Aug 30 2016 - 6:38 pm

Twitch donations and PayPal: Everything you need to know about chargebacks

Ambiguous wording in PayPal's recent update to its user agreement in some countries left the Twitch community wondering if the company was finally doing something about chargebacks on donations
Saira Mueller
Dot Esports Managing Editor

Ambiguous wording in PayPal's recent update to its user agreement in some countries left the Twitch community wondering if the company was finally doing something about chargebacks on donations.

Chargebacks have been a big issue on Twitch for quite some time. Basically, a viewer will donate money to a streamer, then request the money back at some point afterwards. They'll do this either because they simply couldn't afford the donation in the first place, or because they’re trolling. If those chargebacks get approved, the broadcaster will incur a fee on their PayPal account.

And of course, if that streamer has already withdrawn the funds, it could put their account in the negative—and perhaps very deep into the negative, if the donation was particularly large. This makes donations on Twitch an often stressful and unreliable source of income.

Unfortunately, if you’re a streamer hoping that chargebacks were suddenly a thing of the past, we've got some bad news: they’re not. PayPal's updates to its user agreements changed absolutely nothing. In fact, PayPal isn’t even the one responsible for chargebacks in the first place.

Here’s why, and what you can do to try and minimize any donation issues on your stream.

PayPal donation buttons

Donation buttons were introduced to PayPal as a way for non-profit organizations to receive donations from people who want to support their cause—companies like the Red Cross and Make-A-Wish. These do not count as regular transactions like selling a product (which has a merchant transaction fee of 2.9 percent and 30 cents in the U.S. and 3.9 percent and a fixed fee internationally), since the person giving the money does not get anything in return.

Donations processed by PayPal do incur a transaction fee, as the company has to pay standard transaction fees itself. You can find information about these fees on PayPal’s website.

The PayPal user agreement updates

PayPal user agreements did not have anything about donations laid out in express terms previously. Now, PayPal specifically states that, in certain countries, donations will not be covered under the buyer or seller protection portions of the agreement, with the changes going into effect later this year.

Note that while the donation wording has only been included in certain countries’ agreements this is just a clarification of existing PayPal policies. That means broadcasters won’t see any substantive change in how chargebacks are dealt with.

“We regularly make updates that do not substantively change our relationship with customers,” a PayPal spokesperson tells Dot Esports. “But instead clarify language and promote a more consistent customer experience around the world."

The updates essentially mean that viewers who donate money cannot chargeback through PayPal itself, because if they file a purchase protection claim and say that they didn’t get what they said they’d bought, PayPal sees it as a donation and it doesn’t qualify. Likewise, the seller protection means that streamers are not covered if a viewer claims the purchase was an unauthorized transaction. Another thing to note is that the term chargebacks refers to claims filed with credit card companies directly, with PayPal using the term Purchase or Buyer Protection claims.

Some of the countries and regions that saw the donation exclusion added to their user agreements includes the European Union, Switzerland, Russia, Japan, and Mexico. The U.S. user agreement has not been amended, as each country is on a different schedule for updates. But, as mentioned above, PayPal’s policy on donations is blanket across the whole company, even if it’s not laid out in express terms in the user agreement for a country.

"When buying with PayPal, customers can be assured they are not responsible for costs should they not receive the item they actually purchased or it was significantly different from what was described,” a PayPal spokesperson tells Dot Esports.

“And when selling with PayPal, merchants who meet the requirements are not liable if a buyer claims the purchase was an unauthorized transaction or they did not receive the item. Since customers are not purchasing something when they make a donation or tip, these transactions are not eligible for purchase protection and refund requests would be denied."

PayPal donations and Twitch

While chargebacks are not covered under the PayPal user agreement, there is another way viewers can get their donations back—by filing through their bank or credit card company directly.

If a viewer uses PayPal to make the donation, then requests a chargeback from their credit card company or bank, PayPal works with the bank or card provider to give information about the transaction, so it can determine whether the claim is legitimate. But at the end of the day, the bank or credit card company authorizes the chargeback themselves, which then pulls the money out of the broadcaster’s PayPal account and incurs a $20 chargeback fee. If the streamer’s PayPal balance does go into the negative, there is no overdraft fee or negative balance fee, they just receive a notification that their account is in the negative.

Sometimes streamers will be notified that a viewer is trying to chargeback a donation, but there is no standard for dialogue, and broadcasters might not be contacted at all if the claim is flat-out denied. If a broadcaster does receive a notification about a chargeback they usually have 10 days to answer the claim. Chargebacks from a bank or credit card company could be approved for a few reasons, like if the card is proven to have been stolen.

In a conversation with Dot Esports, PayPal emphasized that, when streamers add a donation button to their stream, they're no longer using the service the way it's intended. It was made to be used exclusively by non-profits.

It’s also always a good idea to keep track of each donation you receive—third-party apps like Twitch Alerts do a good job of this. Be wary of large donations from viewers that you don’t recognize, and don’t withdraw the funds immediately, just in case.

Viewers can file chargebacks 120 or more days after the donation was sent. While it’s usually resolved within a few weeks, it can sometimes take over 75 days depending on the instance.

PayPal is keeping an eye on how Twitch and donations relate through its service. But it isn't guaranteeing any changes or safeguards to the way it works, since donations are intended to be used by non-profits.

“PayPal is a fan of the Twitch community and is proud to be accepted as a form of payment on Twitch,” a spokesperson for the company tells Dot Esports. “Ultimately, Twitch streamers should always exercise caution when accepting or sending donations to people or organizations they are not familiar with.”

Twitch is aware of the issues with donations on the platform, and recently announced its own microtransaction system, which it calls "Cheering." Viewers can purchase “bits” through Twitch directly, then use them to “cheer” for a broadcaster (if they have the beta enabled), with higher donations giving a bigger animated emote in chat, and a percentage of the amount donated to the streamer directly. The minimum purchase is $1.40, which gets the viewer 100 bits.

The biggest complaint with this system is that it’s not always obvious how much the Cheer or donation is actually worth—while it seems like a huge number and the emote is very noteworthy, when someone cheers using 10,000 bits for example, that equates to $126 if they used the bulk discount. Twitch gives the streamer one cent per every bit used to cheer for them.

Neither system is perfect. But for the time being, they’re the only two options available. So if you’re a streamer, just make sure you know what you’re getting into before encouraging your viewers to donate through one of them.

Update 4:50pm CT, Aug. 30: Twitch provided the following statement about the difference between 'donations' and 'tips.'

"The difference between tips and donations on Twitch are that donations are given to charities, and therefore can be written off on your taxes, whereas tips are typically voluntary monetary offerings for a service or to show appreciation."

Jan 22 2017 - 9:12 pm

Hearthstone's NA vs CN event ends in controversy

The Chinese players were coasting to victory, but their final win provoked minor outrage.
Callum Leslie
Weekend Editor, Dot Esports.
Image via Blizzard Entertainment

China's best Hearthstone players turned back a team of the best North America had to offer—but the event did not end without controversy.

In the final game of the event series, China's "Lvge" made a play that seemed to defy logic. He played Dirty Rat on turn two, risking pulling a hugely advantageous early Tomb Pillager or Gadgetzan Auctioneer for his opponent Keaton "Chakki" Gill.

However, according to the American players the Chinese casters and Lvge's teammates were screaming to play the Rat when he picked the card up, and with no white noise in the player headsets Lvge could likely hear the noise and take the cue.

The play promoted a furious series of tweets from Tempo Storm founder and Team NA player Andrey "Reynad" Yanyuk—though the tweets were later deleted.

Chakki and other players have also commented on the controversy, claiming that they raised the issue of players being able to hear the casters. The other members of each team were also watching the stream of the game, meaning they could see the hands of the opposing player.

There was little that could be done to address the controversy unless the admins immediately halted the game in progress, as the game was tournament point for the Chinese side.

Despite the controversial finish, team China had run away with the tournament to get into that position. Thanks to two wins by "OmegaZero" and "Lovelychook" over the two day event, Lvge was left with only Chakki left to beat.

China had also won the first of the three showpiece events, before Canada's Julien “Cydonia” Perrault had single-handedly won the second for team North America.

Jan 21 2017 - 5:09 pm

UFC champion Demetrious Johnson on video games, investing in esports, and why Infiltration is his favorite player

He's the best MMA fighter in the world, and esports has his attention.
Callum Leslie
Weekend Editor, Dot Esports.
Photo via UFC | Zuffa

Demetrious "Mighty Mouse" Johnson has a nickname worthy of esports. Which is good, because it turns out the number one pound for pound fighter in the world is a fan.

In between defending the UFC flyweight championship, something he has done a near-record nine times, Johnson chills out the way he always has—playing video games. But now he does that while streaming to an audience of over 82,000 fans on Twitch.

Gaming and online broadcasting has become a massive part of Johnson's career. We spoke to the champ about gaming, esports, and how his two passions have aligned to make him one of the most unique and engaging athletes on the planet.

Obviously we will mostly be talking about gaming, but were you happy with how things went for you inside the octagon last year?

Hell yeah. I had an injury to overcome and got two fights in. Two wins, one finish and one pretty decisive war against Tim Elliot, so I'm pretty happy about that.

Your fighting career and gaming passion have intersected before. In the past you were the only combat sports athlete sponsored by Xbox. How did that come about?

It came about because of my gaming connection, and Microsoft were very passionate about getting behind athletes and Seattle, which is where the Xbox was originally created. I'm a huge game player, so the two brand just merged so well. I know people who worked at Microsoft at the time. It wasn't revolutionizing sports, but it was the first time they ever sponsored a fighter, and the first time ever the UFC was going to be streaming live on Facebook. That was pretty much the first livestream for the UFC. They don't do Facebook anymore, now we have UFC Fight Pass. 

Obviously I fit the brand really well but especially with Xbox, I was passionate about video games before Xbox was around. Back when it was Nintendo, Sega Genesis, Dreamcast, I was in love with that stuff. I played a lot while doing sports. So when the UFC was going to merge with that and doing Facebook live streaming, Xbox saw that as an opportunity to get their name out in the sport of mixed martial arts.

What games and teams are you following in the esports world?

The biggest ones that everyone follows, League of Legends, Dota 2, CS:GO. But I really like to watch the fighting game events, like Evo. Razer have an esports team, Red Bull have an esports team, but the one I really like to follow is Infiltration who plays for Razer, he uses Nash on Street Fighter V. I know I watched Northern Gaming in the World of Warcraft tournaments, but that stuff gets too stressful man! You about to kill a guy and next thing you know he gets healed all the way and I'm like "fuck!" It takes forever. I'm a big WoW guy, but I do wonder why I play it sometimes. I love the game but when it comes to streaming, it's not the most entertaining game to watch on the stream unless you're really really into it. But I love WoW. 

I watched Echo Fox compete at the H1Z1 Invitational, I competed against them. So if there's a game I like, I'll see if there's an esports scene and see if there's a player I like. But the one that really sticks out to me is Infiltration.

Have you ever made it to an esports event in person?

I have not. The only event I've ever went to was the H1Z1 Invitational when Echo Fox were playing, but I was in it. 

We'll see which ones are going on, I know TwitchCon has already been announced and I'm probably going to go to that. H1Z1 is probably going to have an Invitational there. I'm sure Echo Fox will be involved there. I know they have the Dota 2 event at the Key Arena in Seattle.

Right now, traditional sports figures are lining up to get involved in esports. Do you see yourself turning esports from a passion into something more?

Yeah, hopefully. I'd love to sit down with them [UFC owners WME-IMG] and see how the business side works of an esports team. I haven't really had a chance yet. One of the Echo Fox managers used to manage [former UFC champion] Rampage Jackson, and he talked to me about potentially looking into it and seeing if I wanted to get involved. But at the same time it's got to make good business sense for me. I don't understand the logistics of it. You buy an esports team, what's your return, you're hoping that your team wins? There's a little bit more that I need to understand.

Now being a commentator? Whatever the game, I'd absolutely love to do that.

Do you think these people from traditional sports are doing the right thing, investing in esports? Is it the next big thing that they need to be a part of?

If the people are passionate about it and follow it absolutely. It depends on what the investment opportunities are and what the payout is. It's a little bit difficult. Guys like Rick Fox, they have other things and they've made millions and millions of dollars. I heard someone say an esports team costs at least $40,000 or something to get started. It all depends on the opportunities. You got to look at all of the logistics of it. It's a cool idea and a badass thing to be apart of, but it's got to be more than just thrown in for me. We'll see what happens.

Is there any game that isn't currently a major esport that you would love to see on the big stage?

Oh man. If it's an esport, it has to be competitive. I would say Dead Space multiplayer. You would have to fight each other, and also have the necromorphs coming at you as well. Almost like a free-for-all. The one I would really love to see make it as an esport is H1Z1, but there's just so many variables and things that don't work out. Everybody doesn't get a fair chance to start out, so I think it will be hard placed right now.