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Have only spent 10 minutes skimming through various docs. Seems like it's upto the businesses to treat an issued card as debit or credit. I can even see use ca
by vishnugupta 8y ago
Have only spent 10 minutes skimming through various docs.
Seems like it's upto the businesses to treat an issued card as debit or credit. I can even see use cases for overdraft.
Below is a snippet from their doc[1]
> Any use of an issued card that results in funds entering or leaving your Stripe account
Here's what I've understood so far.
1. Businesses create, maintain and own customer accounts. It's upto the businesses to figure out how to get money from the customers. Could be prefunded (i.e., debit card) or postpaid (i.e., credit card).
2. Said business then creates cards and associates them with the above customer accounts and issues them that card.
3. Customers are now enabled to use those card wherever credit/debit cards are accepted.
4. Businesses need to maintain balance with Stripe. Stripe deducts from this account upon successful authorisation.
5. Now as I've mentioned in #1 it's upto the business to figure out a way to charge the customer.
Money movement is happening in two steps.
1. Business account -> Merchant (via stripe).
2. Consumer -> Business (Stripe isn't involved here).
Whether #2 happens before or after determines if the card is a debit card or credit card respectively.
So, what Stripe has done essentially is connect accounts holding money with rest of the world. I.e., anyone can now become a bank, in a sense.
In my previous job my team worked with a similar third party provider to launch a virtual card product[2]. But what Stripe has done is game changing.
[1] https://stripe.com/docs/issuing/transactions https://stripe.com/docs/issuing/transactions
[2] https://www.freecharge.in/mobile/freecharge-go https://www.freecharge.in/mobile/freecharge-go
Edit: Minor correction.
- ikeboy 8y agoThat doesn't answer the question of which network and what rules the transaction is governed by.
- vishnugupta 8y agoAbout the network they are quite clear right upfront. > "Stripe Issuing is certified directly with all major card networks as an issuing processor, which ensures reliability and rapid feature releases" As for the rules I guess the business needs needs to adhere to the rules of whichever country it operates out of. Don't see Stripe helping there. They have built the roads, it's upto the driver to procure valid license.
- ikeboy 8y agoThat literally gives zero information about whether it's processed as debit or credit. There are very different sets of rules depending on which one it is.
- lachyg 8y ago(I work on Issuing.) The technology we've built is agnostic to debit or credit -- it really depends on your use case. That said, force posts (or transactions cleared without an underlying authorization) can happen on any card type. For what it's worth, we have an API to initiate disputes (which you would be able to on a transaction initiated without a valid authorization) which you could use to recoup funds.
- ikeboy 8y agoSo who determines whether it's run as debit or credit? The business creating the card at time of creation? The merchant?
- lachyg 8y agoWe do :-) But it's based on quite precise Visa / Mastercard rules.
- ericpauley 8y agoIs this determined as issuance time or purchase time?
- VectorLock 8y agoCan you expound a bit on what the rules are? In my observation debit issuers make it much harder to do chargebacks.
- ikeboy 8y agoMany protections in laws only apply to credit. See e.g. https://consumercomplianceoutlook.org/2016/first-issue/credit-debit-card-issuers-obligations-consumers-displute-transactions/ https://consumercomplianceoutlook.org/2016/first-issue/credi... https://usa.visa.com/dam/VCOM/download/about-visa/visa-rules-public.pdf https://usa.visa.com/dam/VCOM/download/about-visa/visa-rules... here's a 1031 page document with all the technical rules from Visa. You'll note there are entirely different sections for debit and credit.