Twitch Chargebacks - How to Beat Them
In the past decade, one of the biggest stories in entertainment and online media is the rise of streamers: people who broadcast live, streaming video of themselves playing video games or engaging in other watchable activities on platforms like YouTube and Twitch. Streamers can make money through endorsements, ad sales, and affiliate programs, but one of their biggest sources of income is direct donations from their fans and viewers. For many gamers and would-be digital media stars, getting paid to livestream yourself playing games sounds like a dream come true, but whenever digital payments are involved, chargebacks can be the bucket of cold water that brings the dream to an abrupt end. What can Twitch streamers do to protect themselves from the harsh reality of chargebacks?
There’s a lot of competition in the streaming world, and while only a select few approach the heights reached by the Fortnite streamer Ninja, who reportedly received over $20 million to join Microsoft’s Mixer platform, it’s not uncommon for dedicated, professional streamers to pull in a thousands per month.
Make no mistake, they’re working hard to earn that money. Building and audience and keeping them coming back to your channel on a regular basis takes time, dedication, skill as a broadcast performer, and often a considerable investment in the hardware and software that makes streaming possible. Just like any other digital entrepreneur, streamers can suffer significant losses from chargebacks, missing out not only on the tips and donations that are getting clawed back, but racking up costly fees as well.
Why Do Streamers Get Chargebacks?
While many platforms, including Twitch, sell proprietary digital currencies that can be used to tip streamers without any risk of chargebacks, many streamers still rely on donations from PayPal and other widely-used payment platforms. Tips and donations are a well-established and accepted part of streamer culture, so streamers expect that if they’re keeping their audiences entertained, some of them will want to send some money their way—so it makes sense to make things easy for your generous fans by accepting payments from as many platforms as you can.
There are a number of reasons why a viewer might decide to dispute their donation and try to get a chargeback. Often, in the heat of an exciting moment, they might tip more than they can really afford. Many streamers interact with their fans, talking to them on camera or in the stream’s chatroom, which can lead to conflict or drama that can cause a fan to change their mind about donating and try to walk it back. And of course, the internet being the internet, some people troll streamers by making big donations that they fully intend to charge back later.
Maybe you’re wondering what would be a valid reason to request a chargeback over a freely given donation, anyway. Cardholders often claim that the charge was “unauthorized” (also known as the “my kid did it” excuse, also frequently seen in in-app purchase disputes) or invoke the “product or service not received” reason code.
How Can Streamers Win Chargebacks?
Since vanishingly few streamers would go to the trouble of setting up a payment gateway to process credit card transactions directly, it’s likely that most chargebacks will come through via PayPal and similar platforms. It’s a good idea to review how the chargeback process works when PayPal is involved. While disputes kept internal to PayPal can be resolved through communication in the PayPal Resolution Center (with PayPal serving as the final arbiter), cardholders who dispute PayPal transactions with their issuing bank end up with PayPal as the middleman, gathering evidence from the seller and presenting their findings to the issuer for adjudication.
Streamers should fight their chargebacks, but since they don’t typically have the means to submit chargeback representments directly, that means following the procedures set out by PayPal or whichever other payment platform is involved.
It’s important to note that PayPal has a short window of time to respond to chargebacks, just ten days. To fight PayPal chargebacks, you must keep on top of your notifications and respond promptly when chargebacks come to your attention.
Fighting chargebacks (and winning) is all about presenting the right evidence. To beat a chargeback, you have to show that the charge was valid, the cardholder was not misled or defrauded, and that you met your obligations as the receiving party. What kind of evidence is right when the disputed charge is ostensibly a no-strings-attached donation? This is what we recommend submitting:
- The transaction ID and confirmation email associated with the charge. Many streamers use third-party tools that facilitate receiving tips and donations from external payment platforms. Any documentation you receive that confirms the details of the transaction should be part of your evidence packet.
- Screenshots, video clips, or chat logs showing the donation, or discussion about the donation. It’s always a good idea to thank your fans for their financial support—not just because it’s the right thing to do, but because it can prove that the cardholder made the donation intentionally.
- A screenshot of your stream or donation page that includes a disclaimer stating that tips and donations are strictly voluntary, that you do not provide any goods or services in exchange for them, and that they are non-refundable.
While following these practices can’t guarantee you won’t get hit with chargebacks or win every time you fight them, they can provide a good foundation from which to prove to issuers and payment platforms that you aren’t engaged in any shady behavior.
Not so long ago, credit cards were new and different, and we all had to change many things about the way we handle consumer transactions in order to accommodate this innovative technology. While streaming has been around for some time now, it’s still novel enough that some banks may struggle to place streamer donations and their various dispute scenarios in the proper context. It can be frustrating to lose out on a donation unfairly, but keeping good records, following best practices, and submitting compelling evidence to fight disputes are the best things streamers can do to prevent chargebacks.
As streaming becomes more of a mainstream form of entertainment, the financial world’s understanding of it will catch up, and streamers of the future may be able to enjoy better protections and resources to help them earn and keep their revenues.