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PayPal PreApproved Payments

Hi, i am using PayPal PreApproved payments for my crowd funding website, where where project backers are only charged if the project is successfully backed (similar to kickstarter)

I am worried that a high rate of payments will fail when the PayPal API tries to collect the funds when a project is successful:

- a backer might not have any funds in their PayPal account
- a backer might close their account once the project is succssful (to intentionally stop payment)
- a backer might remove / cancel their preapproved payment
- etc...

There are a number of ways that the payment could fail which would mean that the project owner would not get the funds.

Can anyone suggest a way of tightening or securing preapproved payments?

Please note, that PayPal will only allow you to use PreApproved payments for a crowdfunding website.

Please also note that project owners need to be able to receive the funds from my site. Sometimes, these funds can be as small as $10 or up to $10,000 so we need to use PayPal to pay them as there is no other automated way of getting the funds to the project owner
Avatar of Ray Paseur
Ray Paseur
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Thanks Ray, unfortunately PayPal will not allow you to process the payment and store it in an escrow... this is strictly against their policies. PayPal only support crowd funding using PreApproved payments. The main reason being that there is usually a high percentage of refunds in crowd funding therefore the backer would get hit with a 3.5% to the site and then another 3.5% refund fee.

The reason i wanted to use PayPal over a bank account is that i need to pay the project owner in an automated way and asking them for their bank details to send them $50 is too much hassle for them.
Yeah, I understand.  It may not be a viable business model.