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I think the interesting idea is what happens when you use a Stripe issued card[0] on a Stripe API powered terminal. The system, somewhere, will know it is a Str

I think the interesting idea is what happens when you use a Stripe issued card[0] on a Stripe API powered terminal. The system, somewhere, will know it is a Stripe card based off the number, but I'm willing to bet the CC networks are protected from being cut out. At least for now. Great job team! Looking forward to more of this in the future \o/ [0] https://stripe.com/issuing https://stripe.com/issuing

Domenic_S 8y ago
They're protected from being cut out because they are the networks on which the credit card system runs. If you look at a stripe-issued card, you'll see there's still a visa or mc logo in the corner.
- wbronitsky 8y ago
  I understand how the system works; the requests hit the API before the credit card network. Hence the ability to cut out the network if Stripe is willing to take the chargeback/fraud risk.
  - docker_up 8y ago
    No, they would need to become money transmitters according to what you wrote above. AFAIK they aren't money transmitters yet.
    - wbronitsky 8y ago
      It depends on the jurisdiction, but they are in many! It is something they have been working towards for quite some time.
    - screature2 8y ago
      They list themselves as having money transmitter licenses across the US. see e.g. https://stripe.com/us/payments https://stripe.com/us/payments and https://stripe.com/connect https://stripe.com/connect (under "Rigorous Compliance" and "Compliance respectively"). You'll also find them on CA's directory of money transmitters. http://www.dbo.ca.gov/Licensees/money_transmitters/money_transmitters_directory.asp http://www.dbo.ca.gov/Licensees/money_transmitters/money_tra...
  - Domenic_S 8y ago
    You're saying Stripe would process directly when their own card is used on their own network, and then outside the network they'd process through visa/mc?
    - password03 8y ago
      Well something like that depending on the Stripe infrastructure. That currently happens when an issuer card is used in a merchant that is acquired/processed with the same issuing bank. It is called an "on us" transaction and doesn't need to fire through the card scheme rails.
      - jjeaff 8y ago
        I assume that still incurs a visa fee. Perhaps just bypasses the underwriting. Otherwise, I can't imagine visa would allow this.
        password03 8y ago
        I can't see how they could disallow it to be honest. That would be seriously anti-competitive.
docker_up 8y ago
There's a whole infrastructure of liability for payer and merchant that exists below the surface of every transaction. This is why, unfortunately, credit card companies can charge the fees that they do. For example, the issuing banks take on liability if payers don't pay, for example. I don't think Stripe is willing to get in the business of this unless they want to turn into a bank.
- wbronitsky 8y ago
  I think you might be surprised how much risk Stripe is willing to take on when they can gain hundreds of basis points on cutting out the networks. Only time will tell though :)
  - docker_up 8y ago
    Not if it means having to turn into a bank. The repercussions on their business will be draconian. Although I would be surprised if they haven't already explored or fully gone through a money transmitter license for a subsidiary.
    - deleted 8y ago
      [deleted]
    - qaq 8y ago
      Can't they just buy a Bank?
      - rossdavidh 8y ago
        Almost certainly they would, and there might be some small banks out there they could buy or merge with. That would get them out of a lot of legal issues, and also buy them some relevant legal expertise. However, I seem to recall WalMart investigating this option a while back, and it never happened. It may be that the more you look at the option of becoming a bank, the more it looks like it would take over your life/business. Also, there are doubtless many lobbyists who the existing banks employ who would try to stop it.
clairity 8y ago
nordstrom used to do this, back when it was also a bank and issued their own line of credit cards. they also negotiated more favorable terms with visa because of it. they marketed the crap out of their own cards so they could keep more of the fees. but the regulatory environment tightened up and being both a bank and a retailer became less appealing, and consumers found store branded credit cards less appealing, so they sold the bank portion.

Domenic_S 8y ago

They're protected from being cut out because they are the networks on which the credit card system runs. If you look at a stripe-issued card, you'll see there's still a visa or mc logo in the corner.

wbronitsky 8y ago
I understand how the system works; the requests hit the API before the credit card network. Hence the ability to cut out the network if Stripe is willing to take the chargeback/fraud risk.
- docker_up 8y ago
  No, they would need to become money transmitters according to what you wrote above. AFAIK they aren't money transmitters yet.
  - wbronitsky 8y ago
    It depends on the jurisdiction, but they are in many! It is something they have been working towards for quite some time.
  - screature2 8y ago
    They list themselves as having money transmitter licenses across the US. see e.g. https://stripe.com/us/payments https://stripe.com/us/payments and https://stripe.com/connect https://stripe.com/connect (under "Rigorous Compliance" and "Compliance respectively"). You'll also find them on CA's directory of money transmitters. http://www.dbo.ca.gov/Licensees/money_transmitters/money_transmitters_directory.asp http://www.dbo.ca.gov/Licensees/money_transmitters/money_tra...
- Domenic_S 8y ago
  You're saying Stripe would process directly when their own card is used on their own network, and then outside the network they'd process through visa/mc?
  - password03 8y ago
    Well something like that depending on the Stripe infrastructure. That currently happens when an issuer card is used in a merchant that is acquired/processed with the same issuing bank. It is called an "on us" transaction and doesn't need to fire through the card scheme rails.
    - jjeaff 8y ago
      I assume that still incurs a visa fee. Perhaps just bypasses the underwriting. Otherwise, I can't imagine visa would allow this.
      - password03 8y ago
        I can't see how they could disallow it to be honest. That would be seriously anti-competitive.

docker_up 8y ago

There's a whole infrastructure of liability for payer and merchant that exists below the surface of every transaction. This is why, unfortunately, credit card companies can charge the fees that they do. For example, the issuing banks take on liability if payers don't pay, for example. I don't think Stripe is willing to get in the business of this unless they want to turn into a bank.

wbronitsky 8y ago
I think you might be surprised how much risk Stripe is willing to take on when they can gain hundreds of basis points on cutting out the networks. Only time will tell though :)
- docker_up 8y ago
  Not if it means having to turn into a bank. The repercussions on their business will be draconian. Although I would be surprised if they haven't already explored or fully gone through a money transmitter license for a subsidiary.
  - deleted 8y ago
    [deleted]
  - qaq 8y ago
    Can't they just buy a Bank?
    - rossdavidh 8y ago
      Almost certainly they would, and there might be some small banks out there they could buy or merge with. That would get them out of a lot of legal issues, and also buy them some relevant legal expertise. However, I seem to recall WalMart investigating this option a while back, and it never happened. It may be that the more you look at the option of becoming a bank, the more it looks like it would take over your life/business. Also, there are doubtless many lobbyists who the existing banks employ who would try to stop it.

clairity 8y ago

nordstrom used to do this, back when it was also a bank and issued their own line of credit cards. they also negotiated more favorable terms with visa because of it. they marketed the crap out of their own cards so they could keep more of the fees. but the regulatory environment tightened up and being both a bank and a retailer became less appealing, and consumers found store branded credit cards less appealing, so they sold the bank portion.