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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
by 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 agoI 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 agoNo, they would need to become money transmitters according to what you wrote above. AFAIK they aren't money transmitters yet.
- wbronitsky 8y agoIt depends on the jurisdiction, but they are in many! It is something they have been working towards for quite some time.
- screature2 8y agoThey 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 agoYou'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 agoWell 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 agoI assume that still incurs a visa fee. Perhaps just bypasses the underwriting. Otherwise, I can't imagine visa would allow this.
- password03 8y agoI can't see how they could disallow it to be honest. That would be seriously anti-competitive.