How to Solve a Problem like PayPal

This morning I woke up to the news that Open Source Scotland 2012 has been cancelled. I hadn’t actually bought a ticket, yet, but from what I have read it looks like the organisers have run into problems with PayPal retaining the ticket revenue. This is not the first time this has happened and it’s certainly not unique to conference organisers. Colly and Aral suffered the same fate last year with New Adventures and Update and I know of one or two other projects that have been affected too.

What’s the Problem?

I am writing this from memory but I believe the issue PayPal has is that they immediately think the worst when a large amount of money lands into your account. You would think a simple email exchange pointing them to your web site which shows details of your event and the booking form would be enough to resolve the issue, sadly this doesn’t appear to be the case. It also appears that there is never a rush to deposit the money in your account, even after acknowledging the fact that you are running a conference.

Conferences and Cash Flow

Having worked in a conference organising company I know all too well that events rely on cash flow. You have to pay numerous deposits well in advance of the day and this is usually done with the initial burst of ticket revenue. This might not be an issue for big companies but for smaller more grassroots affairs it’s vital to have access to your revenue, without it your hands are very much tied. I therefore totally understand when organisers have had to pull the plug despite having strong ticket sales.

What’s the Answer?

Contrary to the mildly misleading post title there is a way to still offer PayPal as a payment option but not run into these problems. Whilst working at Carsonified I spent a week researching the numerous third party ticketing options available for event organisers. After weighing up the various systems I recommended the company switched to Amiando.

There were many reasons for this, not least their willingness to get on the phone and help us get the most from the system. However the massive selling point was the fact that whilst they offered the option of PayPal for payment it was their account, not yours, that receives the money. At no point do you enter your own PayPal details. Any issues with retention are resolved by Amiando. As well as PayPal they also offer the option of paying with credit and debit cards as well as American Express.

Your relationship as an organiser is with Amiando. You only ever pay their fees when you sell a ticket and it’s pretty competitive, currently £ 0.79 per attendee + 5.9% of the attendance fee. If you compare this to PayPal which is 3.9% + £0.20 GBP then you are looking at around 2% difference. If you factor that in as the rental fee for your ticketing system it’s not too bad at all.

Eventbrite has a similar model but it is my understanding you use your own PayPal account for payments. They charge a fee for themselves and then factor in the PayPal charges to give you a total cost of around 5.5% plus around 80p per transaction.

Getting your Cash

Amiando issue payouts directly into your bank account at regular intervals (usually monthly but you can ask to change the frequency) and will send an invoice showing you their fees and your revenue. This has the added bonus of reconciling your accounts much easier. They do retain some of your revenue until the event has taken place to cover potential chargebacks but this is normally deposited with in 7-10 working days after the event.

It’s for this reason that we chose to use Amiando for “Insites: The Tour” last year and will continue to use them for our future events. Just to put your mind at rest I am not affiliated with Amiando in any way and do not receive any discounts for using their system.

I hope this helps future event organisers and if you have any questions please leave a comment and I’ll get back to you.

Update

Thanks to Seb and a couple of comments on Twitter it has been pointed out that EventBrite does indeed offer payment processing. However should you wish to use PayPal I believe those funds do end up in your account and could still be frozen. Viewed purely on this point I still recommend Amiando over other solutions.

9 Comments

I tried Amiando but it really didn’t work for me. I found their UI to be over complicated and confusing. Their telephone support hours are 9am-6pm in central european time, so useless if you have a problem in a different timezone (my workshops are all over the world). And if you want to refund a ticket you can’t do it yourself. You have to call Amiando but you don’t get a refund on any of the fees, not even Amiando’s!

I would recommend EventBrite – they also do card processing but have a way better UI (not perfect by any means but way better than Amiando). And if you ask them, EventBrite will also give you most of the funds before the event (I think they hold on to 25% until after the event). If you refund a ticket, they refund all the fees.

The only thing that Amiando has that EventBrite doesn’t is automatic VAT handling. This is really important to me, and if Amiando were as good as EB I would use them for that reason alone. But I had such a horrible experience with them that it’s just not worth it.

Hope this helps!

Seb

Hey Seb – Thanks for the comment. It’s interesting to hear your experiences. I certainly agree that some of the UI could be improved.

My main point here was more to do with the potential PayPal problem as opposed to a direct comparison of the various solutions. If it wasn’t a problem I may well evaluate differently. Having re-read the EventBrite page it looks like any PayPal transactions do go straight into your account which could result in them retaining your revenue. By the looks of it their credit card processing does work in a similar way to Amiando.

I hear you on the refunds, UI and opening hours but speaking personally I would rather put up with those than have my cash flow frozen.

I’ve been using Google Checkout to take payments (although, admittedly, not for conferences). Seems to work just as well as PayPal – people either already have an account or they can pay by Credit Card.

Fees are 3.4% + £0.20 for under £1.5K, then they drop.

@Keir, yep the main thing is avoiding PayPal and both Amiando and EB allow you to do that. :D

@Terence Google Checkout has worked well for me although it’s important to note that you can only accept payments in the currency for your account – so I couldn’t put my US workshops through Checkout. :(

Seb

@Seb – Absolutely. I guess it then comes down to whether you want to actually offer PayPal as a payment option at all. If the answer is no then happy days! I know from speaking to a lot of friends and colleagues that they are really reluctant to not use it as for many people, especially web savvy ones, it’s a one click order process.

Thanks for chiming in, always great to hear other people’s thoughts and opinions.

With my last event in November (http://2011.beyondtellerrand.com) I started using Amiando as a test pilot. I also took a long time to compare Amiando and Eventbrite. For me the support of EB was way to slow. I think this was no matter of their bad support, but more that I am in Europe and they are in the U.S. I also urgently need the VAT handling Amiando is doing and EB just could provide with a workaround that was not very satisfying. I had a personal contact next to the usual support that was very fast and very friendly, calling me back directly after I wrote an email. So for me it did turn out really good and I am using them for btplay in April again.

Sure their interface is far from being perfect, but I collect feedback and give it to them and lots of the stuff I suggested already was fixed or added. And they are really thankful for this. I can’t compare it to the Eventbrite workflow, as I just tested EB with registering and playing around a bit and using them for a free event. So I can’t really compare Amiando to EB. I just say that – after following all the stuff that happened to the people you, Keir, are mentioning in your post, I will do my very best to avoid PayPal.

/marc

My understanding is that the problem is more than just a large amount of money showing up in your account: I believe PayPal has specific policies that relate to tickets for conferences and events, and those policies involve holding back a large amount of the money until the event has finished. They do this because if the event is cancelled the attendees will go to PayPal to get their money back, and PayPal want to have enough of the event’s cash held in reserve to deal with that eventuality.

Think about this in terms of PayPal’s worst-case scenario: someone creates a fake event, sells hundreds of tickets, then runs off to South America with all of the money leaving PayPal to deal with the demands for refunds.

Hey Simon – Thanks for your comment. You have certainly explained the reasoning much better than me!

It does make perfect sense for them to be cautious and it’s right for them to cover their bases. Fraud and chargebacks are a massive issue these days, especially online.

I think the arbitrary, at least it appears arbitrary, nature of the retention is what causes the issue. This and the fact that there appears to be a lack of good communication between PayPal and it’s customers in resolving the matter and ultimately handing over the remaining revenue.

Interestingly I know of a couple of non event, in these cases they were physical goods, based projects that have suffered similarly. I didn’t mention these as I am not sure how public that knowledge is so I am aware that it’s not a unique to the conference world issue.

Fascinating reading Keir – thanks for posting. I went the Amiando route with both of the HDLive conferences I’ve run and have been very pleased with how they operate. I found the setup, whilst not pretty, was effective and I was up to speed quickly.