
Stripe Raises New Funding and Partners with Visa - brianchu
http://www.nytimes.com/2015/07/28/technology/stripe-digital-payments-start-up-raises-new-funding-and-partners-with-visa.html
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thejosh
The nice thing about Stripe is that they have really shaken up the online
payments here in Australia. They are 1.75%+30c per transaction here, and that
caused the others to drop down to that as well (even Braintree which was one
the last IIRC).

eWay is still 2.6%, hopefully that changes too.

So thanks Stripe for your awesome API & team.

~~~
objclxt
In the US Stripe charges 2.9%. That's _66%_ more than in Australia. Do you
think it costs Visa that much extra to process a payment in the US? No, it
clearly does not.

Whilst I'll happily congratulate Stripe for the investment, I don't myself see
it as a good thing. With Stripe having investments from both Visa and AmEx
they have little incentive to challenge the current fee structure. Stripe
processes its payments in the US through a strategic deal with Wells Fargo,
who have a substantial (> $1 billion) investment in Visa, who in turn have an
investment in Stripe. Do any large retailers or merchants have similar
investments in Stripe? I don't believe they do.

If you're a merchant I wouldn't see Visa and American Express investing and
taking equity in Stripe as a good thing. These are companies that have every
possible reason to keep credit card fees as high as possible and prevent
regulation from reducing them (which is exactly why Australia's fees are much
lower - they're regulated).

I like Stripe as a company. I think they do great stuff. But a Stripe that's
received investment from the card networks is a Stripe less likely to make
disruptive moves to break the monopoly card networks have today.

~~~
pc
> _In the US Stripe charges 2.9%. That 's 66% more than in Australia. Do you
> think it costs Visa that much extra to process a payment in the US? No, it
> clearly does not._

The extra interchange in the US doesn't go to Visa but instead to the banks
that issue the cards -- much of which then, in turn, gets passed to consumers
in the form of rewards. So, whether it costs more depends on your definition
of "cost" \-- but Visa itself does indeed incur much higher fees in the US
(since they're paying more to banks). To a large degree, it's just a different
equilibrium.

That aside, I'm one of Stripe's cofounders. We're not beholden to credit
cards: Stripe was the first major payments company to support Bitcoin; we
support Alipay; we support ACH. We funded Stellar. And we have more in the
works.

But we should acknowledge that credit cards are by far the dominant instrument
today. The purpose of this partnership is to help build products that improve
the experience of accepting credit cards on behalf of the businesses that use
Stripe. (And there sure is plenty of improvement possible there!)

~~~
abalone
All due respect but I believe you are leaving out a key piece of information:
that the Durbin Amendment regulated down the cost of _debit_ cards to next to
nothing (not unlike Australia's interchange regulations), yet Stripe still
charges the same as credit cards.

I think it's fair to call Stripe out on this because you position the 2.9% as
a "it's not our fault, it's the payment instrument, we're happy to pass on
savings if you use alternatives like Bitcoin etc." But you are not passing on
the very significant savings of debit cards.

How significant? Whereas credit card cards are in the ballpark of 1.5-2% plus
10 cents, major debit cards are just 0.05% + 21 cents.[1]

That's right.. 0.05%.

So why is Stripe charging 2.9%?

[1] Visa interchange rates: [http://usa.visa.com/download/merchants/Visa-USA-
Interchange-...](http://usa.visa.com/download/merchants/Visa-USA-Interchange-
Reimbursement-Fees-2015-April-18.pdf)

~~~
pc
Only some debit cards are covered by Durbin. (Those issued by US banks with
more than $10 billion in assets.) So, sure, we could break that out... but
quoting "X% for most cards and Y% for Durbin-regulated debit" isn't exactly
straightforward or easy to understand/model. We calculate our fees based on
the blended cost of processing. (Plenty of transactions cost _more_ than
2.9%.)

~~~
abalone
Over 60% of debit transactions are covered by Durbin.[1] For those Stripe is
taking 0.05%, an extraordinarily low fee payment method, and marking it all
the way up to 2.9%.

If the rationale for this is simplicity then why break out Bitcoin or ACH? Why
not just fold them into the blended rate too? Of course it would defeat the
whole point of them.. Just as this defeats the whole point of Durbin fee
regulation.

Durbin has positioned debit to fill the role that Bitcoin has failed to: a low
fee consumer payment method unburdened by reward programs. It's about as cheap
as Bitcoin, but it has near universal adoption already, basic consumer
protections and well oiled rails.

I seriously doubt merchants would find breaking out debit from credit too
complicated especially if the rate was significantly lower. I'd understand
doing a blended _debit_ rate that combines regulated and exempt debit cards,
which I'm guessing would come in well below 2%. Merchants would go bonkers for
that! But blending debit and _credit_ in the post-Durbin landscape makes about
as much sense as blending Bitcoin and credit.

One price for credit, one price for debit, one price for Bitcoin.. That sounds
pretty simple.

So... Is it really simplicity driving this, or is it the fear of the credit
fee crossing 3% if you broke out debit? To be honest I hope it's not that
you're secretly hiding a big profit center in regulated debit markup because
that would not be so transparent.

[1] [http://www.federalreserve.gov/paymentsystems/regii-
average-i...](http://www.federalreserve.gov/paymentsystems/regii-average-
interchange-fee.htm)

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arianvanp
can somebody explain why we have credit cards to me? Where I live it's kinda
uncommon and I can't even get one as a student. And I never saw the need for
one either as we can just pay everything with direct bank transfers. And yes
you can undo bank transfers.

I just don't get the obsession? Why would anyone ever want debt? We have money
to pay for stuff, why not use your money instead?

~~~
MaxScheiber
Credit and debit cards are the easiest way to pay in America, since bank
transfers are not really an option for merchants. It's really uncommon to pay
by check at the point of sale (to the extent where people might respond
negatively), and cash is actually pretty inconvenient in the US due to odd-
even pricing tactics giving everyone pockets full of small coins.

Most people would agree that the most intelligent way to use a credit card is
to treat it as a debit card and never incur a balance. Instead, you'd pay each
month's bill in full. This way, you pay no interest on your debt; in fact, you
are effectively incurring zero debt. Moreover, a lot of credit cards offer
rewards programs in terms of cash back or "points" as a percentage of your
expenditures. With some mixing and matching of cards, you can easily get 2-3%
cash back on your aggregate purchases, or rack up some free airline flights.

I actually find this to be a huge moral gray area; the reason that Visa,
Discover, and MasterCard can afford to pay out handsome rewards is partly
because of the financially illiterate charging more to their credit cards than
they can afford to pay off. [1] I don't have the exact numbers on me, but I
think interest versus merchant fees was about a 67%-33% split in terms of
credit card company revenue. (American Express is an exception because they do
not allow you to carry a balance on a lot of their cards; they will report
your account as delinquent and terminate service.)

Otherwise, as other posters have mentioned, credit cards offer fraud
protection. Cards aimed at people with good credit scores often come with
other nice benefits, such as additional reimbursement if an airline loses your
bag.

[1] There _are_ valid reasons to place a huge charge that you can't afford to
pay off immediately. Emergencies do happen, for instance, and it's really
great to have a line of credit for that situation. But then your credit card
serves the same purpose as a traditional loan.

~~~
morgante
> I actually find this to be a huge moral gray area; the reason that Visa,
> Discover, and MasterCard can afford to pay out handsome rewards is partly
> because of the financially illiterate charging more to their credit cards
> than they can afford to pay off

That's entirely false. The credit card business model (including rewards) does
not depend on debt. Rewards are a fee passed from the merchant to the consumer
via the credit card.

As you pointed out, American Express doesn't depend on this at all. Most of
their best cards aren't even credit cards.

Also, if credit companies love debtors so much that their business depends on
it, why do they court people with good credit so aggressively?

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mahmoudimus
Congratulations to Patrick, John, & the hardworking team @ Stripe! Looking
forward to more stellar growth in the future. An investment by AMEX is
acknowledgement of an interesting company in the card space. However, an
investment by Visa is essentially an industry nod of approval. Seriously can't
wait to see what else they have in store.

~~~
danenania
I'd be happier if they tried to take out the credit card cartel rather than
seeking its approval. They're in as good a position as anyone to make progress
in that direction, but I suppose everyone has their price.

~~~
nchelluri
If I had to attempt to predict the future, I'd say give it time...

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plumeria
If anyone from Stripe is reading this... Please, come to Costa Rica (come to
Central America for that matter). We already have Paypal and 2Checkout. Having
Stripe will help the local tech community develop even more rapidly.

~~~
msellout
Off-topic: I'd like to get in touch with Pythonistas in Costa Rica. Send me an
email? (address in profile)

~~~
plumeria
I've sent you an email.

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nailer
Knowing Visa's business practices and being a Stripe customer this does not
make me comfortable.

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pbreit
Care to elaborate?

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valisystem
Can't find source but I remember reading here the story of a payment business
that competed with VISA and was taking off until VISA started threatening his
client, making them fear that their payment wouldn't be processed at some
point, and they would be subject to fines, if not worse.

I remember reading other stories on the same line, about visa using shady
approaches to frighten people to preserve their monopoly, but a quick search
can't bring any up. Search terms are too generic.

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tommccabe
Really fascinating that Visa is a partnere here when they already own
Cybersource, which is a key player in the enterprise e-commerce payment space.
The $5b valuation is higher than what Visa paid to acquire Cybersource ($2b)
in 2010.

Would be great to see the additional features from Cybersource (tax
calculation, address verification, fraud management) available with the ease
of integration that Stripe provides.

~~~
jusben1369
Don't forget Authorize.Net too.

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vizzah
Stripe must introduce cross-border card 2 card payments asap (available for
many countries). It's a killer feature and as far as I know is not available
by any major world-wide player yet, just on per-country basis.

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lucaspottersky
right. So now we need a new Stripe in order to continue disrupting the market.

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WormyMcSquirmy
I wonder what this means for CyberSource, Visa's already merchant facing
company.

