

The Internet Needs a Better Way to Handle Money. This Startup Has the Key - denzil_correa
http://www.wired.com/2014/07/the-startup-that-wants-to-change-the-language-of-online-payments/

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rayiner
Econ 101: favorable transactions that would otherwise happen don't in the face
of transaction costs. This fact of life plagues the web, because there are a
lot of potential transactions that are, individually, only worth a few cents
to the user. Advertising is the backbone of the web, I think not because users
like it so much, but because it's a way to monetize clicks a few cents at a
time. There is, for the time being, no practical alternative for these sorts
of micro-transactions.

I think the holy grail of reducing transaction costs and friction for online
payments is allowing better monetization strategies for the web. Imagine going
to a website and having it auto-bill an account for a few cents per page view,
instead of being greeted with a pop-over ad that's impossible to dismiss on a
mobile device without accidentally clicking through. This is the big value of
Stripe and its ilk. Not just reducing the cost of accepting payments (which
has the economic effect of just shifting revenue away from payment processors
to merchants), but enabling valuable transactions that wouldn't have happened
before.

~~~
harryh
This idea is certainly compelling from some perspectives but isn't there a lot
of evidence that most people hate being nickel and dimed (which is literally
what this proposal is) and in basically every instance have preferred
purchasing goods in bundles?

~~~
rayiner
The psychological aspect is definitely a hurdle, and can be viewed as a
transaction cost in itself. I wonder if there's any practical ways to reduce
it.

~~~
harryh
There might be, but I'm not optimistic.

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anderspetersson
So, this article is talking alot about tech and not so much about the
bureaucracy that is involved getting paid online.

I'm building a marketplace, airbnb, model, and have applied to braintree, the
process has taken 10 days and counting, so far they have asked for the
following documents.

\- Copy of my passport,

\- Company registration papers

\- Bank account statement,

\- Buisness plan,

\- Terms of service,

\- Privacy Policy

(Physical address and phone on website, apperently a requirement from
VISA/Mastercard)

How does Stripe solve this problem? I have never needed to provide a business
plan when embedding a YouTube Video.

Note, I'm in a country where Braintree's Marketplace offering (or Stripes, or
Balanced) is not available. So I'm doing the payouts to the service providers
myself.

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ultimatedelman
easy integration is cool, obviously, but 2.9% + .30 is the same price as
paypal. businesses ultimately don't care about how easy it is to integrate but
how much it costs.

~~~
mcherm
> businesses ultimately don't care about how easy it is to integrate but how
> much it costs.

For many large-scale businesses, the ongoing cost of a higher rate will
overwhelm the startup costs of building it and you will be correct.

But that is not the only sort of business in the world. For many tiny
businesses the startup costs exceed their available funds -- they would pay
ANY rate so long as the profit from the new customers it brings exceeds the
cost to existing customers.

For some startup companies, the savings in integration (both of dollars and
more significantly savings of time) is a short-term cost to be minimized even
if it means a larger cost in processing fees to be shouldered next month or
next year. After all, if we don't get a demo out the door there won't BE a
next month or next year.

And 2.9% + 0.30 really isn't all that high. It's high enough to hurt, but not
high enough to drive away customers. For some, this amount really makes a
difference and they can do better, but don't fall into the trap of assuming
that EVERYONE is like that.

