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> Maybe if you're charging millions of dollars, you should use a regular merchant account. You should probably still use Stripe in this case. (Some people alre

> Maybe if you're charging millions of dollars, you should use a regular merchant account. You should probably still use Stripe in this case. (Some people already are.) We scale up pretty well. Everything that you get with a merchant account (correct statement text, money held in your name), you get with Stripe. Additionally, there are some advantages for large businesses that would make Stripe more attractive than a merchant account: transfer reporting and detailed reconciliation tools make a big difference to people doing high throughput.

rorrr 15y ago
He means the fees. You can pay significantly less than 2.9% + 30¢ with a merchant account.
ecommercematt 15y ago
How do you handle situations in which you can't tell if someone is legitimately undergoing hyper-growth or committing fraud? In a prior startup, I had my funds held indefinitely by PayPal and 3 separate merchant banks because our rapid growth made them suspect us of fraud or perhaps that our business was just too risky because our numbers were changing so rapidly. Our ultimate solution was to engage a merchant bank that specialized in sight-unseen, no swipe/no sig transactions that we could meet with face-to-face.
- boucher 15y ago
  There's no simple thing I can say here. There are situations where withholding funds might be required, but they should be exceedingly rare. In other words, we're hoping to eliminate false positives. In general, we're a tech company and we're looking for technical solutions to problems. We're also just culturally familiar with startups that explode in popularity, so we aren't worried about that kind of behavior.
  - bprater 15y ago
    You may want to seriously consider working on fleshing out this plan now. Paypal supposedly has thousands of people working in fraud control. When word gets out that Stripe makes it "dead simple" to process credit cards without a merchant account, the vampires will come out to play. And I'm truly excited for a service like yours. We need this. But be prepared.
    - jtheory 15y ago
      PayPal isn't just a payments processor, so they have many more fraud scenarios to worry about than Stripe. You can't use Stripe unless you have a bank account set up to receive funds, and you can't use Stripe to pay for things -- i.e., you can't launder fraudulent money by buying a ton of stuff online and having it shipped to an abandoned house. In Stripe there's a very simple money trail, plus there's a week's delay before your charges are transferred into your account... which makes it tricky if you're hoping to run up lots of fraudulent charges then disappear with the cash before anyone notices. With PayPal the money trail could be very complicated indeed.
      - sukuriant 15y ago
        I became concerned with reading this statement. We need a lawyer to understand liability for laundering with regard to systems like Stripe
        jtheory 15y ago
        If you're laundering money, you might want to consider in-house legal expertise, as well as in-house payments processing expertise. If you're not laundering money, then (all other things being the same), you should prefer Stripe over PayPal, since it would be quite hard for someone to use Stripe for this purpose, hence they will have fewer money-launderers to deal with, hence you have less risk that you'll set off some obscure alarm and they'll lock up your account for months. In any case, if you sell anything (online or off) you may want to learn a bit about the various risks and liabilities. Fraud does happen, and some businesses are at far higher risk. I'm not sure the average lawyer will help much, though. They can tell you "yup, if someone buys a diamond from you with a stolen credit card and you ship it, you will not get to keep that money even if the diamond isn't recovered" (but don't you know that already?). The more important advice is technical, and it's about all of the things you can do to reduce the risk of that ever happening to you.
  - afaulkner 15y ago
    If you are looking for a technical solution you might want to check out..ahem... my company ThreatMetrix. As ex paypal Im guessing you have invested a lot in risk management, ML and automation etc as its really technically difficult to make such a broken process like online payments this simple so you may have it all covered. What we can bring to the table is a (300ms) https name value pair API that delivers aggregated intelligence in real-time based on transactions, identities, devices and behavior across 6000 sites that represent over 1MM individual CNP txns on a daily basis (only 1/5 of Paypals txns but hey we are a startup!) which you can ingest into your rules engine or risk models during, before or after the payments authorization/capture. We dont just provide a score which can be impossible to integrate with other ML engines we also provide customizable (by you) reason codes/triggers that can be used to characterize behavior e.g. customer's computer associated with 3 difference identities and 4 different proxy ip addresses across global network in last hour....Data Geeks geek out on it as we also provide full attribute data back in the API response so provides a good way to do feature extractions for SVMs etc. We have been proven to reduce FP and increase TP. We currently process peak 700 tps with about 20% degradation in performance at load. We suck at batch processing cause its just not our thing. I head up products and one of the founders so not selling just helping as I think you have a solid offering that should do very well. Paypal bought Fraud Sciences for 170M but you can rent ThreatMetrix ;-)
    - djcapelis 15y ago
      Also selling! Don't be ashamed of it. If you have a good product, sell it! (I have no idea whether you have a good product, but I'm hoping you do, because the problem you're trying to solve is an annoying one.)
white_devil 15y ago
Q: Do I need to be in the United States to use Stripe? A: Yes. --> FFFFFFUUUUUUUUUUUUUUUUUUUUUUUU Would you finally be the one to tell us what the hell is the problem with non-US customers?
- boucher 15y ago
  Unfortunately, there are just a lot of regulations when dealing with payments across international borders.
  - white_devil 15y ago
    Seriously, I really need to know something about this. It's driving me mad to keep seeing promising payment services only to find out they won't deal with me. Yours is the most compelling one I've seen.
    - _delirium 15y ago
      One major barrier is that in many countries it's difficult to set up a service like this in a way that doesn't require it to be a bona-fide "bank", and setting up a bona-fide bank is often not low-overhead.
      - white_devil 15y ago
        Do they even need a presence in other countries to be able to work with companies in them?
    - maaku 15y ago
      The Patriot Act.
      - jules 15y ago
        While this reply is short it is right. The Patriot Act is the reason why these nice things generally aren't available to non US citizens. Patriot Act Section 312: http://ithandbook.ffiec.gov/media/resources/3356/con-usa_patriot_act_section_312.pdf http://ithandbook.ffiec.gov/media/resources/3356/con-usa_pat... As you can see if you want to provide this service to a foreigner then you need to do checks on this person and his bank. This costs such much that most will decide that it is not cost effective to do so.
davros 15y ago
We scale up pretty well. Everything that you get with a merchant account (correct statement text, money held in your name), you get with Stripe. Key scaling issue is pricing. 2.9% is fine for low volumes and no risk validation, but once you're turning over large volumes and have a track record of no chargebacks etc the comparison looks much worse. If you can offer businesses a pricing that 'scales' with substantial reductions in transaction fee by volume then there is a growth path, otherwise any business would be crazy to stick with you no matter how good your service and APIs, etc because 2.9% could be half their gross margin and they can get 1% by dealing with the bank direct.
- Robbnotes 15y ago
  I really like your idea of "pricing that scales." However, I feel the need to point out that no one can get a 1% rate on eCommerce transactions from their bank or anyone else. Interchange rates (cost) from Visa and MasterCard range from 1.71% + $.15 all the way up to 3.06% + $.10. Having said that, you're right about larger businesses finding Stripe's rates unpalatable. Maybe they're just trying to become the Square of eCommerce - which might not be a bad idea.
  - davros 15y ago
    However, I feel the need to point out that no one can get a 1% rate on eCommerce transactions from their bank or anyone else. I didn't mention 1% as idle guesswork, I have direct knowledge of several businesses paying close to 1% on online (card not present, no signature) transactions. I'm not saying its easy to negotiate good rates, but its possible, even for fairly early stage startups. I got 1.6% for a startup turning over only about $20k per month, no track record and 'non standard' business model. So feel free to push your bank, get quotes from their competitors, they can almost certainly do better for you. EDIT: I just notice that stripe is planning to introduce volume discounts - that would make a very nice product!
    - nkurz 15y ago
      I'm not sure how to say this politely, but I think that you are mistaken. Perhaps you are not including some relatively high monthly fees? Perhaps you are not accepting all major cards? Maybe you are including a large percentage of debit cards? Maybe all your transactions qualify for some particular promotional rate? I do about that volume, mostly card present, and think I have decent rates. I think I'm at Interchange plus .2% plus 1 cent per transaction plus $20 per month, and end up around 2.7% for total fees. I'm sure one can do better, but not by a lot. I'm willing to bet a considerable sum that you are not actually paying 1.6 percent once it's all added up. But if somehow you are, the loss of the bet would pay back quickly if I could get those rates myself!

rorrr 15y ago

He means the fees. You can pay significantly less than 2.9% + 30¢ with a merchant account.

ecommercematt 15y ago

How do you handle situations in which you can't tell if someone is legitimately undergoing hyper-growth or committing fraud? In a prior startup, I had my funds held indefinitely by PayPal and 3 separate merchant banks because our rapid growth made them suspect us of fraud or perhaps that our business was just too risky because our numbers were changing so rapidly. Our ultimate solution was to engage a merchant bank that specialized in sight-unseen, no swipe/no sig transactions that we could meet with face-to-face.

boucher 15y ago
There's no simple thing I can say here. There are situations where withholding funds might be required, but they should be exceedingly rare. In other words, we're hoping to eliminate false positives. In general, we're a tech company and we're looking for technical solutions to problems. We're also just culturally familiar with startups that explode in popularity, so we aren't worried about that kind of behavior.
- bprater 15y ago
  You may want to seriously consider working on fleshing out this plan now. Paypal supposedly has thousands of people working in fraud control. When word gets out that Stripe makes it "dead simple" to process credit cards without a merchant account, the vampires will come out to play. And I'm truly excited for a service like yours. We need this. But be prepared.
  - jtheory 15y ago
    PayPal isn't just a payments processor, so they have many more fraud scenarios to worry about than Stripe. You can't use Stripe unless you have a bank account set up to receive funds, and you can't use Stripe to pay for things -- i.e., you can't launder fraudulent money by buying a ton of stuff online and having it shipped to an abandoned house. In Stripe there's a very simple money trail, plus there's a week's delay before your charges are transferred into your account... which makes it tricky if you're hoping to run up lots of fraudulent charges then disappear with the cash before anyone notices. With PayPal the money trail could be very complicated indeed.
    - sukuriant 15y ago
      I became concerned with reading this statement. We need a lawyer to understand liability for laundering with regard to systems like Stripe
      - jtheory 15y ago
        If you're laundering money, you might want to consider in-house legal expertise, as well as in-house payments processing expertise. If you're not laundering money, then (all other things being the same), you should prefer Stripe over PayPal, since it would be quite hard for someone to use Stripe for this purpose, hence they will have fewer money-launderers to deal with, hence you have less risk that you'll set off some obscure alarm and they'll lock up your account for months. In any case, if you sell anything (online or off) you may want to learn a bit about the various risks and liabilities. Fraud does happen, and some businesses are at far higher risk. I'm not sure the average lawyer will help much, though. They can tell you "yup, if someone buys a diamond from you with a stolen credit card and you ship it, you will not get to keep that money even if the diamond isn't recovered" (but don't you know that already?). The more important advice is technical, and it's about all of the things you can do to reduce the risk of that ever happening to you.
- afaulkner 15y ago
  If you are looking for a technical solution you might want to check out..ahem... my company ThreatMetrix. As ex paypal Im guessing you have invested a lot in risk management, ML and automation etc as its really technically difficult to make such a broken process like online payments this simple so you may have it all covered. What we can bring to the table is a (300ms) https name value pair API that delivers aggregated intelligence in real-time based on transactions, identities, devices and behavior across 6000 sites that represent over 1MM individual CNP txns on a daily basis (only 1/5 of Paypals txns but hey we are a startup!) which you can ingest into your rules engine or risk models during, before or after the payments authorization/capture. We dont just provide a score which can be impossible to integrate with other ML engines we also provide customizable (by you) reason codes/triggers that can be used to characterize behavior e.g. customer's computer associated with 3 difference identities and 4 different proxy ip addresses across global network in last hour....Data Geeks geek out on it as we also provide full attribute data back in the API response so provides a good way to do feature extractions for SVMs etc. We have been proven to reduce FP and increase TP. We currently process peak 700 tps with about 20% degradation in performance at load. We suck at batch processing cause its just not our thing. I head up products and one of the founders so not selling just helping as I think you have a solid offering that should do very well. Paypal bought Fraud Sciences for 170M but you can rent ThreatMetrix ;-)
  - djcapelis 15y ago
    Also selling! Don't be ashamed of it. If you have a good product, sell it! (I have no idea whether you have a good product, but I'm hoping you do, because the problem you're trying to solve is an annoying one.)

white_devil 15y ago

Q: Do I need to be in the United States to use Stripe? A: Yes. --> FFFFFFUUUUUUUUUUUUUUUUUUUUUUUU Would you finally be the one to tell us what the hell is the problem with non-US customers?

boucher 15y ago
Unfortunately, there are just a lot of regulations when dealing with payments across international borders.
- white_devil 15y ago
  Seriously, I really need to know something about this. It's driving me mad to keep seeing promising payment services only to find out they won't deal with me. Yours is the most compelling one I've seen.
  - _delirium 15y ago
    One major barrier is that in many countries it's difficult to set up a service like this in a way that doesn't require it to be a bona-fide "bank", and setting up a bona-fide bank is often not low-overhead.
    - white_devil 15y ago
      Do they even need a presence in other countries to be able to work with companies in them?
  - maaku 15y ago
    The Patriot Act.
    - jules 15y ago
      While this reply is short it is right. The Patriot Act is the reason why these nice things generally aren't available to non US citizens. Patriot Act Section 312: http://ithandbook.ffiec.gov/media/resources/3356/con-usa_patriot_act_section_312.pdf http://ithandbook.ffiec.gov/media/resources/3356/con-usa_pat... As you can see if you want to provide this service to a foreigner then you need to do checks on this person and his bank. This costs such much that most will decide that it is not cost effective to do so.

davros 15y ago

We scale up pretty well. Everything that you get with a merchant account (correct statement text, money held in your name), you get with Stripe. Key scaling issue is pricing. 2.9% is fine for low volumes and no risk validation, but once you're turning over large volumes and have a track record of no chargebacks etc the comparison looks much worse. If you can offer businesses a pricing that 'scales' with substantial reductions in transaction fee by volume then there is a growth path, otherwise any business would be crazy to stick with you no matter how good your service and APIs, etc because 2.9% could be half their gross margin and they can get 1% by dealing with the bank direct.

Robbnotes 15y ago
I really like your idea of "pricing that scales." However, I feel the need to point out that no one can get a 1% rate on eCommerce transactions from their bank or anyone else. Interchange rates (cost) from Visa and MasterCard range from 1.71% + $.15 all the way up to 3.06% + $.10. Having said that, you're right about larger businesses finding Stripe's rates unpalatable. Maybe they're just trying to become the Square of eCommerce - which might not be a bad idea.
- davros 15y ago
  However, I feel the need to point out that no one can get a 1% rate on eCommerce transactions from their bank or anyone else. I didn't mention 1% as idle guesswork, I have direct knowledge of several businesses paying close to 1% on online (card not present, no signature) transactions. I'm not saying its easy to negotiate good rates, but its possible, even for fairly early stage startups. I got 1.6% for a startup turning over only about $20k per month, no track record and 'non standard' business model. So feel free to push your bank, get quotes from their competitors, they can almost certainly do better for you. EDIT: I just notice that stripe is planning to introduce volume discounts - that would make a very nice product!
  - nkurz 15y ago
    I'm not sure how to say this politely, but I think that you are mistaken. Perhaps you are not including some relatively high monthly fees? Perhaps you are not accepting all major cards? Maybe you are including a large percentage of debit cards? Maybe all your transactions qualify for some particular promotional rate? I do about that volume, mostly card present, and think I have decent rates. I think I'm at Interchange plus .2% plus 1 cent per transaction plus $20 per month, and end up around 2.7% for total fees. I'm sure one can do better, but not by a lot. I'm willing to bet a considerable sum that you are not actually paying 1.6 percent once it's all added up. But if somehow you are, the loss of the bet would pay back quickly if I could get those rates myself!