* let people hold money into their Stripe account instead of transferring to a bank immediately
* let people transfer money from their Stripe balance to any other account's Stripe balance for free (PayPal charges a fee for "cross-border" transactions)
* make it possible for marketplaces to pay their workers through Stripe (PayPal and sometimes Payoneer are the only choices now). Workers can then withdraw to their bank accounts from Stripe balance, or use it to pay directly for other stuff on the web
* have a low commission for merchants, if not free, for payments of goods using Stripe balance
Not everything that's bad. A sucky API and UI isn't because of regulations.
If you want paypal, why not use PayPal?! You think Stripe could turn into an multinational bank/processor/transmitter/card network/tokenizer/anti-money laundering quasi governmental entity plus whatever the hell else PayPal is without having the same problems PayPal does?
I've read of stories of people getting burnt by getting significant amounts of money frozen that they had left in their merchant PayPal accounts (without transferring it to a bank) for inane reasons. Not holding on to the money eliminates that worry and builds trust, doesn't it?
* allow true multicurrency operation - a Stripe client in any country should be able to accept funds in any currency Stripe supports.
Case in point, as a Canadian, I can accept only USD or CAD. But I have clients in the UK, and am stuck using Paypal to accept GBP directly.
This is just an impression though, I don't have anything to back it up.
>"On the flip side, Square is more diversified, generating revenue from non-payment products such as its Square Capital lending business and Caviar restaurant-delivery operation."
Isn't Caviar widely known for being a massive money-loser for Square?
One has a part-time CEO tanking Twitter and the other doesn't. This is not a rivalry.
What would you guys say is the biggest hurdle to overcome to get off the ground? Finding a bank to back your transactions? Securing customer card details and connections? Dealing with fraud? Insurance in case of data breach? Or none of the above?
Also, what kind of upfront costs would I need to factor in? I've been looking at local compliance requirements and regulations, and they seem doable (on the order of $1k USD). I plan on working on this alone, at least initially.
You're partially right. The biggest issue medium to long-term would be getting a bank to back you. That doesn't have to be a show stopper from day 1 though (assuming you're willing to assume some personal liability, as you will be in violation of the ToS of any service provider you use).
It all comes down to your risk appetite. Essentially, you could run your own API that would wrap Stripe/Braintree's API and kickstart your business that way. This would require a US entity, but with Stripe's Atlas this is a non-issue.
This is fine if you're processing $10k or even $100k/mo. It gets icky when you try to get past that. As volume grows, there's increasing pressure to make sure that your setup is air-tight, something you can only get by setting up locally (Visa/Mastercard regulations prohibit cross-border processing so it's the only 100% legit way forward).
Herein lies the challenge. Banks in the Middle East (which I presume is where you are targeting) vary greatly in terms of what volume actually deserves their attention. For some that's $10M/mo. For others it might be less. Once you've got $100k, and have a strong upward trend, you can start having these discussions.
In short, you want to start it like you would any other business: by focus on making something people want. The bank issues can be delayed until after you've got a decent customer base. Historically, there's a 95% chance that your company would not survive (startup stats still apply). If you get past that, hit me up and I can provide more specific advice.
Be sure to put your email in your profile, or else there's no way for other users to get in touch with you.
(The email address field is private, whereas your profile section is public.)
I'm curious where you learned all of your financial knowledge. Thanks for sharing.
Disclaimer: I work at Stripe, on Atlas, and I'm writing here because this is professionally interesting to me.
We probably wouldn't be able to support that business, due to it being an "aggregator." (It aggregates the charges of other merchants and holds onto the funds for some period.)
These are strongly discouraged by banking partners, largely for risk reasons. For example, hypothetically suppose an undercapitalized aggregator was hit by $10k in credit losses by a fraudulent merchant. (Merchant signs up; runs $10k in charges; whoops they're all stolen cards; you ask their bank to pull $10k back but that account has been closed and whomever opened it is out in the wind.)
That $10k has to come from somewhere. Historically, what ends up happening distressingly frequently is this causes the aggregator to fail to deliver money to other merchants. Some of them fail. Their customers charge back their purchases. This increases financial strain on the aggregator. Eventually, the aggregator fails; all of their merchants are greatly inconvenienced; some of them fail; thousands upon thousands of customers are adversely affected. One or more interested parties look for the nearest deep pockets and say "Hey, you should have seen this coming. You're the big, sophisticated company here. Make this long, long line of people whole."
This is why the industry largely doesn't offer credit card processing services to aggregators and, when it does, wants them to be huge, well-capitalized, and very sophisticated. The same issue makes it anomalously hard to get processing capabilities for businesses that you'd assume wouldn't cause problems, like e.g. travel agents. (One cruise company folds while holding onto customer funds; dominoes start falling as above; boom there's an $N million credit loss attributable to a company with revenues in the $100k per year range.)
There are some things which look similar if you squint but are distinguishable because the business doesn't end up holding funds they're not already entitled to. For example, Stripe Connect lets a platform split a transaction into the majority for the merchant and a fee for the platform, without the platform needing to physically have custody of the merchant's money at any point. That probably won't work for your use-case, though, since the merchant would have to be in a country we support.
We're working as fast as we can on bringing the rest of the world online. Stripe wants to be everywhere. Atlas is one initiative we're working on to make good on that (and has brought Stripe up to somewhere north of 110 countries with customers in them); we're constantly at work on other approaches, too.
If any HNer ever has a question about this sort of topic, feel free to email me -- my HN username @ stripe.com will work. I'm happy to explain things, find the right person to do so, or see what we can do regarding businesses that are at the margins. We spend a lot of time on me team and elsewhere in the company zealously advocating on behalf of our users to banking partners to get their businesses accepted.
Because of this, the only way to setup a payment processor in Tunisia is to do it the old-fashioned way. I guess my only course of action is to talk with a number of local banks and see if they'd be willing to back a local payment processor.
Things might have changed a little now, but probably not much. Companies with later than C rounds will prove to be poor investments.
Couple plausible options
- they aren't profitable but have huge transaction volume
- international growth
- new product development
I'm not saying that's a deal-breaker–and I do think Braintree does have an advantage in some areas–but I'm just attempting to answer your question.
Braintree/PayPal really needs to hire a serious UX/frontend team to clean up their docs and dashboards (monospaced font srsly?).
#1 reason is lock-in and momentum. Stripe has, bar none, the WORST support of any company in existence. And they don't care to ever change that, having made noise about it for years, but expending precisely zero effort on that front. We would love to move.
But we stay, because we utilize Stripe's card tokenization in order to "store" repeat customers' payment information without having to deal with PCI-DSS compliance processes. If we moved, all existing customers "stored" payment information would, by necessity, go away.
Not necessarily. You should be able transfer the stored card data to another provider. Many (although not all) payment processors seem to allow this.
That said, #stripe on Freenode has been very helpful.
That's why I use Stripe.
One gripe about Stripe is the support emails are really slow, but I can't complain and Paypal is missing as well but I've situations where somebody paid for my software using stolen Paypal account and I had to reverse it.
Braintree first, because it was the only option, and then Stripe because we were eager to get away from Braintree.
In short, Braintree was very painful to implement and run, while Stripe has been both easier to implement and operate.
Even with the sunk-cost of a working Braintree implementation it was an easy choice to switch to Stripe.
That puts Braintree into liability category as Paypal's influence on them increases. Leaves Stripe as safer bet for now if they don't pull stuff like that on customers regularly. If Stripe IPO's, they might turn into villains as well. However, there will be another startup or mid-sized company differentiating on quality of service by then. I'll recommend that one.
Note: If Stripe management is reading, I suggest that they continue to pull less crap than Paypal with better service as a continuing differentiator from this point on. It should always work. Braintree also succeeded that way when competing with payment processors.
I don't get why we have Paypal in Costa Rica, but not Braintree.
Anyone know of similar ones like Paddle.com?
Both Stripe and Braintree are priced at 2.9% + $0.30/transaction. If you're doing any notable amount of volume, you can do much better...closer to 2%.
PaypalPro used to automatically give you lower rates, down to 2.2% + $0.30, at volumes well below what Stripe requires to "contact sales" and get a discount. Last year, they eliminated that, and went to the 2.9% + $0.30.
It seems you have to get your own merchant account, and use something like authorize.net now to get decent pricing.
Here's a screenshot of what it used to be: http://i.imgur.com/QQ7LVot.png
Still useful, though, as it gives a good indicator of how low you might get if you get your own merchant account.
"Processing more than $80,000 per month? Send us an email at firstname.lastname@example.org"
I will never accept PayPal for the rest of my life.
In my case: I've never heard of Braintree before this discussion and I was going to implement Stripe for my SaaS without even looking at the existing competitors.