In this article we'll take you behind the scenes at the work that goes on to make payment processing possible. It will go over key terms and the responsibility of each entity within our processing system.
Here at Patreon, we have one core goal: to fund the creative class. Getting creators paid is a priority, and we have teams dedicated to making sure the online payment process is successful. Online payments are complicated, so we’ve created this chart and glossary to explain each key player.
Patron = Card Holder
Patrons are the keepers of the cash, the power people with the credit/debit cards. A patron will kick-off the chain of events by typing in credit/debit card info, or syncing a payment account, like PayPal. Without a patron’s information, we can’t kick off the payment cycle.
Patreon = Merchant
Creators create the goods, but Patreon manages the actual exchange, thus making us the merchant.
The Payment Gateway is responsible for two crucial items: The Payment Gateway talks to the Acquiring Bank, picking the right one based on the country in which the patron lives. They make sure to get a response from the Acquiring Bank before letting Patreon know if the transaction was successful or not.
Once the Payment Gateway gets the info it needs from Patreon about a given transaction, it contacts the Acquiring Bank, (Patreon’s bank), which is the bank tasked with requesting funds from the Card Networks.
Check your wallet - these are the Mastercard, Visa, Discover, Amex and Diners Club cards that Patreon accepts.
This is the patron’s bank, the Wells Fargo or Bank of America or other bank that is connected to or funding the patron’s credit/debit card. Think of the Issuing Bank as the ultimate yes/no person, who controls the money.
The terms below are not pictured in the chart above, but are useful to know when thinking about payments on Patreon.
Every single time Patreon charges patrons on a creator’s behalf (either monthly, on the first of the month, or per creation), the money is exchanged through a series of complex systems. This isn’t just the way Patreon processes payments… this is literally how e-commerce works: monies are requested then accessed or denied in seconds.
A chargeback is a dispute, filed by the cardholder with the card company or banking institution. Chargebacks are issued by the card holder for a number of reasons; the card could have been stolen and the card holder did not make the Patreon pledge, or the patron was unhappy with their pledge and used this as a way to get a refund of their money. Patreon will respond to chargebacks on behalf of creators. Defending against a chargeback often involves saying “This person’s account is legit and here’s our proof” or “This person made a purchase on such a date.” Sometimes you win a chargeback. Sometimes not. If creators get a lot of chargebacks we may reach out to find out why, since such things can be predicated on patron satisfaction.
If a patron's card declines we retry the transaction through out the month at optimal times to try to recover the payment. Additionally, we email the patron letting them know the card declined so they can update their card information. If the patron would like to speed up the process, they also have the option of clicking retry from their billing history once they update their payment details.
Vaulting is a secure way to store credit or debit card information for repeat use, so patrons aren’t having to plug their card numbers in month after month. Patreon uses a secure third party service.