Xenonauts Paypal dispute halts pre-orders

Indie developer Goldhawk Interactive's first project disrupted by account freeze

Goldhawk Interactive has hit financial problems as Paypal has frozen its account, leading to the indie developer to stop pre-orders of its debut title.

The company appears to have fallen foul of terms of service regarding accepting pre-orders for a product.

"The funds in the account are being held for 180 days to protect them against chargebacks, but we will receive them after that," explained Goldhawk founder Chris England on the company's official blog.

The developer has promised that while the situation is not ideal, Xenonauts will still see release.

"Whether we'll be able to implement all the 'nice-to-have' features on that budget (such as our new UI style) remains to be seen, but we'll be able to complete it to the original spec on the funds we currently have. So, no need to worry about the future of the project."

Goldhawk Interactive is an independent developer based in London, and Xenonauts, a strategy sim, is due for release this year.

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Latest comments (7)

James Prendergast Process Specialist 10 years ago
Is there a viable alternative to Paypal? Everything else seems too small-time or specific and Paypal as a service is just crap.

Edited 1 times. Last edit by James Prendergast on 10th October 2011 11:14am

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Sonat Dennis Ozturk Producer, Logic Artists10 years ago
BMT Micro is known to be a good alternative to Paypal.
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John Donnelly Quality Assurance 10 years ago
But the same problem will exist, how do you protect customer pre-ordering using an online payment system?

As stated the problem is that the PayPal TOS does not permit selling pre-orders and this is why the funds and account are locked for 180 days.

Unless the service is willing to accept a level of risk and monentary loss for pre-orders it wont work unless they take a large fee for each transaction.

PayPal is the defacto online payment service for a reason, it might be crap at times but no one as yet come along and toppled it or forced them to improve the service to keep being the service people use.
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James Prendergast Process Specialist 10 years ago
@John... what risk are they taking with pre-orders? These aren't refundable... and if they were then it would be up to the company which got the money to refund it. It's not like we're talking about a CC chargeback (or a Paypal dispute) on an immediately sold/received item here.
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Andrew Goodchild Studying development, Train2Game10 years ago
@James, if the company folds not having released the game, the customer paid PayPal, so they are responsible for refunding the money. The Games company would be responsible for refunding PayPal, but if they have gone bust they can't do that, or likewise if they scarper.

People may demand a refund from PayPal due to failure to deliver if the game is majorley delayed, even if it is still in development. PayPal have legal responsibilities (probably dependant on individual countries' laws). It is also hard for them to determine if a pre-order system is genuine or fraud until some time after payments have been made.

It is also against PayPal's ToC, if they were to allow this they would take a larger cut to cover underwriting.
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James Prendergast Process Specialist 10 years ago
Is it not possible to have a system where you pay for the possibility of a game - like the recent attempts at crowd funding? Would that not get around the issue?

As far as i know, Gamestop don't refund pre-orders, though you can switch them around to different games.
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Andrew Goodchild Studying development, Train2Game10 years ago
@James. For Gamestop, they are running that themselves, and if a game is cancelled, the will refund or give credit. If they refund they are giving your own money back. If they can get away with only offering store credit for a cancelled product, even better, although I'm pretty sure many countries that PayPal operated would not consider that legal.

For PayPal, they have passed on the money, if the company in question disappears, PayPal will have to find the money to return to you.

As for crowdfunding, it may be a good way to fund an indie project, but I don't think it would be in PayPal's interest to be any part of it. There are organisations set up to help with crowdfunding.
At the end of the day the developers have my sympathy, I can understand it is easy to miss a ToC, but PayPal are not in the wrong for upholding their conditions, especially when those terms are there because they have to adhere to strict banking regulations of many territories.
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