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Lee is a smart guy. But I think his missed one important point: It's not about fees. No it's not even about easy to use. In China, technically anyone can setup

by nirui 6y ago

Lee is a smart guy. But I think his missed one important point: It's not about fees. No it's not even about easy to use. In China, technically anyone can setup a "business" account on Alipay with just one tap and then start to collect payment right way, the story is completely different if you have to deal with banks. Then with all that, you add the fact that not everybody here uses credit card which raises the bar for credit card adaption up yet again. I'd recommend people who interested about the related development to checkout the DC/EP project. Which is aimed to be an alternative to Alipay and WeChat Pay, but backed by the banks.

jariel 6y ago
It's definitely about the fees and underlying structures. No economy is 'suffering' because businesses have to 'deal with a bank'. It could be smoother, but it's mostly not a big deal. Since the world has 'gone digital' the '2%' system setup became the natural medium and it's possibly a bigger problem than Google and FB, it's just that nobody wants to talk about it.
- erichocean 6y ago
  > No economy is 'suffering' because businesses have to 'deal with a bank'. So, what was the market opportunity Stripe exploited if not that "dealing with banks" is painful?
  - jariel 6y ago
    First, Stripe, despite it's mega valuation, is small peanuts. They are just a part of something much bigger, and they are not really enabling new markets. Second, they didn't invent anything new, they just made the process a easier. There are plenty of non-Stripe solutions you can use today. To a teenage software developer without business exposure or experience, who thinks 'opening a merchant account' is a big deal, or that 'incorporating' is a big deal, Stripe seems like some kind of magic. But none of that is hard. People do it all the time. Your plumber, hairdresser and local cafe probably have some kind of incorporation and collect/pay a VAT and business tax. It's not rocket science. You can usually do it online in a few minutes. 'Dealing with banks' is not a problem with scale. 2% of every transaction however, and the underlying power structures that want to keep it that way ... that's a problem.
    - jlokier 6y ago
      > Your plumber, hairdresser and local cafe probably have some kind of incorporation and collect/pay a VAT and business tax. It's not rocket science. You can usually do it online in a few minutes I'm in the UK. Setting up a company is easy. The last time I did it, took an hour or so of filling out forms online, but it's cheap and a few hours later, or the next day, you have a legal company. Registering for tax/VAT etc takes longer. The forms took me longer to fill and the system took a few weeks to proceed through each step (codes sent in the post, figures in online forms checked by a person, etc), but you can start trading before they are done if you follow the transitional arrangements. Getting a bank account is much slower. Recently I did it with Starling, because they offered a much faster online process than the high street banks. It still took a frustrating 4 working days, with support messages back and forth because they kept challenging me for "proof" that I was a business. Having a company was not sufficient proof. Lots of money laundering requirements, having to prove the type of business, having to provide evidence of online presence, etc. I temporarily altered my LinkedIn profile (which I saw they did check) to satisfy their requirements. The time before that was a high street bank, Barclays. The process took about 2 months. They interviewed me twice, and another of the directors, and conducted background checks on everyone. In the interviews they asked a lot of challenging questions about the nature of the business, even though it was a non-profit with 5 independent directors, handling only a small amount of money. Other people, in more regular types of small business (plumber, hairdresser, cafe etc) report that getting business accounts can often take 1-2 months, and be quite frustrating because you want to start trading and that's a bottleneck. Merchant accounts (for taking credit cards) are no longer necessary because of services like Paypal and Stripe. It used to be that merchant accounts were a challenge to get as a small business, because they didn't serve early businesses. But even now, with Paypal, last time I did it, they set a cap on £1000/year of transactions until certain documentation was received by them. Despite sending them 10 different forms of business documentation at their request, they were never satisfied, and so that business stopped using Paypal, relegating it to a handful of users that couldn't pay any other way.

by nirui 6y ago

jariel 6y ago

It's definitely about the fees and underlying structures. No economy is 'suffering' because businesses have to 'deal with a bank'. It could be smoother, but it's mostly not a big deal. Since the world has 'gone digital' the '2%' system setup became the natural medium and it's possibly a bigger problem than Google and FB, it's just that nobody wants to talk about it.

erichocean 6y ago
> No economy is 'suffering' because businesses have to 'deal with a bank'. So, what was the market opportunity Stripe exploited if not that "dealing with banks" is painful?
- jariel 6y ago
  First, Stripe, despite it's mega valuation, is small peanuts. They are just a part of something much bigger, and they are not really enabling new markets. Second, they didn't invent anything new, they just made the process a easier. There are plenty of non-Stripe solutions you can use today. To a teenage software developer without business exposure or experience, who thinks 'opening a merchant account' is a big deal, or that 'incorporating' is a big deal, Stripe seems like some kind of magic. But none of that is hard. People do it all the time. Your plumber, hairdresser and local cafe probably have some kind of incorporation and collect/pay a VAT and business tax. It's not rocket science. You can usually do it online in a few minutes. 'Dealing with banks' is not a problem with scale. 2% of every transaction however, and the underlying power structures that want to keep it that way ... that's a problem.
  - jlokier 6y ago
    > Your plumber, hairdresser and local cafe probably have some kind of incorporation and collect/pay a VAT and business tax. It's not rocket science. You can usually do it online in a few minutes I'm in the UK. Setting up a company is easy. The last time I did it, took an hour or so of filling out forms online, but it's cheap and a few hours later, or the next day, you have a legal company. Registering for tax/VAT etc takes longer. The forms took me longer to fill and the system took a few weeks to proceed through each step (codes sent in the post, figures in online forms checked by a person, etc), but you can start trading before they are done if you follow the transitional arrangements. Getting a bank account is much slower. Recently I did it with Starling, because they offered a much faster online process than the high street banks. It still took a frustrating 4 working days, with support messages back and forth because they kept challenging me for "proof" that I was a business. Having a company was not sufficient proof. Lots of money laundering requirements, having to prove the type of business, having to provide evidence of online presence, etc. I temporarily altered my LinkedIn profile (which I saw they did check) to satisfy their requirements. The time before that was a high street bank, Barclays. The process took about 2 months. They interviewed me twice, and another of the directors, and conducted background checks on everyone. In the interviews they asked a lot of challenging questions about the nature of the business, even though it was a non-profit with 5 independent directors, handling only a small amount of money. Other people, in more regular types of small business (plumber, hairdresser, cafe etc) report that getting business accounts can often take 1-2 months, and be quite frustrating because you want to start trading and that's a bottleneck. Merchant accounts (for taking credit cards) are no longer necessary because of services like Paypal and Stripe. It used to be that merchant accounts were a challenge to get as a small business, because they didn't serve early businesses. But even now, with Paypal, last time I did it, they set a cap on £1000/year of transactions until certain documentation was received by them. Despite sending them 10 different forms of business documentation at their request, they were never satisfied, and so that business stopped using Paypal, relegating it to a handful of users that couldn't pay any other way.