
Stripe: Marketplaces - heidijavi
https://stripe.com/us/marketplaces
======
callmeed
Here's my question on this: is it better to have your marketplace collect all
the payments and then ACH out funds to sellers? OR is it better to have each
seller create their own Stripe account via Stripe connect and have the
payments go directly to their Stripe account?

I ask because I've done both in different projects and I'm still not convinced
which is better. Having all the payments come into your account means you'll
definitely be dealing with more Fraud. Plus the accounting is more of a PITA
in my opinion. But the user-experience is smoother and you can allow for
purchases from multiple sellers (on a site like Etsy).

~~~
pc
I think it depends a lot on your target audience.

\- If your users are "in control" of their own business -- if they handle
refunds and customer service issues themselves, if they'd like to log in to
their own dashboard, etc. -- I think Connect[1] makes more sense. This is
what, say, Squarespace uses.

\- If your sellers are providing a service to another company, and expect that
the company will take care of everything (a la Lyft and Postmates), I think
the transfers API is a better fit.

Does that make any sense?

[1] [https://stripe.com/connect](https://stripe.com/connect)

~~~
pyduan
To add on this, I would advocate you to think more in terms of user experience
(which pc addressed very well) rather than fraud liability when making your
decision.

Of course it depends how big your customers are, how well-educated about fraud
your users are, and your own tolerance for risk, but in my experience
transferring the risk liability onto your customers is a very bad idea if you
can avoid it.

Even if you're not technically liable, your users _will_ blame you and hold
you responsible if they end up losing money to fraud, even more so if their
online stores are hosted on your website (which is probably the case if you're
referring to your product as a marketplace).

Because they are potentially much smaller than you are (if you are offering a
self-service platform, this is the kind of users you'll tend to get), they are
extremely sensitive to risk and they are at high risk of incurring a
catastrophic (to them) loss. If that happens, leaving them to their own device
will be extremely bad PR and will potentially cost you more business than if
you had absorbed the loss. I was talking to a friend who works on the fraud
team at Square (who use Stripe Connect), and I recall they reached this same
conclusion after one of their merchants on SquareSpace was attacked by
fraudsters. We don't use Stripe at Eventbrite but I can guarantee we could
even never suggest passing the fraud losses onto the event organizers without
losing a lot of business.

So don't imagine that by having your users register their own Stripe account
you will be cleared of fraud issues (at least for buyer fraud -- merchant risk
is another issue). Instead, just pick the solution that makes the most sense
in terms of product and ease of accounting.

Also, because as the owner of the marketplace you have much more data than any
individual merchant, you are better equipped to detect and fight fraud than
they are -- if you have the capability and are able to assume the risk I would
highly encourage you to do so, even if it means increasing fees for your users
to cover your costs. As a nice side-effect, you'll even be able to advertise a
"no fraud liability" policy for your users which may sway potential customers
that were hesitant with trusting some online platform to handle their money.

~~~
callmeed
The type of fraud that is endemic to many marketplaces is exactly what can be
prevented by going with the Stripe Connect approach. In a nutshell, what
happens is (a) fraudster creates a fake "store" in your marketplace, (b) they
run purchases through that store with stolen credit cards, (c) they attempt to
have the funds transferred to a bank account. Your own founder even talked
about it [1] and I've had to deal with this quite a bit at
[http://nextproof.com](http://nextproof.com)

Actual merchants in the marketplace are rarely affected other than the user
experience. But when all the chargebacks come back to you, it severely affects
the bottom-line. I also think the user-experience has improved quite a bit
(with Stripe Connect, you can have users provision their own Stripe account
during signup).

I would also argue, given how how "lean" many startups and MVPs are, many
marketplaces are actually smaller and more at risk than the sellers they
serve. Most marketplaces don't have $200M in funding and data scientists like
EventBrite ;)

[1] [http://techcrunch.com/2011/06/16/founder-stories-
eventbrite-...](http://techcrunch.com/2011/06/16/founder-stories-eventbrite-
go-after-incumbents/)

~~~
tim333
How does Stripe Connect prevent the fake store, stolen card numbers scam? I'm
genuinely curious here.

~~~
Kliment
The chargebacks go to the fake store, rather than to the marketplace operator.

~~~
tim333
Ah, thanks.

------
nathcd
I really wish a payment processor other than Amazon could offer a separate
microtransaction rate[0]. For anything under $10, Amazon reduces their regular
rate of 2.9% + $.30 to 5% + $.05.

[0] [https://payments.amazon.com/help/Checkout-by-
Amazon/Creating...](https://payments.amazon.com/help/Checkout-by-
Amazon/Creating-Managing-Your-Account/Amazon-Payments-Fees)

~~~
jayp
PayPal has a lower rate for small transactions too.

~~~
iLoch
Is that still around? I thought they were removing micro transactions.

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ajsharp
Is this new? Anyone know if Stripe supports transactional escrow yet? E.g.
when a credit card charge clears, are those funds available immediately in my
account balance, for payout or withdrawal? Balanced does this and it's one of
the most valuable features IMO.

~~~
MikeAmelung
I've used the Stripe Transfers API, and am considering using it on another
project soon, but I've also been looking at Balanced.

One of the pain points for me was that funds are only available to be
transferred 7-ish days after the charge is cleared, same as when Stripe would
normally transfer it to the bank account of the Stripe account owner. I ended
up having a table of "scheduled" transfers that would be queried each time the
balance.available webhook was run. Any transfers that were scheduled 7 days
prior would then be sent to Stripe. If I messed up, transfers would fail
because there wouldn't be enough to cover them in the Stripe balance.

It would have been much nicer if the balance.available event could tell you
which associated charges had been cleared and made available. Also, Stripe has
no way to pre-fund your account to provide a buffer for possible overages.

Also, you can't turn on the Transfers API until you associate a bank account,
which I don't want to do with the account I use just for development/testing.

~~~
pc
This is good feedback -- thanks.

(The 7 day transfer delay is going away.)

~~~
troyk
For connect as well? -- our users (via connect) have been tugging at us to
replace Stripe with something that transfers sooner

edit: made into a question

~~~
pc
Yep, for Connect as well.

------
nayefc
Stripe was always going to release this. Balanced however, has more advanced
tools to deal with marketplaces (i.e: you need to write less code to power a
marketplace on Balanced than Stripe).

This is not a big deal though, the battle will end up being who can scale
globally faster.

~~~
jackgavigan
> _..the battle will end up being who can scale globally faster._

I think there's more to it than this. The cost of switching from one payments
provider to another is decreasing all the time. Competition appears to have
driven costs (i.e. the fee/commission per payment) down to roughly the same
level for everyone. There's some room for differentiation on the product (not
so much ease of set-up - which is a one-off thing - as the admin UI and
featureset), quality of customer service (I know someone here in the UK who
switched from Paypoint to SagePay for precisely this reason) and the accuracy
of fraud detection (i.e. minimising both chargebacks due to the use of stolen
cards _and_ erroneous rejections of legit payers).

However, I think that there's a strategic competitive advantage to be gained
through operational efficiency (i.e. reducing the cost per transaction to as
close to zero as possible) and generating revenue from sources other than the
fee/commission (for an example of this, see my blog post on how Paypal makes
money on cross-currency payments: [http://jackgavigan.com/2013/03/12/how-
paypal-makes-money-on-...](http://jackgavigan.com/2013/03/12/how-paypal-makes-
money-on-cross-currency-payments/) ).

~~~
nayefc
The uncontrollable part of the cost come from Visa/Mastercard/Amex. Until
these are decreased, fees will not drop significantly.

~~~
jackgavigan
That's actually irrelevant to the question of who will be the winners in
payments processing.

~~~
nayefc
I believe you were pointing out that winner is the one that will have the
lowest fee.

------
larkinrichards
Spent 15 minutes playing with the background on this page: you can push
circles around by moving your mouse nearby, if you push circles apart
connections break, if you push them together they forge new connections.
Rather fun little piece of interactivity.

------
jackgavigan
Interesting move by Stripe, given that WePay (YC S09) decided to focus on the
marketplace market. [http://blog.wepay.com/post/73503019884/wepay-
in-2014](http://blog.wepay.com/post/73503019884/wepay-in-2014)

~~~
billclerico
(bill from wepay here) competition in payments is a good thing for the market
& I believe that Stripe has had these APIs for some time.

I believe that our model (which removes marketplaces from the flow of funds &
shields them from risk) is a better fit for some folks, but not all - there
are tradeoffs. I have a ton of respect for the guys at stripe and would
consider us good friends. (We were actually both in YC S09 when Stripe was
called /dev/payments)

[Edit/addition: Marketplaces are an especially valuable segment for payment
companies because they touch a lot of payment volume relative to their company
size. i.e. a software company selling $100m of revenue is usually a relatively
large & established company, but a marketplace processing $100m of GMV can be
quite small.]

~~~
almost
Hi there, I hadn't seen wepay before and it looks really interesting. Do you
have a page that sets out exactly what risks there are when building a
marketplace with your system? I see that you guys say you protect from fraud
with an anti-fraud system but presumably fraud will happen sometimes and I'm
wondering who gets the bill when it does.

~~~
billclerico
Sure, there are a lot of unique risks involved with building a marketplace. My
cofounder Rich wrote a pretty extensive overview here:
[https://www.wepay.com/api/payments-101](https://www.wepay.com/api/payments-101)

------
Axsuul
Stripe needs to incorporate being able to remove bank accounts from their
recipients. Right now if a recipient wants to change their bank account, all
their past transfers get erased.

~~~
hazelcough
Hi! I work on product at Stripe. We're currently working on better API for
managing recipients.

However, I can't seem to reproduce the issue you're seeing--could you provide
a bit more context? If you change a recipient's bank account, their past
transfers will still appear on their page in your Stripe dashboard and when
listing transfers via the API and filtering by recipient ID.

Edit: Feel free to PM me as well :). I'm michelle@stripe.com.

------
robotfelix
I don't see any new features being launched here, but it's a nice landing page
that sets out the value proposition and use cases for marketplaces more
clearly. Yet again making me wish that the Transfers API was available in
Europe!

~~~
zt
I'm frequently trying to explain to people that Stripe has all the features to
run one's marketplace on but folks somehow think that they should be using
another product merely because of the marketing. Good to have a centralized
marketing experience targeted toward marketplaces, even if the feature set
didn't change. It is very smart -- PC and the whole Stripe team did a great
job here.

------
nedwin
Any timeline on when we can use the transfers API to send to bank accounts
outside the US?

------
ntaso
I love Stripe, I love the continuous improvements, but since Stripe also
accepts different currencies, I'm still waiting for a way to localize all that
standard stuff Stripe comes with, e. g. "Stripe checkout". Can't use it, since
labels are not in German and not all of my users speak English and not all
labels can be customized/translated yet.

~~~
mikeg8
I agree. The rate of innovation is very impressive and I'm sure with the
engineering talent they already have, these improvements are more feasible
than say expanding from country to country. But I would love to see increases
in the rate of adaption of existing features for international users as my
company (and many others) would greatly benefit from Stripe in LatAm for
example.

------
j-rom
Spent a bit of time playing with the background.....a lot of time

------
candides_garden
Have any of you had experience with user Credit accounts - in the fashion of
Fanduel.com. In this system, users use Credit/Debit cards or Paypal to pre-
fill up their accounts. They can then use this money to make purchases/bets on
the website.

Are there any drawbacks to using this system? It seems like a much simpler
model than Stripe if it could be implemented to a marketplace, especially in
cases of fraud. Transactions could be held in escrow until they were
sufficiently completed.

Similarly, wouldn't this help avoid transaction fees? Maybe Fanduel is saying
all account credits are essentially payments and then they allocate the money
to its correct place on the site as credit? So the website is still using
Paypal/Stripe, for all payments.

Forgive my ignorance about this stuff.

~~~
tehwebguy
That could definitely save on transaction fees, but my observation is that
customers want their spending money in their most liquid account possible,
which for many is their bank account.

Even something ubiquitous like PayPal isn't usually available at retail
locations.

------
jeromeparadis
I wonder if I could do the following... Any help would be appreciated.

Here's the scenario: a seller is selling something expensive. Some buyers may
prefer purchasing by credit card (simple) but others may prefer to wire money
to the seller. To guarantee the transaction, we would take an authorization on
a credit card for, let's say 10 days and if the buyer transfers the amount
during that time, we remove the hold on the credit card. If he hasn't
transferred the money after the elapsed time, then we would charge the card.

Would Stripe or Balanced support such a scenario and if so, what would be the
fees? Is there any impact of having a lot of CC holds that don't go through?

~~~
cristinacordova
(I work at Stripe)

You can't currently accept payments with Stripe via wire, but you can accept
payments via ACH-in (currently in beta: email amber@stripe.com for access) as
well as debit/credit card. You could certainly do exactly what you describe
with ACH-in and a separate authorization/capture process via credit/debit
card, however authorizations expire in 7 days, so you may want to keep that in
mind.

I suggest doing a separate authorization and capture via credit card
([https://stripe.com/blog/auth-capture](https://stripe.com/blog/auth-capture))
OR accepting payments via ACH-in, rather than attempting to do both at the
same time which can lead to customer confusion.

Stripe only charges upon a successful transaction
([https://stripe.com/pricing](https://stripe.com/pricing)), so the uncaptured
authorizations will not cost you money.

~~~
jeromeparadis
Thanks!

------
mkhalil
Interesting idea. As a middle man you don't have to handle the money.

One thing though...I hate the website. I had no idea I needed to scroll down.
I know its web 3.0ish but it's stupid.

------
shayonj
We are in the process of launching a service that would utilize a marketplace
feature and currently looking into options available. I am wondering how is
Stripe Marketplace different compared to Balanced marketplace with the escrow
feature. I believe the escrow functionality is pretty much the same with what
Stripe has to offer as "Dashboard?

~~~
pc
Yes; the timing of payouts is entirely up to you.

------
dcc1
Not really impressed, why would you want to put your marketplace at the whims
of Stripe or credit card companies?

I am currently working on a bitcoin marketplace, while it would restrict the
ease of use for users, it would also cut out alot of fraud and chargebacks
crap

I would rather have a large part of a rapidly growing pie than fighting ebay
or amazon on their turf

~~~
robryan
Because depending on your industry the vast majority of people have never used
bitcoin and have no intention of working the whole thing out. Most of everyone
interested in buying online though can use one of a credit card, PayPal or a
bank transfer.

Maybe there are niches where it is feasible to operate in bitcoin at this
time. For almost everyone though this isn't an option.

------
ericd
Any plans to enable ACH payments? My industry deals with very large sized
payments (>$1000), and people currently use paper checks - $30+ is too high
for the convenience. Having stripe offer ACH would enable some fantastic
stuff.

~~~
chrisduesing
It appears they use ACH for payments, but not debits (credit card only it
appears). We run a marketplace with 5-6 figure transactions and use Balanced
Payments. Their documentation is fairly terrible, but they cap ACH fees at $5,
which is key, because we are passing the money through and would go out of
business if we had to give 3% or whatever to a 3rd party.

~~~
ericd
Oh that's nice. $5 still might be a barrier for the use case I have in mind,
though. I wonder if there's any higher level of identity verification that one
could do to reduce it further.

~~~
steveklabnik
Hey ericd! I work at Balanced.

The price of ACH debits is 1% + 30¢, _capped_ at $5. So a $10 debit would cost
you 40¢. I know you've said you're doing high-dollar transactions, just wanted
to make sure that it was super clear, as we try to be with all of our pricing.

[https://www.balancedpayments.com/pricing](https://www.balancedpayments.com/pricing)

~~~
ericd
Hey Steve, thanks for the clarification. I understood, but it's probably
useful for others. My transactions would all be maxing out that cap, just not
sure if users will be willing to replace their paper checks if they have to
pay $5 more.

~~~
steveklabnik
Totally. Our experience around checks has been interesting: basically, there
are some customers who absolutely do not want anything but a check. They've
been using checks their entire life, and they don't want to change. Fair
enough.

Some other people just simply don't understand how _quickly_ they can get
money via ACH. It's a matter of venturing into the unknown vs. what's tried
and true. So when we say "You'll get your money today, in your bank account,
if you use Wells Fargo, and tomorrow otherwise," they say "really?" And decide
ACH is good enough for the cost. Then again, that's on the payout side rather
than the pay-in side, though I guess if your website accepted payment via
check, it'd be much faster there, too.

There are also all kinds of other complications in dealing with paper checks
that may make it worth the $5. Here's the issue where we talk about Balanced
and paper checks, and this comment in particular is very insightful:
[https://github.com/balanced/balanced-
api/issues/69#issuecomm...](https://github.com/balanced/balanced-
api/issues/69#issuecomment-15808089) Checks are also not reversible, which we
feel is a significant drawback.

Anyway, no matter what you do, feel free to ping me if you have any questions
payments related: I've really enjoyed learning this domain, there's so many
details, and they're all so important...

------
smallegan
Is a way to ACH money from my bank using Stripe so that I can pay people via
ACH? I am looking for a simple solution for outbound ACH payments via an API.
If Stripe doesn't have this does anyone else?

~~~
mtamizi
(I work at Balanced)

Balanced does: [https://www.balancedpayments.com/ach-
debits](https://www.balancedpayments.com/ach-debits)

------
rocco
I'm building a marketplace just now... this could be very useful but 2.9% fee
is too high(I take 4%), anyone know fee if process more of $80000/month?

~~~
pc
We do custom pricing at scale; the fees depend on the breakdown of card types
used with your service (and hence the underlying costs). Want to drop us an
email at sales@stripe.com?

------
hw
Pretty sweet landing page. I think having lower rates for microtransactions
would be nice, as many have pointed out.

------
coreymgilmore
Basically, all this does it make it so each "seller" doesn't have to create a
whole Stripe setup. It introduces a middleman who collects a fee. Useful for
some applications, I guess so.

I can see this mostly used on smaller-scale projects or businesses. Otherwise
it just makes too much sense to set up your own Stripe, especially considering
how easy it is to set up Checkout.

------
massarog
Does stripe ever plan to release more advanced/streamlined analytics?

~~~
pc
They'll get better, but there are now some cool integrations built on top of
Stripe, like baremetrics.io and linelytics.com.

We list more at
[https://stripe.com/docs/integrations](https://stripe.com/docs/integrations).

------
nfoz
the background of this page is moving around aaaah

------
capex
Is this available in Australia?

~~~
pc
Not yet, I'm afraid. We're working on launching it across Europe, Canada, and
Australia. (You can use Connect in those countries, though.)

------
keeptrying
No Escrow?

~~~
cristinacordova
When you process payments with Stripe, they roll into a balance, which the
marketplace can use to make transfers from.

------
notastartup
What is the value proposition you can build on top of this? create
marketplaces but for what? is it common to use a business model to skim
percentage for each transaction?

~~~
avdempsey
Yes it is a common business model, and great work if you can get it.

To be successful at it you need to be more than just a middle man; you provide
value by solving an impedance mismatch between sets of buyers and sellers.

For example: eBay provides a reputation system, a search engine, and a
payments processor (PayPal). Those are all arguably difficult things for
individual buyers and sellers to provide. As a result eBay attracts a large
audience of both, making the marketplace for goods more efficient, and
extracts a small cut of _lots_ of transactions.

Stripe is providing a way to make the payment provider part of the marketplace
equation more easily available to developers. In theory you can focus more on
the other hard parts of making a successful market.

------
ajsharp
Anxiously awaiting Aaron Greenspan's inevitable troll-sesh on this thread :D

