, but I am not excited about it right now.

Could be wrong

Peace

Jay

p.s. I like the way Mike said "don't egg"... lolz...

[Sid Hale]

Hi Jay,

Originally Posted by JayXtreme

I have to be honest here....

Whilst I do believe it will be a game changer. I don't like the look of it so far... Maybe Paypal have really knocked one out of the park with this and I just don't see it yet.

I much prefer the RAP style alternation of payments...

Me too.

...at least until I get through it more thoroughly, but will prototype this with an eye toward providing it as an option within RAP - not a replacement.

[JohnMcCabe]

Not turning this into an ad for Sid's product, but one of the things I like about the RAP system is the ability to set guidelines for affiliates and to ban affiliates that don't observe them.

If an affiliate refuses to honor a refund request, I do cover it. But it's the last time that affiliate will make anything from me.

[AaronJones]

Mike, what does this mean for our affiliate marketing friends in countries that do not offer paypal?

Aaron

[wordwizard]

If I understand this correctly, that's because there's a difference between the PDC/Clickbank/1shoppingcart that deal with selling and product delivery and affiliate management etc., and the payment processor -- they all need some kind of payment processor to uhm process the payments.

Of course, I suppose that PP could always move into the product delivery line as well -- in fact, it already has for all I can tell.

There's the PayPal marketplace or whatever it's called...

[Popstar]

Paying affiliates immediately on every sale seems like an accident waiting to happen... at least to me. I can understand why affiliates would like it, but it could be a huge financial risk for vendors.

There's a reason that merchant accounts impose reserves on vendors... risk. Just because you use Paypal as a payment processor doesn't mean that risk is gone. Unless you impose a no-refund policy... and even then, you're courting trouble.

If a vendor does any real volume, this could be disastrous. There has to be some type of safeguard in place for the vendor for this to work properly. Maybe I'm just misunderstanding what that safeguard is.

[Keith Choy]

Originally Posted by Popstar

If a vendor does any real volume, this could be disastrous. There has to be some type of safeguard in place for the vendor for this to work properly. Maybe I'm just misunderstanding what that safeguard is.

Hi Popstar,

If I understand from Mike's first post correctly, the refund is also handled by the system.

I guess we need to see this in action over time to see if this is a real concern. :P

- Keith Choy

[Sid Hale]

Hi,

Originally Posted by Popstar

Paying affiliates immediately on every sale seems like an accident waiting to happen... at least to me. I can understand why affiliates would like it, but it could be a huge financial risk for vendors.

There's a reason that merchant accounts impose reserves on vendors... risk. Just because you use Paypal as a payment processor doesn't mean that risk is gone. Unless you impose a no-refund policy... and even then, you're courting trouble.

If a vendor does any real volume, this could be disastrous. There has to be some type of safeguard in place for the vendor for this to work properly. Maybe I'm just misunderstanding what that safeguard is.

Delaying payment of commissions isn't the only way to manage that risk.

Myself and some 1600 other RAP merchants are paying instant commissions today. Many of us have been doing so for 2 years or more, and the $7 Secrets script did this (but with less merchant control) for almost a year before the development of RAP. Almost all of these provide product guarantees and allow refunds.

While the merchant receives all payments in older systems (and is therefore responsible for any refunds), when affiliates are paid directly by the customer, they (legally) take responsibility for any refunds required against funds paid to their account. There is actually less risk for the merchant than with older affiliate programs.

[Popstar]

Thanks for your explanations, Keith and Sid.

I think I understand the theory. What I'm concerned about is whether all affiliates will pay refunds. All it takes is one bad apple with a lot of volume...

I hope I'm wrong, but I still see a serious risk. Unless there's been court precedent, I'm not sure that the legalities have been established in a definitive way. But there's also the perception of your customers if you don't deliver on refund requests if an affiliate bails.

I agree that the probability of a disaster may be small, but I don't like taking that kind of financial risk. Maybe I'm too conservative.

Debbie

[Always-A-Warrior]

Thanks for the heads-up Mike. Looking forward to better ways. You coming to my birthday party?.

[Josh Anderson]

I've never been a fan of split payments....

Also even the 100% rotating payments with 1:1 ratio between merchant and affiliate lead to problems.

The issue is...

If you want total control over customer satisfaction and the reputation of your company when it comes to money back guarantees and other refund related issues...

You want to be the one in control.

Do you think your customer cares when they call you up and want a refund and you tell them:

"But you did not buy my product off me you purchased from my affiliate and you'll need to figure out who they are and ask them for a refund."

If they feel screwed they are going to tell people YOU screwed them even if it was an affiliate.

I know... in IM a lot of people use pen names and aliases and just want to automate the whole thing so that they never have to do anything...

But for most branded and customer service oriented business models it just does not work.

We integrated PayPal's Pay Flow Pro and Website Payments pro for a large partner/client in our platform...

We look at them as just another gateway to use for processing traditional transactions.

I am sure there are some exciting applications for the adaptive payment model. And depending on WHO has control over the refund for the total transaction and how it is structured it could be very powerful...

However, I'd encourage anyone who is considering it to be very careful to ensure that you don't end up with higher shoppingcart abandonment and client confusion by embracing things such as split payment processes.

What I have found is that because PayPal is a staple in people's lives they are used to the traditional checkout processes and even things such as badly implemented PayPalPro checkout processes can lead to higher shoppingcart abandonment just because the client thinks that they have completed the transaction when they still had two more confirmation steps that they were not used to because they did not have to do that in Paypal standard.

So many things to consider to ensure you avoid shoppingcart abandonment, billing customer service confusion etc.

When the affiliate is paid directly the affiliate also has reason to be concerned if the vendor fails to deliver the product or its significantly not as described they could have tons of chargebacks on their hands and they would have NO DEFENSE at all and would have to accept the liability of any and all chargebacks every single time.

Just be smart about it.

[SageSound]

Originally Posted by Popstar

Thanks for your explanations, Keith and Sid.

I think I understand the theory. What I'm concerned about is whether all affiliates will pay refunds. All it takes is one bad apple with a lot of volume...

I hope I'm wrong, but I still see a serious risk. Unless there's been court precedent, I'm not sure that the legalities have been established in a definitive way. But there's also the perception of your customers if you don't deliver on refund requests if an affiliate bails.

I agree that the probability of a disaster may be small, but I don't like taking that kind of financial risk. Maybe I'm too conservative.

Debbie

In general, both in my own experience using RAP on a number of products and promotions, and others I've talked with, unless you've absolutely lied about your product on the sales page or you just have terrible customer service, the refund rates typically hover between 2%-5%, regardless of the payment mechanisms you use. That is, the risk is fairly constant any way you slice up the pie.

Most merchant card processors' discount fees fall within that range as well, including PayPal's.

If you're paying 50% commissions, then on average your affiliates will get half the refunds and you'll get half the refunds. You need to have an affiliate policy in place that says if a customer requests a refund and the affiliate caught the payment, then that affiliate needs to issue the refund or risk being banned from earning further commissions. If they're doing some heavy promotions, do you think they're going to risk losing a dozen or more commissions by not paying a refund or two?

Furthermore, only a tiny handful of your affiliates will make any significant number of sales. Those guys are no more interested in refunds than you are, and in fact my experience is that it's the onsey-twosey affiliates who cause the most problems and generate the most refund requests. But still, we're talking a very small number here.

I once referred two sales of a $500 product paid through RAP. The vendor got the first commission, I got the second. Then the second guy requested a refund from the vendor. Before I even knew it, the vendor issued the refund, then asked me to split it with him. Technically, I was on the hook for the whole amount. But he was kind enough to split it with me. I didn't make any more sales of that product, try as I might, so things worked out fine in that case.

The point is, yes there are always risks of refunds. But they aren't specific to the payment mechanisms involved. The bigger picture is more about how you deal with them.

-David

[SageSound]

Originally Posted by Josh Anderson

You want to be the one in control.

Do you think your customer cares when they call you up and want a refund and you tell them:

"But you did not buy my product off me you purchased from my affiliate and you'll need to figure out who they are and ask them for a refund."

First off, that's a really idiotic way to handle it. You are under no obligation to issue a refund immediately, and saying it will take 24/48/72 hours to process, or even more, is not unreasonable. It doesn't matter if an affiliate was involved or not. They bought YOUR product and YOU owe them the refund. There are numerous ways to handle it, but giving your affiliate a couple of days to issue the refund is perfectly acceptable. More than that and I'd disable their account.

Regardless of who caught the commission, there are other things that could necessitate a delay.

The fallacy of this "I'm in TOTAL CONTROL" theory is that you have virtually NO control over what your merchant charge account processor might do. If they freeze your account, you have no excuses. "Uh, well, sorry, I can't issue a refund because my merchant processor froze my account." Doesn't matter if it's PayPal or one of the bankcards.

Just remember, the likelihood of having one affiliate screw you is going to be fairly low -- because the affiliate is shooting himself in the foot as well. If they're making money from your product, they're not going to screw around and put future earnings at risk.

Your merchant processor, on the other hand, is playing by an entirely different set of rules. They don't care what your refund rate is if your sales suddenly and unexpectedly exceed their projections.

Sorry, but I'd rather take my chances with one not-so-bright affiliate over a merchant card processor any day! The affiliate might cost me one refund but his promotional efforts might garner me far more sales that I don't have to pay him because of his breech of contract. The merchant account processor, on the other hand, has me over a barrel for 100% of my revenues. I don't know about anybody else, but the prospect of THAT happening scares the Bejezus out of me!

I don't care who's in control as long as there isn't one single point of failure that can put me out of business. Well, that sounds great, except for most of us, there really are several: payment processors, web hosts, domain registrars, blacklists, server failures, hackers, etc. It'd complicated and expensive to have 100% redundancy of everything.

-David

[Josh Anderson]

Originally Posted by SageSound

First off, that's a really idiotic way to handle it.

That's my point.

Originally Posted by SageSound

I don't care who's in control

"Idiotic"

[SageSound]

Originally Posted by Josh Anderson

That's my point.

I think you're missing the point.

RAP has the ability to pay something like six different payees.

It's not appropriate to tell the customer to deal with it!

It's YOUR site, so it's YOUR job to contact whomever caught the payment and tell them to issue a refund. If they don't do it in a timely manner, then you do it yourself and disable them from receiving further payments.

If they used a regular credit card with your merchant payment processor, you dont' say, "Well, it was really the credit card processor who took the payment from you, so you'll need to call them". No, you deal with it yourself.

Same difference.

-David

[SageSound]

Originally Posted by Josh Anderson

"Idiotic"

Let's see what you're NOT in control of:

* the power coming into your home or office
* the power coming into wherever your server is hosted
* the server hardware itself
* the internet
* software services on your server
* logical disk problems that can arise on your server
* the DNS Nameserver, if it's a separate server
* hackers who may have snuck into your server
* your bank
* your merchant payment processor
* your ex-spouse (it happens!)
* 3rd-party business sites (eg., PDC, Clickbank)
* and last but not least ... affiliates who refuse to issue refunds

There are probably more, but I think I've made my point -- you can NEVER be in 100% control of ALL of these, and many of them you will NEVER HAVE ANY control at all. "idiotic" indeed!

But just for grins, given all of the complaints posted here on the WF and elsewhere, how often does the last item come up vs. some of the others?

I'd have to say that getting affiliates to issue refunds is one of the least risky things I've had to deal with in all of my time working with RAP. And I think if other RAP users are willing to chime in, they'll probably say something very similar.

-David

[Diver's]

cant paypal do it on stand alone basis. [Just Paypal] no need to get involved with other services.. (correct me if im wrong) ?

[Andy Fletcher]

There been a lot of talk about the potential fraud, which makes people apprehensive to use RAP or the new adaptive payments models. I had exactly the same view but I recently decided I wanted to try RAP out anyway. Mostly because one of my biggest affiliates greatly dislikes Clickbank.

After several hundred sales of a $67 price point item, of which a significant number were done by affiliates (60% first tier, 15% second tier so there were loads of people who I'd never even spoken to) I had just one refund request that required more from me than a single email to the affiliate. And that one was just a case of a busy man with a backed up inbox.

The lesson I've learned from this is that the potential for fraud is a lot scarier than actually dealing with the issues. Don't let perceived threats hold you back in your business.

Andy

[SageSound]

Originally Posted by Diver's

cant paypal do it on stand alone basis. [Just Paypal] no need to get involved with other services.. (correct me if im wrong) ?

What's being discussed here are new features PayPal is offering via their API (Application Programming Interface) so third-party providers can have more flexibility in using PayPal.

PayPal is simply a payment processor. The only thing they deal with as far as affiliates go is their own affiliate program, and I'm not even sure it's still got any legs.

If you want to deal with affiliate payments, you'll need to use a third-party script of some kind -- unless you're paying 100% commissions across the board.

HTH
-David

[Josh Anderson]

Originally Posted by SageSound

I think you're missing the point.

RAP has the ability to pay something like six different payees.

It's not appropriate to tell the customer to deal with it!

That was my point

[RichardWing]

Debbie,

When a buyer requests a refund they do so with the person they paid. Typically they will do so right inside PayPal on the details page of that transaction. If the receiver of that transaction was the affiliate then they will get the notice from PayPal.

If the affiliate doesn't respond within the allotted amount of time then PayPal debits it from the affiliates account. In some cases depending on the type of complaint the funds are placed in escrow until it has been resolved or escalated.

The affiliate is considered the merchant for a percentage of the sales the affiliate refers over to the sales page. We typically refer to our affiliates as RESELLERS because we basically allow them share in the sales of our product a percentage of the time. On a 50% reseller commission the reseller will receive payment for every other sale.

There are many benefits to this model and as mentioned above many of us have employed this model for two years in all of our products we resell.

The main benefit I enjoy is that I know that whatever is paid into my paypal account is mine to spend less my normal business expenses and monthly subscriptions.

Heck we even have our partners (we call equity partners) added into this rotation when its the admins turn to get paid.

My resellers and my equity partner (on a given product) get paid directly.

Everyone is HAPPY. And everyone is responsible to for their own business.

NO PAPERWORK OR ACCOUNTING FOR ME. No being MR Policeman for the IRS.

If you wanted to promote my sale I don't have to know or care if you are a US citizen for IRS tax reporting purposes. I don't need to collect your social security number. (many don't like to give it out) You may keep that information private and still benefit from a sale I set up, I host, I build and provide the affiliate tools for etc...

I don't have to deal with reports. I don't have to aggregate all of my different sites I own or cross compare all of my affiliates for the many products that they may promote to make sure I didnt pay any Single US affiliate more than $600 aggregate.

I can attest that in the two years I have solely used RAP as a merchant for my own sales and affiliated for other RAP merchants, I have not had a single issue where an affiliate had not refunded a sale back to the buyer.

They are more than happy to do so. They get placed right back in the rotation and are next to get paid for the next sale.

The RAP community has proven without fail that this business model works and works very well.

Affiliates love to get paid right away for their efforts and because we offer them that solution they seek out RAP merchants.

Our business model eliminates the concern if they will be paid by the merchant and paid on time. When affiliating for a merchant that uses an instant commission model such as RAP or merchants that will employ the new paypal API. They can know that by the end of the day they will have funds in their account. (provided they have traffic to send there)

The concept of holding on to commissions and paying them out after a refund period is an out dated concept. At least 3 years outdated. And as proven by the new API PayPal is providing they see the market for offering this ability to facilitate what we RAP'rs have been for over 2 years.

This business model is not a FAD and you can bet that those sales systems that don't get on the bandwagon will be left behind in the affiliate game.

There is no more inherent risk to the merchant when using an Instant Commission model. Either way paypal is going to retrieve the funds from everyone that was paid for a transaction. The buyer is protected and the merchant is protected in that he will not be on the hook for refunding a buyer after the merchant already paid out commissions.

Bottomline is that PayPal has taken a step in the right direction and those developers like Mike and Sam that are now looking into this closer and planning to embrace a Instant Commission model are proving they can and are willing to keep up with the trends.

It's a shame it's taken everyone two years to see it's merit

I would like to personally welcome all of you into the Instant Commission Arena.

I hope you find a solution that best suits you like I have.

Richard Wing
623-505-6306

I welcome anyone at no charge to call me personally and I will spend as long as you need and explain in full detail how the instant commission model works for me. I have nothing to sell you and am happy to help out if you have questions.

...... I refreshed the screen to find more posts so I am going to address a few things more....

If you want total control over customer satisfaction and the reputation of your company when it comes to money back guarantees and other refund related issues...

You want to be the one in control.

Do you think your customer cares when they call you up and want a refund and you tell them:

"But you did not buy my product off me you purchased from my affiliate and you'll need to figure out who they are and ask them for a refund."

In the first place any refund requests I have had in the two years I have employed the Instant Commission model 3 things happen....

1. They file a dispute at paypal. ( whoever was paid is responsible for the refund.) Paypal will not go to the merchant and say your affiliates buyer wants a refund. It will never happen.

2. The buyer contacts me through my support desk. (i post my phone number in every email and on every sales page and I don't get calls. (the rare one or two in a two or three month period) Point is they will ask for a refund in the ticket for whatever reason. As any good business owner you are going to let them know that you received their request and will be happy to process it. I also ask them questions to better understand why they wanted the refund and tell them they are welcome to contact me on the phone and I can help them out and if I still can't help them I will be happy to process the refund. I ask them to let me know if they need some assistance or would rather follow through with the refund.

While I am waiting for a response I go into the admin and look up the transaction. I check who they paid and if it was one of my affiliates I will make note of it.

If the buyer responds back still requiring a refund I contact the affiliate myself and pass on the news of the refund request and I ask them to please process it as per my money back guarantee they agree to honor by being my affiliate.

In RAP we have a way to know when a product has been refunded so we can know if the affiliate has handled it in a timely manner.

In the meantime I contact the buyer and let them know that they paid one of one of our partners directly for their purchase (jv partners). I also tell them that this person was notified and that their refund will be processed by them. I also tell them that if it doesn't happen in a timely manner they should initiate a paypal dispute for the transaction.

At no time to I make the buyer do any leg work in regards to doing business with me or my affiliates. I guide them every step of the way and they are assured they will get their refund.

3. They will contact the person they paid. They will contact the affiliate through his/her support email or phone or they will contact ME (the merchant) and request the refund and the affiliate or I will handle those directly.

The person paid is the person on the hook for the refund. (PAYPAL MAKES SURE THE BUYER GETS THEIR MONEY EVERY TIME)

I am a branded and customer service oriented business and I know as in any business its all in the presentation and how you interact with your clients.

When it comes down to it they want to know that they are recognized and how you plan to help them.

They don't want to have a ticket or email waiting for days to get an initial response. They want to know what you plan to do.

I have had no one complain and in fact I have saved quite a few sales (for my affiliates) by the above approach. I have made new friends and loyal clients who continue to buy regularly.

When the affiliate is paid directly the affiliate also has reason to be concerned if the vendor fails to deliver the product or its significantly not as described they could have tons of chargebacks on their hands and they would have NO DEFENSE at all and would have to accept the liability of any and all chargebacks every single time.

Just be smart about it.

I agree be smart about it.

When affiliates decide to form a relationship with a merchant they should research that merchant and even contact the merchant directly. They should find out how quickly they respond to your initial reply. They should have a contact phone number where a real person can be reached.

If they do not have a responsive support system in place even if the merchant is taking in all the money and paying the affiliate later you are at their mercy that they will treat your referrals with the best support you yourself would provide.

Just because a person knows how to set up a website and a product for sale doesn't instantly give them credibility.

I can recount many times over the years merchants that either were late, slow or no pay on my commissions.

Well known marketers to this day. That are still marketing. Most people here would call them GURUS.

I would much rather do my research in the beginning and establish long term affiliate relationships with instant commission merchants just like I would an old school affiliate system merchant. I like the fact that I can get paid directly on the day of promotion. And so do my affiliates who get paid instantly.

My account is a real account of what really happens. Not a guess of what could or might happen. I do this everyday and have been using this model for over two years.

I know it works and its not as much trouble as people would like to have you believe.

Richard Wing
623-505-6306
Anyway the doors open for anyone. Even if you care to argue the point.

I love the instant commission model and it's done me quite well over the years and as I said before I am happy to see it being explored by others.

[AndyBlackSEO]

I have my first 'paid' product on PDC and it is selling quite well. I like the platform so this is great news to hear. Looking forward to the changes! I'll also be putting my next product on PDC within the next couple of weeks. I wonder how this will affect Clickbank?

[Scott Million]

Thanks for the heads up Mike. I'm wondering if this is a step toward establishing an affiliate marketplace like ClickBank or PayDotCom.

[Diver's]

Originally Posted by SageSound

What's being discussed here are new features PayPal is offering via their API (Application Programming Interface) so third-party providers can have more flexibility in using PayPal.

PayPal is simply a payment processor. The only thing they deal with as far as affiliates go is their own affiliate program, and I'm not even sure it's still got any legs.

If you want to deal with affiliate payments, you'll need to use a third-party script of some kind -- unless you're paying 100% commissions across the board.

HTH
-David

----------------------------------------------------------------

Thanks David, i was thinking of using clickbank for my new project (in 5 days). Less hassle maybe. PDC is great, but never upload any product there.

Maybe to much work for paypal to start their own clickbank like affiliate marketplace/service/program.

anyway... thanks.

[Anonymous Affiliate]

I dont know guys... Paying affiliates on the spot can become a can of worms when it comes to deal with refunds and chargebacks. Clickbank has mastered this issue holding a reserve for 3 months out of each account. Besides, the whole sales tax accounting is a nightmare when the product owner, the affiliate and the customer are located in different states. Clickbank deals with all that on their end which is great.

[chickenlittle]

I think that there is still a big issue with refunds.

What if you have a product in a non-IM niche, with a 90 day money guarantee?

There is no way that you could expect affiliates to keep their cash in their paypal account for 90 days just in case there is a refund. And in fact, it makes a mockery of the whole idea of instant payments.

Actually - if Paypal could "hold" the affiliate payment for 90 days, and then pay the affiliates, AND send them any affiliate tax forms - now that would be perfect for me.

It would be similar to clickbank - but without the affiliate recruiting ability (which I don't want anyway because I don't want just anyone to be able to sign up) ... and much cheaper, and less effort for the vendor.

[gpower2]

In theory, this sounds great! I only hope the reality is as promising.

[tschlotter]

I wonder if e-junkie is going to implement the instant affiliate pay feature?

I hope so, I've been paying my affiliates via mass pay every two weeks and they would love being paid instantly I'm sure! Especially since my product is an 'instant commission' e-book.

I think I'll check and see if my old paydotcom account is still open!

[AverageGuy]

well, to my understanding, this is NOT a good news to vendors of intangible products. It will be a nightmare because of fraud.


david

[Sid Hale]

David,

Originally Posted by AverageGuy

well, to my understanding, this is NOT a good news to vendors of intangible products. It will be a nightmare because of fraud.

Sorry - but your understanding is incorrect.

Have you even read the posts here from people who have been offering their affiliates instant commission payments for years?

I've been doing it with 4 products of my own for over 2 years (see my sig) and I promote a number of "instant commission" products that others have developed. These are digital downloads. Others have as well.

The original thrust of this thread is that Paypal has now offered a means to allow others to do the same. Of course, their solution doesn't provide a way for you to track affiliates or their sales, ban them, or build customer lists or any of the other things necessary to run your business. So their new Adaptive Payments technology will have to be integrated into whatever system you might use, and it'll take some time to develop those solutions and thoroughly test them. (of course you could always "roll your own').

Mike Filsaime has stated his intention to implement this feature for PDC. I intend to make this an option for RAP customers, as well.

Others may/may not follow suit, but that's not important because the system developers (RAP), marketplaces (PDC), etc. aren't the real winners here. It's the merchants who use these features, and the affiliates of those merchants who will benefit most.

If anything, the experiences of 1600+ RAP owners (with who knows how many individual sites), all selling their own products, have already validated the concept. Paypal is just implementing payment processing functions that will make it easier for others to capitalize on the potential for their own businesses.

[SageSound]

Originally Posted by Diver's

----------------------------------------------------------------

Thanks David, i was thinking of using clickbank for my new project (in 5 days). Less hassle maybe. PDC is great, but never upload any product there.

Maybe to much work for paypal to start their own clickbank like affiliate marketplace/service/program.

anyway... thanks.

I guess you've got a lot of experience using Clickbank. PDC is pretty straightforward to use, and you can have products for sale on both.

Anyway, I think you're still confused. PayPal and Clickbank are completely different. Clickbank and PDC both use PayPal as well as regular merchant card processors to manage their transactions. They don't do it themselves.

PayPal is like "VISA" -- they provide payment processing. They are not in the business of competing with their customers.

What you're suggesting is like saying your local bank should start selling groceries or auto parts. No, they sell banking services *TO* grocery stores and auto parts stores.

FWIW, PayPal is owned by eBay, which is the world's largest online auction site. eBay doesn't do their own payment processing either, just like Clickbank and PDC. They let their customers choose who to use, but they give preference to the use of PayPal.

PayPal doesn't run the auctions, nor do they even advertise or promote eBay on their site. Not because it's "too much work", it's just not the business they're in. They do PAYMENT PROCESSING. That's it.

Clickbank, PDC, eBay, RAP, aMember, etc. -- they do NOT do payment processing. They USE PayPal.

HTH
-David

[SageSound]

Originally Posted by Anonymous Affiliate

I dont know guys... Paying affiliates on the spot can become a can of worms when it comes to deal with refunds and chargebacks.

Originally Posted by chickenlittle

I think that there is still a big issue with refunds.
. . .
It would be similar to clickbank - but without the affiliate recruiting ability (which I don't want anyway because I don't want just anyone to be able to sign up) ... and much cheaper, and less effort for the vendor.

Originally Posted by gpower2

In theory, this sounds great! I only hope the reality is as promising.

Errrr... why don't you guys grab a copy of RAP and try selling something for yourselves and see exactly what the REAL numbers are, instead of running around spewing off crazy opinions about what happens if the sky is falling? BTW, RAP has a 60-day 100% money-back guarantee. Do you think they're worried?

FWIW, Clickbank's refund rate is about 3x-4x higher than what RAP users have seen. Probably because there are so many folks who buy something and then ask for a refund just to get it for free.

Sure, that can happen with RAP, but I think there's a reason it doesn't, which is probably more psychological than anything. Returning something for a refund at Clickbank is like returning something to the grocery store. Returning something you bought via RAP is like walking up to somebody's front door, knocking on it, and telling the owner that you think his product is crap and you want your money back.

I don't get many refund requests, but I'd say fully half of them start out with the buyer filing a dispute directly with PayPal, rather than contacting me directly. People are generally very uncomfortable asking for refunds, especially if they're being dishonest about it in the first place.

This is probably part of the reason why products sold via direct payment mechanisms have lower refund rates than sites like Clickbank and PDC.

Also, every time I mention about PDC to affiliates, I hear complaints that people weren't paid on-time or even at all. It seems to be the biggest impediment to affiliates wanting to use PDC to sell stuff. If that's true (and Mike sure would be the one to know this), then PayPal's latest announcement will light a fire under PDC's business b/c it will eliminate one of their biggest, if not THE biggest, issues with affiliates.

The nice thing about Clickbank is you get paid regularly, automatically, even if there's a delay in your payments. PDC relies on the vendor to send out payments.

RAP pays affiliates IMMEDIATELY.

If you need to pay your rent or make a car payment or something TOMORROW, which one is going to be the most helpful? A service that pays you in 6-8 weeks? Or one that pays you IMMEDIATELY?

Refunds are a red herring! All the long-time RAP users are saying it's a non-issue, while all of the arm-chair quarterbacks keep whining that "it sounds like a can of worms". Who 'ya gonna believe? What's it costing you to sit on the sidelines and worry?

In today's economy, what do you think will motivate your affiliates more? INSTANT PAYMENTS? Or Delayed Gratification?

BTW, most affiliate sales you make TODAY (mid-November) will pay you MAYBE in time for Christmas.

Affiliate sales you make through RAP TODAY will pay you ... TODAY.

Think about it.

-David