
A simple solution to credit card fraud, part 3: the startup that never was - lisper
http://blog.rongarret.info/2013/02/a-simple-solution-to-credit-card-fraud_27.html
======
foxylad
I salute you sir. Excellent article, amusingly written - and (pardon the pun)
right on the money!

Money transfer is essentially subtracting from a number on one bank's hard
disk and adding it to another on a second bank's hard disk. OK, it has to be
done transactionally, and you need those numbers to be secure, but really...
_how hard is that?_

I read today that share traders are excited that they can now do trades
between Chicago and NY in 8ms instead of 12ms. So why does it take me days to
make a simple payment? And why does it cost more than a few micro-cents to do
it?

Revolutionising value transfer has the potential to be biggest benefit the
internet gives us - but seems destined to be the last one realised.

I make six figures providing online services for schools, and spend roughly
half of my effort on payments. Partly resolving problems where the payment
processor refuses to accept credit cards (from schools - hardly a high fraud
demographic, and we've never had a customer charge-back), partly handling
paper checks, partly trying to match ACH payments with customers.

Bitcoin can't happen soon enough.

------
wonderyak
> (Some people think the trouble starts when you consider a piece of paper to
> be money in the first place instead of, say, gold, but they are wrong. This
> is another tangent that I may write about some day, but for now suffice it
> to say that very few people actually seem to understand what money is or how
> it works, including many people who work in the banking industry. But I'm
> getting way ahead of myself.)

So sad and so true.

I wish more people could bear down, learn and realize how the money system
works; how the Government controls it and what the banks involvement is.

The work that Stephanie Kelton and crew are doing over at
<http://neweconomicperspectives.org/> is really great if you're interested.

------
rthomas6
I think the author is very intelligent and very bad at compelling narratives.
Yeah, the story's complicated, but it's not that complicated. I've seen much
more complicated stories written much more clearly. I wish they would stop
mentioning all these tangents and asides, and just get to the point of why a
strong cryptographic system can't be implemented for money, who is stopping
it, and exactly how.

~~~
lisper
It's relatively straightforward to _implement_ a strong cryptographic system
(relative to the general complexity of dealing with crypto in general). The
hard part is getting it _deployed_. And the reason I can't just get to the
point and tell you why it's not being deployed is that I don't know. It's a
mystery to me. Part of the reason for telling my story and casting a wide net
is the hope that someone who knows will see it and clue me in.

I'm sorry you don't like my narrative style. I'm trying very hard to stick to
the facts and not over-dramatize. There's a reason I'm an engineer by trade
and not a journalist.

~~~
rthomas6
Oh, I didn't realize that you didn't know the reason. I misunderstood your
topic. My complaint was assuming you _knew_ , and were just stringing the
reader along installment after installment while diving into details before
getting to the meat of the story. Now, knowing that you don't know why all
your meetings with banks were cancelled, and knowing that you ultimately don't
know why banks don't want to play ball, it makes a lot more sense the way
you're telling the story.

And I'm sure your narrative style is much better than if I tried to tell it.

~~~
lisper
Nope, I'm not trying to be cagey, I'm trying to find a way not to don the
tinfoil hat. But thanks for pointing that out, I guess I should be more
explicit about that.

------
pbreit
This story is getting even more bizarre. You pitched a start up idea to a
Wells Fargo branch manager?? That makes no sense at all. The insinuation that
bank higher-ups were actually evaluating your idea and killing it is
presumptuous. Unsupported ideas have very short lifespans. Do you realize that
Dwolla is trying to do similar things but it takes dozens of employees,
millions of dollars and an indirect route to get there (same with PayPal)?

I guess I'll keep reading because the inanity of it all has me hooked but pray
tell part 4 gives some sort of short description of the user experience for
this supposedly simple solution (that sounds anything but simple so far).

~~~
lisper
> You pitched a start up idea to a Wells Fargo branch manager?

Sure, why not? Had to start somewhere.

> The insinuation that bank higher-ups were actually evaluating your idea and
> killing it is presumptuous.

I don't know what happened at Wells, but I do know for a fact that senior
management (and in two cases the CEO) was not only evaluating the idea, but
actually signed off on it later. Just because I started naive doesn't mean I
stayed that way.

> Do you realize that Dwolla is trying to do similar things

Of course. So? Lots of companies are trying to do similar things. None of them
(except Paypal) existed when I started.

> but it takes dozens of employees, millions of dollars and an indirect route
> to get there

Yes, of course I realize this. And your point would be...?

------
wmf
After reading parts 1 and 3, I think posting this in parts is just going to
maximize misunderstandings (whether accidental or deliberate). It's just one
cliffhanger after another. Maybe you should just wait until the whole thing is
written.

~~~
lisper
I appreciate the constructive suggestion, but it's hard enough to write this
in installments because I have a very diverse audience, and I don't really
know who is tuning in. So getting feedback and mid-course corrections in the
form of comments really helps me figure out what to focus on next. I don't
think it would be possible for me to write this all at once.

------
driverdan
I wonder if the author ever tried reconnecting with some of the early banks
they talked to. Stripe works with Wells Fargo. When you open an account with
Stripe they actually open bank and merchant accounts under your company's name
with Wells Fargo. I found this out when WF called me one day about my merchant
account and I had no idea what they were talking about.

It seems that WF is now open to working with startups and opening accounts in
other people's names (without notifying them).

~~~
wmf
Simple and Dwolla are also backed by banks. But I guess the reason why every
bank rejected them is coming in part N.

~~~
lisper
Nope. I don't know why all the banks said no. It's a mystery to me. That's one
reason it's so hard to write about.

~~~
pbreit
No bank is going to move on one unfunded guy's weak story.

~~~
lisper
I was not unfunded, I just wasn't funded by VCs. And I was not one guy.

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mrjaeger
Is FundersClub (<https://thefundersclub.com/>) anything like what you were
trying to build with Founders Forge? I'm not sure how they move their money
around, but the idea of creating a platform for investors to be able to more
easily and intelligently invest in startups seems to be very similar.

~~~
pbreit
Moving money is one of the easiest parts. Money movement is not nearly as
broken as the OP would have you believe.

~~~
lisper
Please enlighten me: what is this easy unbroken way of moving money to which
you allude?

~~~
pbreit
Wires, ACH, credit cards, cash, checks, etc. If there are specific situations
where you feel the options are poor and are actually holding back the
situation, would love to hear them. The only one I can think of that is truly
poorly served is micropayments but I'm not really sure that's much of an
opportunity anyway.

~~~
pbreit
That's really a very rare circumstance, is getting rarer and pretty much
always gets resolved. Wires have gotten much easier to perform (which is
actually kind of scary).

~~~
Terretta
On the contrary, over half the wires we get, and we get a lot as we have
clients all over the world, are held up in some way.

------
ceejayoz
> First, what you have just read is a very abbreviated version of the actual
> plan. In the interests of not turning this story into War And Peace I have
> left out a lot of detail.

You've written five thousand words thus far...

------
felideon
But were you using Lisp to build the system?

~~~
lisper
Of course :-)

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tantalor
FWIW Bitcoin solves the problem of moving money around.

~~~
lisper
Maybe. I think the jury is still out on that. But remember that this effort
started in 2008. Bitcoin didn't exist then. Also remember that my target
launch audience was U.S. companies and their investors. To serve that market I
had to be able to move U.S. dollars around, not just any old currency.

~~~
tantalor
Part of your point seems to be that this problem won't be solved because the
financial institutions don't care. My point is you _can_ solve it right now
with Bitcoin. I realize Bitcoin wasn't around, but it is now.

FWIW, to move $100,000 USD through Bitcoin right now would cost you about 6%,

    
    
        100000 USD * (1 BTC / 33.6 USD) = 2976 BTC
        2976 BTC * (31.8 USD / 1 BTC) = 94636 USD
    

Or simply, (33.6 - 31.8) / 33.6 = 5.3%

But I'm sure you know this already!

Those numbers from <http://mtgoxlive.com/orders>

~~~
lisper
Yes, I know this. It makes no financial sense to pay 6% just to move dollars
(unless you're a drug dealer, but that was not my target market). That's
double what credit cards cost. My target was 0.1%.

