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The toxic side of free – how I lost the love for my side project (part 4)

remysharp.com

31–40 of 185 posts

Re: The toxic side of free – how I lost the love for my side project (part 4)

#31
post #12

Earlier quoted context omitted.

Stupid question: is there a service which you can hand off the evidence-gathering to? Seems like a very good opportunity.

Yes. I've been researching this in recent weeks, and have found several operators that build on top of Stripe and PayPal, in various ways, to handle the VATMOSS burden. Without offering any recommendation for them, here are two I've investigated: * https://www.taxamo.com/ * https://quaderno.io/

Another comment mentions http://www.fastspring.com/vat

Re: The toxic side of free – how I lost the love for my side project (part 4)

#32
post #5

> it's cost me, £21.54 to allow some shithead to use JS Bin as a stolen card testing facility. Not sure if it's standard practice, but in our case we let the users use the "free tier" service first , and we offer the paid plans only once we can validate they have a genuine interest in the product . It works well for us to avoid these cases.

If that works for you I'm glad, but I've had to deal with credit card fraud hitting my service, and it tends to be an arms race. There's simply too much money it for them to be deterred. If you are an attractive target it's difficult to find something which prevents credit card fraud without also hurting your business.

Re: The toxic side of free – how I lost the love for my side project (part 4)

#33
post #4

Regarding his fraud issue, I found that my website was being used in the same way when I added a credit card payment form. I implemented a system that first does an "Auth". If that passes, then I pass details to MaxMind and get back a response with a "riskScore". If the score is too high, I void the auth and decline the transaction. This has saved me a lot of chargeback fees, though it's still not perfect. I prefer P…

risk score means the possibility of a transaction being fraudulent. here's another way you can do this for cards issued in Europe: if the risk score is too high start a 3D secure transaction. if the risk score is acceptable then start a normal transaction. a full 3D transaction will never mean it is not fraud however you will have no liabilities when a chargeback is issued by the card holder. many of your US customers, if not all, will fail to pay via 3D-secure because god knows why tons and tons of US card holders or issuing banks are not enrolled in 3D-secure system.

Re: The toxic side of free – how I lost the love for my side project (part 4)

#34
post #11

Okay, say you're a US citizen building some digi service like JS Bin, and VATMOSS starts fling threats at you, for how long can you go about ignoring them? I mean 3.5k GBP and however many weekdays it took isn't exactly affordable for every small business, and if you don't even have many Euro pro-users, I don't see the cost-benefit justification of giving VATMOSS priority unless they can reach across the Atlantic.

VATMOSS is a nightmare for small businesses. I am lucky that authorities in my country decide that I can avoid it with my project (because it doesn't fit exact definition of electronic service so I can pay VAT in my country as it's a place the service is provided in according one interpretation of the new law) but they have plans to extend it and I may be forced to go through accounting hell to comply with this regulation in the future.

It's one of the most ridiculous regulations there could be. As a small business founder you are not really in position to do the accounting for it properly and most accountants here have very little idea how to prepare all the documents either. You are required to keep 2 pieces of evidence of customer's location (IP, address etc.) which you often just don't have access to in the first place (if you payment gateway provider doesn't make this information available to you).

So not only you need to find someone who knows what to do (already very hard), pay them significantly more than you would for normal accounting (big burden for small business owners and especially people who start), keep accounting information you often don't have access to, then prepare this accounting information as well (which means you spend resources for writing the scripts yourself as most tools accountants use don't track needed info).

Additionally to all of this there is no more VAT free quota for people who just start (usually there is for business who don't qualify for VATMOSS, size of the quota depends on the country).

When I've learnt about it (I started my business in 2015, the regulations started to be law Jan 1th 2015) I was really depressed about the whole thing. I was spending my days reading some contrived law and various interpretations of it instead of doing the actual programming. Nobody had answers for me (I've got different opinions from 2 tax advisors, different one from our tax office and yet different one from national tax information line) and I was just close to giving up altogether (I didn't expect my project getting as much traffic as it did and I wasn't really in position to spend significant resources for accounting when I didn't even know I would make enough to cover it).

It's a hostile piece of regulation which very severely disincentivize you from starting a business or paying your taxes properly. It only shows how out of touch EU bureaucrats are. I guess they think typical business is like Google or Amazon or something.

Re: The toxic side of free – how I lost the love for my side project (part 4)

#35
Why don't you "motivate" frequent users to start paying?

ex. by making the free version (gradually) worse until you see revenue.

ex.

- non pro user pastebins last 5mins, 5 views etc

- non pro users can post 1 pastebin per day (cookies, IP)

- non pro user pastebins are max x characters long.

- you get the idea

- there are clever people on this forum who will come up with good ideas to help you out.

- do everything BUT show ads, PLEASE. Internet's sole purpose is almost all that already.

Re: The toxic side of free – how I lost the love for my side project (part 4)

#36
post #20

Earlier quoted context omitted.

I think the obligation to pay customers' VAT goes back way before VATMOSS. That said, I think you've answered your own question. Unless you're at a size that would be drawing attention, it would be logical to ignore this if you're not in the EU.

> I think the obligation to pay customers' VAT goes back way before VATMOSS. Yep, VOES was put in place in 2003 and that was a simplification, before that businesses were supposed to register themselves with each country's tax office and fill VAT everywhere. For non-EU businesses VATMOSS mostly updates the scheme: register yourself in any member state and use their MOSS portal as a non-EU business, the tax office is…

You only needed to register in different countries once your sells to them are above a quite hefty limit though so when you started you just paid VAT in your country and that was it. (I am talking from EU citizen perspective)

Re: The toxic side of free – how I lost the love for my side project (part 4)

#37
post #4

Regarding his fraud issue, I found that my website was being used in the same way when I added a credit card payment form. I implemented a system that first does an "Auth". If that passes, then I pass details to MaxMind and get back a response with a "riskScore". If the score is too high, I void the auth and decline the transaction. This has saved me a lot of chargeback fees, though it's still not perfect. I prefer P…

risk score means the possibility of a transaction being fraudulent. here's another way you can do this for cards issued in Europe: if the risk score is too high start a 3D secure transaction. if the risk score is acceptable then start a normal transaction. a full 3D transaction will never mean it is not fraud however you will have no liabilities when a chargeback is issued by the card holder. many of your US customer…

As a US customer, I'm hesitant to use 3D Secure because:

1) The implementations by Visa and MasterCard have security weaknesses, terrible usability and look like phishing: http://www.cl.cam.ac.uk/~rja14/Papers/fc10vbvsecurecode.pdf

2) My understanding is that my bank shifts liability to me for 3D Secure transactions. Why would I want extra liability?

Re: The toxic side of free – how I lost the love for my side project (part 4)

#38

This is why if any of my personal projects go anywhere they'll remain free while they are in my hands. They can act as a portfolio ("look what I've done, aren't I clever") for when job hunting but I'll not even try make money directly from them even to cover costs. If they become worth charging for then someone can buy the rights from me and run it. Yeah they'll take the lion's share, but also all that hassle and I c…

This is why Amazon DevPay(?) exists. You ship software, and Amazon directly bills your customers for the AWS usage. you don't have to get into the AWS-reselling business just because you wrote cloud software.

Thanks for mentioning this.

"Amazon DevPay removes the pain of having to create or manage your own order pipeline or billing system, which is traditionally a challenge for online subscription services or applications running on demand."

https://aws.amazon.com/devpay/

Re: The toxic side of free – how I lost the love for my side project (part 4)

#39

Please, please, anyone, if you are getting started in online payment processing, don't do it yourself. Use a service that already handles the VAT and fraud detection issues. Then, when you've proven your product, and got substantial sales, you can write your own. Maybe. The author of the article spent weeks and thousands of euros to implement a payment system. And yet he had only a handful of customers.

Not much choice here (Poland). You can use payment gateway (say PayPal) but no luck with VAT and ridiculous VATMOSS regulations like being required to keep 2 pieces of evidence of customer location (say address and IP) which for example PayPal doesn't give you access to (you only go the address).

Re: The toxic side of free – how I lost the love for my side project (part 4)

#40

Earlier quoted context omitted.

Well, he used Stripe, so he didn't write his own. Personally I wasn't aware that there was such a high fee for a chargeback. Is that because Stripe doesn't handle fraud well? Seems like most of his time was spent dealing with tax issues, which you'd have to do regardless of how money is actually transferred.

Good point. I consider using Stripe a "do-it-yourself" solution, which requires manual coding. As far as handling EU VAT, Stripe offers nothing, and you need to manually implement this. I meant that you should use a service last FastSpring or Avangate initially, which require no coding, and completely take care of VAT.

Do you know if Braintree handles EU VAT in an automatic way? I've read the article below but I'm not totally sure what to make of it:

https://www.taxamo.com/braintree-announce-partnership-taxamo...

I am definitely not interested in hand-coding a solution.

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