4 ms·

The experience of receiving credit card payments for a SaaS subscription sucks badly, even if you disregard the inflated payment processing fee. Banks can allow

by m12k 6y ago

The experience of receiving credit card payments for a SaaS subscription sucks badly, even if you disregard the inflated payment processing fee. Banks can allow the charge to happen the first five months, then on the sixth charge, randomly turn on a penny and reject the charge with a completely opaque do_not_honor code, which probably translates to 'our fraud detection algorithm felt extra paranoid today'. There's a whole industry of companies who help other companies "poke" their customers when their payments randomly fail, to prevent churn. This seems ripe for disruption. My dream tool for receiving payments: - Isn't tied to a piece of plastic that expires - Front loads the fraud prevention by requiring 2FA to make sure up front that the buyer actually wants to pay for this. - Opt-in, per-transaction chargeback/escrow service (intended for shipment of physical goods) that you don't pay for if you don't activate. Transactions are clearly marked whether they include this during checkout. Otherwise transactions are final - For subscriptions, allows you to specify the conditions under which future charges should also be accepted, and when they should be held and you get contacted to approve them instead. - Basically anywhere the current system can fail/reverse a charge, the improved system would verify this up ahead, so the payment processor can be sure the buyer really wants to pay, and the merchant can be sure charges don't fail unless the buyer runs out of money in their account or actively cancels the subscription. - Charge a much more reasonable processing fee, due to not needing to wade into disputes and fraud recovery all the time.

Polylactic_acid 6y ago
The whole system seems to be designed in such a bad way and relies on a bunch of heuristics and insurance to make up for easy fraud. Why is it that to pay for something you give the seller the keys to your account and they go in and withdraw the money they want instead of the seller sending you a request and you accepting to send the requested money.. Another plus side of your suggestion is it now becomes trivial to cancel any subscriptions since you can simply stop allowing the payment to go through rather than getting the seller to stop taking your money.
- imtringued 6y ago
  I'm still wondering why there is no electronic SEPA mandate. When you want to authorize e.g. for your landlord to be allowed to withdraw rent payments from your account the landlord has to physically mail you a SEPA mandate which you have to sign and mail to your bank. This may sound like a slightly obsolete but otherwise well thought out system until you notice that revoking the SEPA mandate requires you to contact the vendor first which is kind of silly.
  - hocuspocus 6y ago
    > I'm still wondering why there is no electronic SEPA mandate. There is! Nothing forces vendors to collect a paper form and signature. I know some countries still love paper trails (hello Germany) but even there, you'll find some businesses that don't do it. When I lived in Berlin and signed up for my broadband with 1&1, I just had to copy/paste my IBAN into their online form. > physically mail you a SEPA mandate which you have to sign and mail to your bank. Nope. The bank is not involved at this stage. Banks authorize direct debits by default, they don't need to know about the mandate beforehand. > revoking the SEPA mandate requires you to contact the vendor first which is kind of silly. It's not. It leaves the responsibility with the contracting parties, and keep banks as a neutral medium. That said, as a customer, you can revert a direct debit with a single click, and permanently reject further direct debits. It doesn't have any effect on your contract (and the vendor will send it to debt collection if it believes you're in the wrong), but you keep full control. By the way, you can build a fully digitized billing system on top of that (there's SEPAmail in France for instance), and more and more banks support instant payments, which I assume can be used to improve the scheme.
shuringai 6y ago
the ideal system you described is called bitcoin
avianlyric 6y ago
Interesting this systems already exists. For Mastercard it’s called MDES for Merchants, or to give it its full name Mastercard Digital Enablement Service for Merchants. It’s an extension of the technology that powers Apple Pay and Google Pay, and basically allows merchants to get a virtual card issued to them. In the EU that would require 2FA to happen, along with describing to the customer what the billing schedule is (required for SCA but being implemented slowly). The end result is the merchant gets a non-expiring virtual card to bill the customer, and the customer get the ability to disable certain merchants by asking their bank to destroy the card linked to a specific merchant. Unfortunately all of this stuff is very new, and there are a bunch of issues that will prevent merchants from using the tech. But it is happening slowly.

by m12k 6y ago

Polylactic_acid 6y ago

The whole system seems to be designed in such a bad way and relies on a bunch of heuristics and insurance to make up for easy fraud. Why is it that to pay for something you give the seller the keys to your account and they go in and withdraw the money they want instead of the seller sending you a request and you accepting to send the requested money.. Another plus side of your suggestion is it now becomes trivial to cancel any subscriptions since you can simply stop allowing the payment to go through rather than getting the seller to stop taking your money.

imtringued 6y ago
I'm still wondering why there is no electronic SEPA mandate. When you want to authorize e.g. for your landlord to be allowed to withdraw rent payments from your account the landlord has to physically mail you a SEPA mandate which you have to sign and mail to your bank. This may sound like a slightly obsolete but otherwise well thought out system until you notice that revoking the SEPA mandate requires you to contact the vendor first which is kind of silly.
- hocuspocus 6y ago
  > I'm still wondering why there is no electronic SEPA mandate. There is! Nothing forces vendors to collect a paper form and signature. I know some countries still love paper trails (hello Germany) but even there, you'll find some businesses that don't do it. When I lived in Berlin and signed up for my broadband with 1&1, I just had to copy/paste my IBAN into their online form. > physically mail you a SEPA mandate which you have to sign and mail to your bank. Nope. The bank is not involved at this stage. Banks authorize direct debits by default, they don't need to know about the mandate beforehand. > revoking the SEPA mandate requires you to contact the vendor first which is kind of silly. It's not. It leaves the responsibility with the contracting parties, and keep banks as a neutral medium. That said, as a customer, you can revert a direct debit with a single click, and permanently reject further direct debits. It doesn't have any effect on your contract (and the vendor will send it to debt collection if it believes you're in the wrong), but you keep full control. By the way, you can build a fully digitized billing system on top of that (there's SEPAmail in France for instance), and more and more banks support instant payments, which I assume can be used to improve the scheme.

shuringai 6y ago

the ideal system you described is called bitcoin

avianlyric 6y ago

Interesting this systems already exists. For Mastercard it’s called MDES for Merchants, or to give it its full name Mastercard Digital Enablement Service for Merchants. It’s an extension of the technology that powers Apple Pay and Google Pay, and basically allows merchants to get a virtual card issued to them. In the EU that would require 2FA to happen, along with describing to the customer what the billing schedule is (required for SCA but being implemented slowly). The end result is the merchant gets a non-expiring virtual card to bill the customer, and the customer get the ability to disable certain merchants by asking their bank to destroy the card linked to a specific merchant. Unfortunately all of this stuff is very new, and there are a bunch of issues that will prevent merchants from using the tech. But it is happening slowly.