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Interesting point. From that perspective, you could argue that giving a loan against the collateral is a way to account for some of the risk on Paypal's side wh

by caser 11y ago

Interesting point. From that perspective, you could argue that giving a loan against the collateral is a way to account for some of the risk on Paypal's side while still giving us some funds. Still, we've been with Stripe since then and have had no problems.

URSpider94 11y ago
Exactly. To give another example, I was at Lucent in the late 90's, just before the telcom collapse. Ultimately, Lucent stock collapsed by 90% and the company was bought by Alcatel (which was just bought by the remaining parts of Nokia that Microsoft didn't grind into dust, but I digress). A big part of what brought Lucent down was not just that sales of communications equipment plummeted, but also that Lucent had extended financing to its customers so they could buy more equipment, and then those same customers defaulted on their loans. Ultimately, it's important to make sure that a loan-granting organization is run separately from your core business, to avoid people making poor-quality loans just to goose sales numbers. Still, we've been with Stripe since then and have had no problems. yet ... There was a recent article on how hoverboard sellers have suffered massive fraud losses, that specifically talked about how Stripe is trying to chase people to recover hundreds of thousands of dollars in chargebacks. That can't happen too many times, given the thin margins of payment processing, before they have to do something to protect themselves.
- tim333 11y ago
  I just googled that: >In one case, hoverboard vendor IO Hawk had a reported $900,000 negative balance. Stripe’s documents call it “one of our largest losses ever.” You'd think there'd be some way to delay shipping for a couple of days while someone checks if the card is stolen. Maybe they could have some way of just calling the card owner and asking if they ordered a hoverboard?
deegles 11y ago
So now Stripe has that risk on their books? Don't you think they'll eventually need to do the same as Paypal did? Maybe Stripe won't freeze your assets first, but they could notify you that they will only support a certain transaction volume unless you take a loan.

by caser 11y ago

URSpider94 11y ago

Exactly. To give another example, I was at Lucent in the late 90's, just before the telcom collapse. Ultimately, Lucent stock collapsed by 90% and the company was bought by Alcatel (which was just bought by the remaining parts of Nokia that Microsoft didn't grind into dust, but I digress). A big part of what brought Lucent down was not just that sales of communications equipment plummeted, but also that Lucent had extended financing to its customers so they could buy more equipment, and then those same customers defaulted on their loans. Ultimately, it's important to make sure that a loan-granting organization is run separately from your core business, to avoid people making poor-quality loans just to goose sales numbers. Still, we've been with Stripe since then and have had no problems. yet ... There was a recent article on how hoverboard sellers have suffered massive fraud losses, that specifically talked about how Stripe is trying to chase people to recover hundreds of thousands of dollars in chargebacks. That can't happen too many times, given the thin margins of payment processing, before they have to do something to protect themselves.

tim333 11y ago
I just googled that: >In one case, hoverboard vendor IO Hawk had a reported $900,000 negative balance. Stripe’s documents call it “one of our largest losses ever.” You'd think there'd be some way to delay shipping for a couple of days while someone checks if the card is stolen. Maybe they could have some way of just calling the card owner and asking if they ordered a hoverboard?

deegles 11y ago

So now Stripe has that risk on their books? Don't you think they'll eventually need to do the same as Paypal did? Maybe Stripe won't freeze your assets first, but they could notify you that they will only support a certain transaction volume unless you take a loan.