Advice needed: goods or services?

[catwithpen.livejournal.com]

I've been told that digital art is a service, and should be charged as a service if asking for payment with paypal.

Today I saw this: http://www.furaffinity.net/journal/4320715/

It says that 1. Paypal considers digital art to be "digital goods" NOT a service, and 2. you need to charge for it as goods, and specify that it's digital goods. ETA: They claim that by specifying *digital* goods, it clears up the whole needing to mail something issue.

So which is it? Goods or services?

I tried to find info on paypal, but kept going around in circles and couldn't find anything useful.

I'm wondering if it's a matter of custom work versus ready-made items. So if someone buys an existing ebook, they are buying digital goods, but if they commission you to write them a custom story, then they are paying for the service?

Comments

[timelapsedecay.livejournal.com]

I thought it was possible to have your paypal investigated for selling art as "goods" and not shipping it out to the buyer

[0acorn0.livejournal.com]

This, I had a friend have her account locked down because people kept sending as goods for digital work.

[oceandezignz.livejournal.com]

Only way you're going to find out from Paypal is if you got ahold of a representative LIVE.

But I stand by this: If it is not going to a physical address it is a Service, because I do not need a physical address.

If it is going to a physical address it is a Goods, because I need the physical address.

The advice on sending invoices rather than telling the customer to send it to you is sound. I can agree with that, and I can also see where they're going with the idea of a commission being a digital goods, but we are all terribly accustomed to Paypal being less than linear with their decisions, so the choice is really up to the artist.

If you want all your commissions, regardless of choice of media to be considered Goods, this is fine! Mail them all out! Be it a print or a CD with the print resolution burned onto it. A somewhat stable safety net in case the commissioner attempts to chargeback on you after the transaction's done with.

[sashimineko.livejournal.com]

I've always done commissions as services since the only other option is "goods" and that gives you the person's address and options for shipping when you're doing something that isn't going to be shipped. And I've never had any problems. I recently switched to just doing invoices so I could fill out all the information myself, so the customer doesn't have to. I'm kinda curious what PP really thinks though.

[teekchan.livejournal.com]

The way I see it (and I'm probably wrong) is...

Digital works, aka an e-book, folio, hi-res images or stocks = digital good.

Custom artowrk (commissions) stories, website graphics or layouts = a service, as you are paying for the person to make said item.

[teekchan.livejournal.com]

Searching around on Paypal, I did find this. Which I'm sure we're all aware of.

"Digital Goods – PayPal prohibits all account holders from buying or selling sexually oriented digital goods, including downloadable pictures or videos, subscriptions to websites, or other content delivered through a digital medium. "

[cyiakanami.livejournal.com]

I'm always in the habit of telling my customers to send payment as a service since I'm actually not shipping anything to their house. This way I'm not left with a ton of (please confirm if shipped or tracking number) boxes near the payment transactions and paypal starts getting fishy on why I have so many or all of them have no tracking number.

Edited for typos

[scarletwolfsong.livejournal.com]

As a frequent commissioner, I've actually never had an artist specify what to send payment as. I've always chosen "service," however, since I do know that selecting "goods" makes it seem like something needs to be mailed. If I know I'm getting the original mailed, I'll select that instead.

[shukivengeance.livejournal.com]

This is how I do it as well.

[deejthistle.livejournal.com]

This is also how I do it, and I've never had any problems.

I've just heard way too many horror stories of selecting "Goods" in a transaction where there's nothing to be physically mailed.

[marus-puppy.livejournal.com]

The issue with selecting "goods" is that it implies that something needs to be delivered. Apparently Paypal has, in the past, sided with commissioners who've claimed to have never gotten the work they paid for despite the artist emailing them the piece. Whether this was because the person selected regular goods instead of digital... I'd still personally not risk it and select a digital service.

[aggro-badger.livejournal.com]

I don't see any option on paypal to specify "digital" goods . Only just goods or services.
Services much more accurately describes and protects digital commission work.

Kind of wish paypal would shut the hell up and not pry into things if there isn't a complaint because I can't honestly see what it matters how something is tagged as long as the fees are paid.

[timelapsedecay.livejournal.com]

Ugh THIS
The art we make isn't made to represent them or something, I don't understand why they care as long as both parties are happy with the transaction and they get their fees

[greenreaper.livejournal.com]

As I see it, you have it right; commissioners are primarily paying you for the service of creating the artwork, not for giving them a copy. That's why it's called a commission.

[thaily.livejournal.com]

Whatever, I'm gonna keep using "services" until they make up their damn mind; I consider making custom artwork a service, rather than selling a finished, tangible product.
If they decide it needs to be labeled a product and the buyer needs to receive a tangible product, I guess I'll start printing postcard-sized prints and mailing them out, but I'd have to charge extra for the additional expense. I'd rather not do that to my customers :/

[excessdenied0.livejournal.com]

Okay, I'm glad this is on A_B because I just spoke to someone at the Small Business Centre in downtown Kitchener, ON, Canada.(Where I live.)

I was told that it is considered a good, because whether the image is being uploaded to a website, sent by e-mail, or physically printed and sent by mail, it is a thing which is being sent to a client, and the artist is the source that it is originating from. As far as taxes are concerned, commissions should be taxed(assuming you and the client both meet the requirements for charging taxes) as though you are delivering a good.
So the artwork itself is a good.
I would suspect that the time spent creating the artwork to specifications would still be considered a service, but that's an assumption. I was told not to treat it that way when determining tax rates should my sales exceed $30 000 in a year(my local requirement for charging tax).

The problem with PayPal is that they seem to require that something be physically delivered, and Digital Goods simply do not function that way. This is an issue with PayPal more so than with the business or client, and it's created a lot of confusion.
I know there's a way to mark transactions as "delivered", so perhaps the best way to go about it(at least for registered businesses that need to keep records) is to still charge it as a good, state that it is a "Digital Good" in the description somewhere, and mark it as Sent once it has been sent out to the client.

In addition, keep in mind that even personal (non-business) PayPal accounts can send invoices or request money, and this gives the artist/writer/business excellent control over the amount, currency type, whether it is a good or service, and pretty much everything else related to the transaction. It also allows you to easily and painlessly send a "Bill Reminder" with a quick button click if the client is late or reluctant to pay.

I hope that helps! I don't know how "true" everything is, but that's the information I got when I asked the local small business authorities how to solve this problem, and they are very professional and generally quite reliable. c:

[neolucky.livejournal.com]

Oh wow! I am surprised by their answer but...it makes fantastic sense. Man what a confusing issue though, because Paypal can easily use this as a loophole to allow people to get refunds long after the goods are finished.

Feels like Paypal in general just isn't a safe service to use at all! Yipes.

[bobghengiskhan.livejournal.com]

The problem with Paypal saying that it should be goods is that there was a somewhat recent and rather widespread chargeback scammer on FA, and the reason the chargebacks were being upheld when people tried to prove the transactions was "No physical product was sent." Of course, my thought on that is "Surprise! A catch-22 from paypal that props up scammers! What a shock!"

[stormrunner1981.livejournal.com]

Always send and invoice for one. This keeps people from scamming you. Put down your TOS so the buyer has to agree with it etc.

AND Commissions are a service as stated above.

[teekchan.livejournal.com]

How does it keep people from scamming you? People can still do chargebacks with them. It's the exact same.

[stormrunner1981.livejournal.com]

Not really. The invoice will have exactly what you are selling AND you can say it is not shippable. As I said the buyer has to agree to the invoice - so if they try to charge back you can show paypal the invoice.

It is an official paypal invoice anyway that they can see.

Only Credit Card charge backs may apply. But people that do that...well they can do it anytime unfortunately. But it is not pretty if they do and are caught.

[zoichi20.livejournal.com]

I usually send the payment as "Goods" unless the artist specifies otherwise. After I choose that I think in the next page there's an option, something like "Shipping not needed", that you can check so the shipping information is not sent, although I've forgotten to check it a couple of times. Does everyone else get this option? I never got the "Send money as a gift" option, so I wonder if that other option also depends on your location.

Also, I didn't know about invoicing, that sounds like a better idea.

[crocdragon89.livejournal.com]

This is indeed all confusing. I've been told that marking the payment as goods is bad and that services was good, but recently I was told that marking it as services is actually bad and that goods is the better choice.

Source: http://www.furaffinity.net/journal/4384610/

Who do I believe? Like anyone else, I really don't wish for my account to be frozen or for my funds to be held for any amount of time for selecting the wrong thing.

I also have another question, is there a difference between an invoice and requesting money? Lately I've been using the request money feature for getting payment from clients, but most say they use invoices. Does it matter which one I use?