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Stripe has raised $150M more at a $9B valuation (recode.net)
200 points by eloycoto on Nov 25, 2016 | hide | past | web | favorite | 94 comments

Stripe, please, please, invest in a better PayPal alternative. That is:

* 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

If they hold money in their Stripe account, it would transform Stripe into a money transmitter. The regulations involved are completely different and immense and would change Stripe into a different company. Also, the regulations are different for every state they're in, with different requirements on the board of directors (like NY state). A lot of the things they do as a processor right now would be impossible if they turned into a money transmitter. They would turn into Paypal not because they want to, but because the regulators would force them. Including everything that's bad about Paypal.

> Including everything that's bad about Paypal

Not everything that's bad. A sucky API and UI isn't because of regulations.

Didn't realize it. Thanks for the insight.

You're the guy who thinks the Porsche could be improved by adding a flatbed, another row of seats, and a lift kit with mudding tires.

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?

Why is transferring to a bank immediately beneficial?

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?

While you're at it, let me add one to your list

* 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.

(I work at Stripe.) We're working on it! What's your email? I'll let you know once this is live. (Alternatively, feel free to shoot me an email: lachy@stripe.com)

I thought you could already do this? I use Stripe in the UK, and can accept multiple currencies. I can also set up multiple bank accounts for deposits in each of those currencies (although I do not at the moment). I suppose this varies by country?

The Collison's will probably use this money for growth & new products. Growth in the form of country expansion and new products which are probably along the lines of something like "Radar" and less like a full scale PayPal alternative. Upending PayPal is much harder than it looks, despite their long term threat to Stripe's business.

This sounds like Square Cash?

Which didn't work well for me, so it would be nice to see Stripe get into that space. When I linked my Square Cash account to a Chase debit card about a year ago, one or two friends were able to pay me but the next ones only saw weird errors on their end and when I contacted support, it took them forever to get back to me and eventually they emailed to say my account was being closed due to suspicious activity. No answers, no help, nada. Who would trust their financial transactions to a service like that? So yeah, go get 'em Stripe!

I'm assuming by "cross-border" that you mean across currencies. You really expect a company to do foreign exchange for free?

Foreign exchange can easily be "done for free" by properly setting the exchange rate. All Stripe has to do is publish an exchange rate that is a 0.N% deviation from the current market rate and they'll cover their costs, have a profit, and provide a "free" service. This would likely be significantly cheaper than international wires.

Nope - it is a fee for money that travels between PayPal users in different countries. It's about 1% for Canadian accounts, depending on the payment's source or destination [1].

[1] https://www.paypal.com/ca/webapps/mpp/merchant-fees

I'd like to see Stripe go public instead of raising additional VC capital. They could really spark a series of tech IPOs strengthening tech stocks. I don't have any insider knowledge (besides my research when working on my failed startup Charge Control[1]), but I would be shocked if Stripe is not profitable.

[1] https://justink.svbtle.com/stripe-put-my-startup-out-of-busi...

I don't have any insider knowledge either, but I have this impression that you lose operational efficiency when you go public. For all the heat that VCs get for pressuring their portfolio companies to grow 10x, it seems like answering to the public market is even more wasteful.

This is just an impression though, I don't have anything to back it up.

So what's the end game though? Investors want their return at some point.

The end game is that you have a product market fit figured out and then you go public. Pretty much the opposite of what Twitter did.

Fun to see the rivalry between Stripe and Square play out. This line though has me a little puzzled, however:

>"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?


> Fun to see the rivalry between Stripe and Square play out.

One has a part-time CEO tanking Twitter and the other doesn't. This is not a rivalry.

Is there that much rivalry? AFAIK Square is pretty solidly 'brick and mortar' while Stripe is APIs.

Yes. And if you ever wondered whether or not the right CEO can make or break a company, this is a pretty awesome test case for you.

I think so, iirc Caviar is losing money as they compete with the dozen other food delivery services. The payment processing industry itself is currently very overcrowded too, with a million ISOs like Stripe, Square, Braintree, etc.

OT but Stripe has some of the most beautiful front-end design I've seen on a major financial product. All their pages are just so beautiful, yet functional

I would like to start a developer-first payment processor in my country, where we do not have access to PayPal or Stripe.

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.

First off, congrats on taking the initiative. It's one thing to complain about how much a situation sucks, and another entirely to take it upon yourself to actually do something about it.

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.

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.

I actually requested him to comment on Twitter (https://twitter.com/yazinsai). He founded White Payments, a Stripe-inspired payment processor in the Middle East. It was acquired by Payfort last year [1].

[1]: https://www.wamda.com/2015/06/payfort-acquires-white-payment...

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.

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.

I'm curious: FastSpring supports sellers from all over the world as their customers, despite having no local presence. It's not difficult. Why can't Stripe? I was waiting for years to be allowed to use it, until MOSS happened in EU and I no longer care - FastSpring's higher fee is well worth the VAT offloading they do for me (and Stripe wouldn't because of the different setup).

Thanks @patio11 -- curious to know if Stripe has ever approved an aggregator outside the regions where Connect exists? Seems to me this limitation is set upstream from Stripe

The issue is that my country, Tunisia, doesn't allow local banks to make foreign purchases. In other words, if you have a Tunisian credit card, you are not able to buy anything online. The primary cause of this is that the currency is strictly controlled, but I believe that the government is trying to work on relaxing these restrictions over time. So that removes the possibility of using Stripe/Braintree/etc. as an intermediary for processing payments.

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.

Shouldn't you have "bank-status" for this?

Not necessarily, no. From what I understand, you would typically use a bank to get onto the payment network. Of course, this means that both the bank and Visa/MC get a cut of each transaction.

I hope the employees got to sell in this round.

Stripe is in the same bucket as Airbnb, Uber et al. Transfers, even if "permitted", are blocked. Because what–are engineers going too sue? /s

That's sad. Back in my day, the last round was always C. After that you either went public or folded up. The track record of companies that raised a D was so bad that everyone feared a D out of stigma.

Things might have changed a little now, but probably not much. Companies with later than C rounds will prove to be poor investments.


I have trouble understanding this valuation considering that it just doesn't seem like a terribly difficult market to jump into. They aren't first to the table. Is there something that's protecting their market position/ensuring that it will get better?

Whether the market is easy to jump into doesn't matter. Ecommerce is easy to jump into, but you don't see anyone threatening Amazon's position, right? It's all about your ability to execute competitively. Also, payments in particular is a regulation-heavy industry and PCI compliance is a headache all on its own.

Anyone guess what they will spend the cash on?

Couple plausible options

- they aren't profitable but have huge transaction volume - international growth - new product development


Paddle has CC, Paypal, and available in my country. Win Win Win.

Does Paddle have a Ruby gem for Rails?

Perhaps now they will build an Android app?

I don't mean to hate but why would anyone chose Stripe over Braintree? It seems the same to me + Paypal which is HUGE.

I've used both extensively and in our mobile apps, we've switched back and forth. Stripe is noticeably easier to implement on mobile (including Apple Pay). Maybe not an order of magnitude easier but close. Part of the reason is that Stripe's documentation is much better.

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?).

I think Braintree's document are really nice looking. I really like the look of monospace font at larger font sizes. There is also a ton of designers that use monospace font for more developer related things.

In the spectrum of evaluating the quality of documention, I never would have thought that fontface would be the first mention.

Throwaway for obvious reasons. We do approx $5MM of annual business through Stripe.

#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.

> 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.


I've moved a few businesses off of Stripe and never had any problem. They do it with PGP keys and go directly to the new provider so I never touch any info. Worked great.

You moved them from Stripe to where and why? I'm about to launch a product in a few months and trying to decide which company to go with. So far Stripe seems to be most favorable for the development team. But maybe there are some business things that make Stripe less desirable. Thanks for any insight.

Oh wow, thank you so much for this.

Fascinating. I found a bug in Stripe's python client a while back. They acknowledged and fixed it in less than a week. From a technical perspective Stripe 'just works' in a way that all SaaS vendors could learn from.

Support has been a mixed bag in my experience. 95% of the time they can quickly resolve problems. The other 5% are 20+ email threads where support is accurate but not helpful, and it takes over two weeks to reach a resolution.

That said, #stripe on Freenode has been very helpful.

You’re right. Flexibility on your payment infra is key here and no merchant should be that dependent on a payment provider. I'm working on a possible solution at ProcessOut with a platform that allows merchants to easily connect any payment provider and optimize their payment flow. Would definitely be happy to have your feedback on the solution. Email is my in profile.

I have personally found stripe's support to be very responsive. Have only asked a few questions about limits and APIs, so maybe my qs were easy, but haven't had any issues with the support they've provided, and we dont do anywhere near the volume you cite.

I know you are replying to the Stripe vs BrainTree question but a question of my own for clarity/certainty. If you were to move your business where would you go? To BrainTree or some other provider and why?

Not sure about in USA. But in Canada to get a Braintree account is a giant process that takes several weeks and required submitting a ton of stuff, and you need too meet their minimum transaction volume in order to qualify.

That's why I use Stripe.

Yeah, I'm confused as to why Braintree would ignore us. That's why I'm using 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.

I've implemented both in a typical SaaS app.

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.

I was a big fan of Braintree. It got acquired by Paypal. They cause their users pain quite often since they're a dominant company that doesn't have to care:


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.

Stripe in the UK is 1.4% + 20p which is less than half price. So I was surprised and intrigued to read these comments. Is this an intro offer I wonder?

(I work at Stripe.) No, those rates are not an intro offer. Interchange, the largest cost in processing credit card transactions, is much cheaper in the U.K. than it is in the U.S., thus we can price lower.

Because Stripe is not available in my country I am forced to use Braintree. I am waiting Stripe to come in while building my app at the moment.

Well, at least you have Braintree in your country.

I don't get why we have Paypal in Costa Rica, but not Braintree.

you can use Paddle.com

Never heard of them before so thanks for the mention.

Anyone know of similar ones like Paddle.com?

When I started using Stripe the thing for me was ease of use, it was quick and painless to add to an app, the APIs made sense and were incredibly well documented. They also had a reputation for great customer service (though I've heard this has waned as they grew). I honestly didn't consider Braintree at the time but it was clear from the moment I started researching Stripe that they understood the pain points of payments and were making a product to alleviate them.

This is interesting. I've been fed up with Braintree because you can only reach their technical support on the phone during American business hours, and if you want after-hours help you have to send an email

I thought the competitor was Adyen.

When I had to make the choice it was simple - with Braintree you needed your own card acquiring agreement (with the bank), with Stripe you didn't. I don't know if this still applies though.

What problems does Braintree solve that Stripe doesn't?

They seem to be very similar to me.

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.

Braintree allows you to bring your own merchant account and then its just a per transaction fee. https://www.braintreepayments.com/faq#pricing

You seem to have a strong user experience when it comes to payment. I am currently working in this space and it would be great to share some insights. Happy to discuss if you want, email is my in profile.

I don't seem to understand what autorize.net does compared to Stripe. I mean, both seem to charge the 2.9% fee.

Authorize.net (unlike Stripe or Braintree) will also allow to obtain your own merchant account, at whatever rate it charges you, and use their payment gateway. In that case, they do not charge the 2.9%.

What are the dis-advantages of doing so? (as in, why does everyone not do that in the first place?)

Interesting, what volume do you need to get to 2.2%?

It was $10k/month to get 2.2%, but as mentioned, Paypal Pro discontinued the automatic discounts. It's all 2.9% now.

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.

Thanks, helpful. What volume did you need to get 2% on Stripe?

They did not promise any specific rate. The wording is gone now, but it used to say:

"Processing more than $80,000 per month? Send us an email at sales@stripe.com"[1]

[1] https://web.archive.org/web/20140228105853/https://stripe.co...

Seamless Paypal integration. Paypal is very popular across Europe (and the world), and many prefer to use it over credit and/or debit cards (these payment methods aren't universally popular).

Some people don't WANT PayPal. I had a bad experience with an eBay /PayPal charge back scam 5 years ago. I.e. freezing of my entire account and no human to find to unfreeze it.

I will never accept PayPal for the rest of my life.

It's not mutually exclusive. It's just an extra option (much like Stripe allows you to select Card or Bitcoin, for example).

Ah. But at that point, not seeing the Braintree draw over stripe. They seem more or less similar, with Stripe maybe being a bit easier to set up.

yeah, braintree only has a potential benefit over stripe once you're forced to start caring about conversions & breakages (countries that expect to use PayPal, old people who trust the brand, etc)

One reason could be that Braintree is less known than Stripe?

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.

It's funny, IIRC the founder of braintree was quite active on HN as Braintree started to become successful.

Braintree seem to be advertising aggressively. I've been surprised to see a lot of phone boxes in Melbourne, Australia that are covered with Braintree ads promising better payments integrations.

Just learned that Alphabet is reusing names. CapitalG was used before: http://www.royalgazette.com/article/20140422/NEWS/140429952

Seems odd so this means the money making isn't going that well.

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