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Card network requests are comprised of fairly complex ISO 8583 messages. (https://en.wikipedia.org/wiki/ISO_8583. https://en.wikipedia.org/wiki/ISO_8583.) We no

by pc 7y ago

Card network requests are comprised of fairly complex ISO 8583 messages. (https://en.wikipedia.org/wiki/ISO_8583. https://en.wikipedia.org/wiki/ISO_8583.) We now have enough data across Stripe to implement an ML engine to optimize these requests on a per-issuing bank basis. As mentioned in original comment, this helps collect a lot more "free" revenue for our users.

dmlittle 7y ago
For the curious here's the link without the period at the end for convenience https://en.wikipedia.org/wiki/ISO_8583 https://en.wikipedia.org/wiki/ISO_8583
deleted 7y ago
[deleted]
BrandonMarc 7y ago
What is meant by "free" revenue? I'm wondering how the one leads to the other. Does this mean, lower processing fee/less need to increase processing fees?
- jccooper 7y ago
  It means fewer rejected transactions.
- patio11 7y ago
  Businesses invest in product development and marketing to bring a customer to them. The customer is convinced of the value of the thing they want to buy and puts in their credit card number. Sometimes it doesn't work, for example because a poorly understood interaction of systems at their bank decides the charge is likely fraudulent. (Ask me about how a particular US bank has caught 17 of the last 0 times a fraudster in Japan used my credit card to purchase software.) Some percentage of these customers retry, perhaps with another card, and eventually succeed in buying the thing they want to buy. Some don't, and the business loses the revenue that a customer was already happy to give them. Improving authorization rates (the industry jargon for that) recovers that revenue, for ~free (your product/advertising/etc spend to attract the customer is the same whether they successfully complete the purchase or not).
  - agopaul 7y ago
    Appreciate the explanation. We actually noticed a huge improvement since last summer with charges made with Stripe. Still, we lost a few thousands €€ in these years because of customers' banks rejecting our transactions. I hope that one day this problem will be gone.
    - patio11 7y ago
      We share that desire, and are iterating on this a thousandth of a basis point at a time, because at the scale of the internet it really matters. (Anyone want to work on this? Super fun stuff. https://stripe.com/jobs/listing/backend-api-engineer-acquiring-sf/2043205 https://stripe.com/jobs/listing/backend-api-engineer-acquiri... You get to e.g. build systems which blackbox reverse engineer the behavior of financial institutions worldwide, in some cases getting to explain the behavior of their systems to them directly because the people who built them retired years ago.)

by pc 7y ago

dmlittle 7y ago

For the curious here's the link without the period at the end for convenience https://en.wikipedia.org/wiki/ISO_8583 https://en.wikipedia.org/wiki/ISO_8583

deleted 7y ago

[deleted]

BrandonMarc 7y ago

What is meant by "free" revenue? I'm wondering how the one leads to the other. Does this mean, lower processing fee/less need to increase processing fees?

jccooper 7y ago
It means fewer rejected transactions.
patio11 7y ago
Businesses invest in product development and marketing to bring a customer to them. The customer is convinced of the value of the thing they want to buy and puts in their credit card number. Sometimes it doesn't work, for example because a poorly understood interaction of systems at their bank decides the charge is likely fraudulent. (Ask me about how a particular US bank has caught 17 of the last 0 times a fraudster in Japan used my credit card to purchase software.) Some percentage of these customers retry, perhaps with another card, and eventually succeed in buying the thing they want to buy. Some don't, and the business loses the revenue that a customer was already happy to give them. Improving authorization rates (the industry jargon for that) recovers that revenue, for ~free (your product/advertising/etc spend to attract the customer is the same whether they successfully complete the purchase or not).
- agopaul 7y ago
  Appreciate the explanation. We actually noticed a huge improvement since last summer with charges made with Stripe. Still, we lost a few thousands €€ in these years because of customers' banks rejecting our transactions. I hope that one day this problem will be gone.
  - patio11 7y ago
    We share that desire, and are iterating on this a thousandth of a basis point at a time, because at the scale of the internet it really matters. (Anyone want to work on this? Super fun stuff. https://stripe.com/jobs/listing/backend-api-engineer-acquiring-sf/2043205 https://stripe.com/jobs/listing/backend-api-engineer-acquiri... You get to e.g. build systems which blackbox reverse engineer the behavior of financial institutions worldwide, in some cases getting to explain the behavior of their systems to them directly because the people who built them retired years ago.)