7 ms·

Making Your Own Merchant Service Provider

268 points by progval 1y ago

gethly 1y ago
[flagged]
- ronsor 1y ago
  > Making a PP is insanely hard on technical, legal, financial, insurance, compliance... level. It's probably cheaper and easier to get your own country and then make your own regulations to avoid that stuff. That's how terrible it is.
- udev4096 1y ago
  > today it is being used as store of value Bitcoin is not the only currency. There are quite a lot of decent networks who offer quick transactions with almost no fees and is not a speculative currency
  - latchkey 1y ago
    Tokenized bitcoin is actually perfect for this. Bitcoin is otherwise, a useless pet rock and if you follow my comment above, it makes it useful, while also removing all the ESG arguments against bitcoin (because tokenized bitcoin is on eth and eth is PoS).
  - gethly 1y ago
    I never mentioned bitcoin and you are missing the point here. Cryptocurrency network is just a publicly available distributed ledger that records "financial" movements, these movements are denominated in the inherent cryptocurrency of the network. They are just units of measure but they themselves do not store any value. The world needs to start actually using crypto for payments, so you can exchange FIAT or precious metals for a crypto coin and then use it to buy groceries. It is just a means of exchange of value, not the value itself. The fact that people take it as store of value should necessitate a nee designation beyond the "retard" classification.
- mwenge 1y ago
  Well no, as a consumer you need to feel comfortable that you know how to get your money back if there's a problem with your purchase, as a merchant you need similar protections and a stable cost model, and as a bank you need an income model to cover all the costs and risks associated with processing the transaction. Moving the money is the easy part and is not the main set of problems that the card payment schemes have solved.
  - nebezb 1y ago
    > Moving the money is the easy part and is not the main set of problems that the card payment schemes have solved. Nailed it. Anyone can move money. As a consumer, I always opt to pay for credit card where available. The safeties provided to me facilitated by everyone in the network – from issuer to acquirer and everyone in between – is exactly why. I don't want to consider waiting 12 months in line at small claims to get back $200 sent over Interac for services that were never provided by a shoddy business owner. The cost of those consumer safeties and convenience is incurred by the merchant. This is the cost of business.
    - latchkey 1y ago
      When you buy something from Amazon, who protects your purchases, Amazon or the credit card company? This "insurance" could be offloaded to a neutral third party that isn't controlled by the credit cards. Often, you purchase additional protection insurance on your big ticket items. This could easily be extended to cover whatever credit cards would have been relied upon in the past.
      - nebezb 1y ago
        > This "insurance" could be offloaded to a neutral third party that isn't controlled by the credit cards. I had not considered this. My first thought is how technically and operationally complex it would be for an insurer to underwrite these transactions "on-the-fly" from merchants they don't know, but it is probably a great idea.
        1y ago
- latchkey 1y ago
  > I am no fan of crypto as today it is being used as store of value(which it is not) instead of mechanism to transfer value(which it is). Once we finally move into the right direction, I know I'll have a good day. People need and like to use credit, but they are doing it wrong by contributing to the "rotten" system. Crypto is a great store of value because you can use it as collateral to borrow against. Supply eth, borrow usdc, withdraw as usd. This is tax free since the conversion is 1:1 and there are no gains to report. Instead of buying things with a credit card and paying it back every month, provide crypto as collateral, borrow against it and then pay it back. The difference is that this takes an upfront investment in order to get yourself started. Not too much different than the way credit works in SE Asia, since they time lock a deposit, to enable a debt card. Maintaining your collateralization ratio (this answers the price volatility question) is no harder to do than paying the exorbitant fees to credit card companies for your balance. This could easily be wrapped into a nice UX. It would work globally and enable all sorts of great commerce. No more giving up all your information to the credit card companies. No more credit scores to get hacked either.
  - rcxdude 1y ago
    This is more of a guide to dodge taxes than it is how to use crypto for transactions, or avoid the traditional financial system.
    - latchkey 1y ago
      This has _nothing to do with dodging taxes_. Everyone, including me, should pay their taxes within the rules of law. Do you pay taxes when you "borrow" funds from a credit card and pay them back every month? No. This is really no different except that instead of borrowing from a third party, you're borrowing from yourself. In the same way that you don't pay taxes when you borrow from a bank or when you borrow from your friend. Cut out the middleman and be your own bank. My prediction is that one day, people will think of crypto as the traditional finance system. We're already seeing the transition happening today.
  - habinero 1y ago
    You're solving for the completely wrong problem. Several wrong problems, actually. Your scheme is just debit cards with more work, less privacy and a lot more risk. Consumers use credit cards because of chargebacks and fraud protection. If I get my card stolen or I accidentally pay a fraudster, I get that money back. Crypto's irreversibility is one of the worst things about it from a consumer perspective. It's also horrible for privacy since all your transactions are literally public.
- stego-tech 1y ago
  > I'm not even going to read it because it is pointless. Reading it would’ve saved you the embarrassment of making a comment that effectively retreads the actual article in its entirety while also painting yourself in a negatively arrogant light. This ain’t Reddit. RTA is advised before commenting.
- deleted 1y ago
  [deleted]
- burntpineapple 1y ago
  lol you’re being very dramatic, it could absolutely be done in a garage. Legacy orgs are held together with billions of dollars worth of last minute fixes and duct tape in the US
  - ta12653421 1y ago
    since I've founded banks over here in Europe, I can tell you: NO! Thats nothing that you could do in a garage :) Even a PSP requires some "minium/fixed setup" on different layers in the org, so building this with two people over your spring break will not be possible.
  - immibis 1y ago
    One of the PCI-DSS requirements is that you're not literally doing it in a garage.
- deleted 1y ago
  [deleted]
- dheera 1y ago
  As long as people have to do their taxes every time they spend crypto it isn't viable as a value transfer system in the US. In Dubai and Singapore, maybe it works well because capital gains aren't taxed.
throwanem 1y ago
So Valve buys Itch cheap in a year or two?
elevenoh4 1y ago
there's an avalanche of money waiting for more competition to Stripe i've seen too many businesses destroyed by sudden "your account is closed" with no human contact
- Keyframe 1y ago
  If it's as difficult as they say it is, how did Stripe do it?
  - danielmarkbruce 1y ago
    They worked at it for a long time before launch, started with a very narrow product and only had customers they actually knew (reduces fraud a lot), worked like crazy, operated in a market where the competition was abysmal.
- danielmarkbruce 1y ago
  There's an avalanche of money waiting for more competition to Nvidia too.... The problem is, many folks have absolutely no comprehension of how difficult it is to build a payment processor that can serve lots of customers they don't personally know. The fraud is just insane. The regulation is insane. The card network rules are insane.
FinnKuhn 1y ago
While I'm not the biggest fan of crypto overall this is definitely one instance where you could actually use it in a way that makes sense by offering people to pay with it instead. Only issue is converting it afterwards into fiat currency.
- tonyhart7 1y ago
  [flagged]
  - FinnKuhn 1y ago
    None of that has anything to do with me liking it. There are enough things that are mainstream that you probably don't like either.
- kaishiro 1y ago
  That's not actually the only issue, unfortunately. Steam did in fact accept Bitcoin for a while, but it was dropped in 2017, with Newell stating: > “We had problems when we started accepting cryptocurrencies as a payment option. 50% of those transactions were fraudulent, which is a mind-boggling number. These were customers we didn’t want to have.” [1] [1] https://finance.yahoo.com/news/steam-co-founder-reveals-why-211430243.html https://finance.yahoo.com/news/steam-co-founder-reveals-why-...
  - cosmic_cheese 1y ago
    Seems like a catch-22. Crypto can’t be used like legitimate currency because it’s not used like legitimate currency, and fraud can’t be addressed because there’s no regulation and no mechanisms by which to make victims whole. There are parts of me that can see some appeal in cryptocurrency but I can’t see any way around this, at least not without impacting what made it appealing in the first place.
  - Feeble 1y ago
    That's quite interesting, I wonder how they were fraudulent as bitcoin transactions dont have chargebacks etc. In the article they also mention that the price for the game would fluctuate which seems to indicate they actually priced the games in Bitcoin. Normally price would be Euro, USD etc and price conversion to Bitcoin would be done at check out. I guess these were the early days though =)
bob1029 1y ago
> In short, just making your own payment processor is hilariously difficult and far beyond the means of Valve let alone Itch. Depending on what the speaker means by "Payment Processor", they may be suggesting making your own bank, or somehow convincing a bank to let Itch shove payments through them; who will eventually do the exact same thing as what happened here. There's no winning play there. PCI-DSS compliance wasn't even mentioned and it is easily able to overwhelm organizations like Valve and Itch on its own. The hardest part of payment processing is the network. Connecting the acquirers to the issuers in such a way that everyone is happy with the arrangement. Just like the hardest part of the power grid is the transmission infrastructure. The endpoints are far more trivial to replace. If you want to use the existing network, you have to play by all of the rules. The only real way out of this system is to use a completely different kind of currency.
- ta12653421 1y ago
  For shops like Valve only if they need SAQ-D in case they want to store the credit card numbers on their own, I'd say? SAQ-A til SAQ-C is doable for any e-commerce company.
  - notpushkin 1y ago
    Yeah, but assuming they want to build everything from scratch it would get way harder very quickly.
  - bob1029 1y ago
    It's likely they would need on-site visits from a QSA if they wanted to go all the way into this. Valve would fall into the Level 1 compliance category. Self-reporting won't work for that kind of transaction volume.
- CamouflagedKiwi 1y ago
  PCI-DSS can be tough but it is also very specifically scoped and so if done well you can keep it very limited. From the way the article describes Itch (1 person + some part time help - which isn't totally ideal for PCI either), it absolutely could overwhelm them, but Valve are certainly a big enough organisation to handle it just fine - assuming, of course, they they wanted to.
stego-tech 1y ago
The solution to this issue is regulation, pure and simple. It doesn’t even have to be a complicated bill, either: “Financial institutions and financial services providers are barred from blocking, interfering with, restricting, or refusing any consensual transaction that complies with laws regarding content, materials, goods, or services.” Admittedly in the USA this tees up a 1A case over whether companies have freedom of speech (they shouldn’t), but in other jurisdictions it could be the game changer needed to unshackle commerce from the control of a handful of boardroom puritans and risk-adverse compliance departments. If porn has a high rate of chargebacks, then stop allowing them without a higher burden of proof on the person requesting them, for instance. There’s ample room to enforce accountability on consumers and processors without upending the proverbial produce cart.
- 9dev 1y ago
  Instead of tailoring this to financial service providers, create conditions for essential service operators that must ensure service delivery neutrality. That way, the legislation applies to all kinds of infrastructural services, and you don’t even open up the can of worms that is freedom of speech, since the affected companies don’t get to have a say in who they want to do business with.
  - stego-tech 1y ago
    For the US specifically (I can’t speak to other countries), that could be an excellent use case for the USPS: digital money orders. Pay with cash or debit card at the post office, claim it back to a bank account. Other postal services could reciprocate/honor those orders in that specific currency (or offer conversion at a publicized daily rate). Since it’s cash only (no credit), it significantly reduces chargebacks - and because it’s through national postal services, it still allows checking/tracking by governments to keep tabs on illicit transactions. Thing is, that would absolutely be blocked by current payment providers and their lobbyists. I fully agree with you, though. EDIT: Hah, I’m late to this party. Physical international money orders have already been discontinued by the USPS as of last year and are dwindling globally thanks to FinTech. The lack of a digital equivalent is definitely frustrating, as their flat fees and discretion were rather appealing.
c0balt 1y ago
That was an interesting read. The core issue unfortunately appears to boil down to being a deeply complex of net of trust and risk distribution. The issue being a "human"/societal problem, instead of technology, makes me wonder if this could be slowly changed over a few generations. The amount of momentum required would be quite high tough.
udev4096 1y ago
[flagged]
- thunderfork 1y ago
  The actual experience of actually selling or buying actual things with crypto is nearly untenable, and doesn't actually free you from all the legal requirements that make payfac hard
  - wmf 1y ago
    Stripechain is going to fix the UX but you're right that it won't fix "reputational risk".
    - thunderfork 1y ago
      [dead]
- scyclow 1y ago
  > POW is necessary to keep the network secure It's certainly a way to keep the network secure. At best it's marginally better than POS. At worst, it's a ticking time bomb security budget cliff.
debo_ 1y ago
I've built a payfac before, and while I think this author is overstating the difficulty of doing so in 2025, I agree that it wouldn't help Valve to do so. We weren't the ones that decided it was too risky to deal with specific merchant categories; our processor did that for us. It wasn't even a discussion. (Nevermind such policies like "all of Puerto Rico is too risky to deal with.")
meagher 1y ago
In 2018, Patreon almost got kicked off of Stripe because Mastercard objected to NSFW content (probably because of PACs and/or “moralizing busybodies”). Patreon booted most of the NSFW creators and OnlyFans scooped them up. OnlyFans is now significantly bigger than Patreon.
- meindnoch 1y ago
  And how come the card companies aren't objecting to OnlyFans?
  - prasadjoglekar 1y ago
    They grew too fast too quickly. Now the gravy train is too yummy to object to from within.
    - appease7727 1y ago
      Gravy train might not be the best choice of words, here
  - throwawaylaptop 1y ago
    The crazies online say it's because OnlyFans owner is Jewish.
    - throwawaylaptop 1y ago
      Did I get downvoted because people don't believe crazy right wingers say this? Or just for giving their thoughts voice? I don't get it.
- FinnKuhn 1y ago
  Just to add to this. OnlyFans also uses Stripe as their payment processor.
  - mansa10 1y ago
NoahZuniga 1y ago
> If you're making your own PayFac, you're suddenly responsible for getting and securely storing that information and handing it up to your sponsoring Acquirer. You're also responsible for verifying it, ... My understanding is that steam already has to do this? Like when I buy a game on steam it goes to steam, who then redistributes the funds to themselves, developer and tax man. Since they are holding the money, are they not defacto already a Payment Facilitator?
- Crackula 1y ago
  afaik games are not considered money. and steam points are not considered money either. only withdrawable credits (casinos/online payment apps) are considered as money
  - Shank 1y ago
    Steam pays developers their cut from sales, which is probably what they’re referring to.
    - NoahZuniga 1y ago
      Yes, steam isn't holding the customers money, but the developers money.
- ta12653421 1y ago
  Most of the companies store tokens for CC numbers etc., apart from not beeing allowed to store the number itself, it doesnt bring any good to you since every hacker will be pleased to stop by; If someone is stealing the tokens, they can't use it for much.
sschueller 1y ago
The only correct solution is something like the Brasilian pix. No fee paid for by taxes and the central bank just like the management of cash. A digital alternative to cash offered by the central banks which are the ones responsible to enable financial transactions. Since so many are moving to cashless it is important for the central bank to retain control of the currency alternative to cash. We can not allow this explosion of middle men all taking a cut of something they should not be part off especially since they now have such power that they decide what you can and cannot buy instead of the laws of the land.
- Voultapher 1y ago
  Yep. The EU has also enacted various regulations to enable cheap bank to bank transfers and online payments but pix seems even better - haven't use it though. 3% transaction fees are ridiculous and only possible because Visa/MC have successfully - until now - lobbied against any good alternative in the US. Privatizing water supply is an awful deal for citizen - ask the UK - since the incentives are anti-consumer and public infrastructure is more often than not a monopoly by definition. I'd count transferring money online as public infrastructure and it should get the same treatment.
  - sschueller 1y ago
    Switzerland has a huge conflict of interest with the banks and a similar P2P service (TWINT) that isn't free for merchants. This service is owned by the same banks that are supposed to by law implement instant IBAN to IBAN but of course those same banks have added fess to this.
    - mansa10 1y ago
      Same problem in Denmark with our banks. Our popular QR payment system, known as MobilePay, is owned by banks that have a financial interest in letting payments continue to process via visa/mc cards underneath, as they get a big interchange fee from reusing the legacy payment system. (around 0,2% interchange on a typical danish visa transaction). In the past, we had a popular nationally owned cheaper safeguard against foreign payment monopolies in the form of Dankort, a local visa/mc alternative, but the company operating Dankort (NETS) has been sold by our gov+danish banks to an american equity firm, further removing any incentive for danish banks to not just quietly force visa/mc on everyone, so Dankort is now slowly dying. The rent seeking is made even more perverse by the EU PSD2 legislation from 2018 that makes it illegal to forward payment fees onto shoppers, which removes all the textbook consumer behavior (judging price vs quality) from the equation. That law has created a situation where shoppers use whatever payment method their bank hands out to them and merchants are forced to blindly accept whatever shoppers use and pay up the fees which goes back to the same banks that decided what to give shoppers in the first place. End result of this is that the banks best move is to push visa/mc, make everything seem hard to change & confuse politicians. Systems like Pix give me hope but I don't believe the existing system can be saved, it needs to be replaced by a new actor, aggressively supported at EU or national level, probably both.
Shank 1y ago
I think you really need to make a card that isn’t a Visa or MasterCard or a QR payments system that’s wired to common banks. I don’t think anyone has suggested creating a payment processor without this, because the issue is with Visa/MasterCard, not with the middleman. I think Valve could actually find a bank to work with to run a QR payments scheme for the gaming industry (SteamPay perhaps?) that’s “topped up” via ACH. Just ignore the whole card part, since it’s online you don’t even need it. Require biometrics and you can make the fraud burden easier. Of course this would cost a lot of money, but it’s at least in the realm of possible versus a PayFac etc.
- tmcz26 1y ago
  About a month ago this topic came up and I commented this about “just” creating a new Visa: https://news.ycombinator.com/item?id=44611807 https://news.ycombinator.com/item?id=44611807
  - immibis 1y ago
    That's true, but how did Visa and Mastercard come about in the first place, anyway? And could that ever be replicated again? Did they start with a small scope before expanding to be globally accepted? There are services where you enter your username and password for your bank, and they log into your online banking for you, and make a giro transfer outwards, and they can confirm the transfer was sent because they sent it. Bank security departments don't like this, but they can't always do anything about it.
- LoganDark 1y ago
  > wired to common banks I highly doubt banks would choose some completely new payment processor (or card, etc.) over Visa or Mastercard: Visa and Mastercard can just put in their terms of service that you're not allowed to use that payment processor and that'll kill them real quick. Highly unlikely any existing bank would give up Visa or Mastercard just for that.
elric 1y ago
American hate for wire transfers will never sound anything other than irrational to me. Why don't you have an equivalent of Europe's Instant Payments? The author mentions the storefront pocketing the money, that seems implausible? If an unscrupulous storefront can pocket money that would be wired, it could also pocket money that would be paid by CC. And then there's the weird thing about payment volumes...that's been a solved problem for half a century?
- palmfacehn 1y ago
  >it could also pocket money that would be paid by CC. No. The card processor will return the customer's funds for various reasons. In many cases, "no reason" is sufficient for a chargeback, especially if you are dealing in intangibles, such as software licenses or digital media. In addition to returning the customer's funds, the merchant is typically penalized a "chargeback fee". This means as a merchant, if your chargeback fee is $25 and the product is $5, one chargeback can set you back 6 sales. For these reasons, as well as other minimum rates, certain price levels are untenable. Consequently, many products are either not sold at all or sold at a much higher price. The conditions make it more sensible for the merchant to sell high priced items to less troublesome customers. The percentage of the card processor's fees are relatively less. The probability of a chargeback is lower. As you have less customers, you can more easily provide support and contact them directly.
  - elric 1y ago
    In the case of fraud (like the article's example of a thieving storefront), banks can simply reverse the transfer. This is not an all-or-nothing deal where CCs are always safe because of theoretical chargebacks, and bank transfers are not. Also: no-reason chargebacks are absolute BS. I worked on a PSP for a largeish adult entertainment business, and I remain convinced that most porn chargebacks are a case of "post nut clarity".
    - palmfacehn 1y ago
      I'm not sure how that works on the continent for transfers, but with cards or PayPal the chargeback/dispute policies are usually pretty clear. Basically, the merchant is always wrong for even being in the neighborhood of a disputed transaction. If you don't have a signed delivery confirmation for your card-not-present transaction, you're out of luck.
palmfacehn 1y ago
Cryptocurrencies are many different things to different people. Putting aside the speculative mania, the payment processor problem is one of the main problems private cryptocurrencies solve. Stablecoins are not without issues, but they've largely solved the problem of price volatility. Objections around issuance and backing might be raised, but this is more interesting for trading and less relevant for merchant transactions. Yes, there are no chargebacks with cryptocurrencies. This is an advantage for the merchant. Before anyone goes off the deep end here, let's recall the context of the discussion: one time payments to reputable merchants for trivial amounts. Game purchases do not require life changing amounts of currency to change hands. Steam and Itch are well known brands. So what is left to object to? My impression is that there is excessive cultural and political baggage. From the article: >Capitalism sucks. The economic ecosystem sucks. People unrelated to transactions in any way except "They have the tech to facilitate them" deciding that entire industries don't get to make money and feed their staff because "It's risky to handle these payments" suck. That these entities can also be attacked by PACs and shamed into being the morality police sucks. ... >But I still hate crypto. Note that even though the author correctly observes the high regulatory overhead and political, non-market forces, they still manage to blame "Capitalism".
gavinray 1y ago
I tried to build a SaaS for niche fetish content creators to connect with fans Got as far as several emails to vendors who all replied they wouldn't facilitate the payments, and saying "Good luck" trying to find one that would Absolutely stupid system if you ask me.
- ta12653421 1y ago
  There are "dediacated P0rn billing" companies, reach out to them.
starkparker 1y ago
I remember working on POS for a non-porn industry also shut out by payment processors, and the increasingly obtuse hoops and loopholes they had to navigate were wild to hear about after working in more traditional SaaS and eCom. Reverse ATMs, cash-to-crypto, cash-to-barter, all different state-to-state and between nations. This shit is hard when you're arbitrarily frozen out of access. Really made me rethink how I pay for things, especially at in-person retail.
djfobbz 1y ago
Would you like to collaborate on this endeavor? I can contribute $36M in annual processing if that helps in bringing additional volume to get setup.
jjangkke 1y ago
Problem with accepting crypto is the on-ramp/off-ramp to fiat Everybody, except for the few that are holding crypto and expect it to irrationally keep rising forever, are looking to convert it into ironically fiat money which they swear is the enemy. This means other than bordering purely illegal or prohibited businesses that payment processors cannot handle (remember there are adult processors too), crypto will never become mainstream replacement for fiat. Right now liquidity is there to absorb the ramping process but long term observers will note how fragile and quickly this can go away. Already, the number of new wallets being created on Bitcoin is plummeting. Search terms for bitcoin has tapered off. There is almost no real interest in it being a replacement for fiat or gold. I wish gold could become more accepted but we all know the history of e-gold and many of us know its connection to Bitcoin and its curious proximity of origin. It's just not a good look for companies selling mainstream products to suddenly accept a medium which is clearly being used for pump and dump and laundering of money for transnational crime and no amount of gaslighting or pushing crypto will change it, in fact it achieves the opposite of their goals. We might at some point see a digital currency but this would be completely different from the crypto in existence today and all stablecoins that isn't issued by the government runs the risk of reporting what is different than what is there in the vaults as if governments haven't been caught doing this in the past. ex) Tether's reserves unaudited unverified mystery
- meagher 1y ago
  Seems possible that on/off-ramps are leveled up in the next few years as Stripe and other large financial institutions all try to launch and dominate stablecoins.
Gurunanak 1y ago
Look at India, the UPI generates a billion+ transaction per day. Just amazing how to include mom and pop merchants into digital economy and not to suck up to Master/VISA networks.
- lovelearning 1y ago
  Misses the point of the article. UPI relies on the same moralizing acquirers (banks) and facilitators (like RazorPay) as the card networks.
czhu12 1y ago
Just a personal story: I built and ran a site that allowed users to upload a stable diffusion model and generate images with them. I originally received money via stripe, and then promptly got kicked off after about 9 months. They threatened (via a clearly automated message), that the fines could be as high as 400k, ended up paying a 4k fine and getting off ASAP. While we were on stripe though, the charge back rate was probably ~2-3%, which, I think is probably fine. Moved over to Coinbase commerce and sales dropped from ~5k / month to 1k / month.
- TZubiri 1y ago
  Were your users generating CSAM images?
- llsf 1y ago
  Could you share this automated message (anonymized if need be) ? Very curious to hear what ground and verbiage was used to close your account.
bokohut 1y ago
I enjoy reading others' complaints about payments and only after the correct person gets frustrated enough, shunning the buyout greed, will a feasible domestic solution manifest. Having written all the code and founded my own "Payment Processor" twice in the last few decades, this is an interesting space that demands subject matter expertise 24/7/365. Having lived through many global events of all kinds, that the general public never saw since being in payments at the inception of the internet, I learned things not possible today. I recall vividly those that laughed at me in the 90's when responding to inquiries about what I did for a living. After stating that I was building a payment server for the internet all balked stating no one would pay for anything online and then PayPal became our client followed by many other well known brands. Is anyone still paying online? Stay Healthy!

268 points by progval 1y ago

gethly 1y ago

[flagged]

ronsor 1y ago
> Making a PP is insanely hard on technical, legal, financial, insurance, compliance... level. It's probably cheaper and easier to get your own country and then make your own regulations to avoid that stuff. That's how terrible it is.
udev4096 1y ago
> today it is being used as store of value Bitcoin is not the only currency. There are quite a lot of decent networks who offer quick transactions with almost no fees and is not a speculative currency
- latchkey 1y ago
  Tokenized bitcoin is actually perfect for this. Bitcoin is otherwise, a useless pet rock and if you follow my comment above, it makes it useful, while also removing all the ESG arguments against bitcoin (because tokenized bitcoin is on eth and eth is PoS).
- gethly 1y ago
  I never mentioned bitcoin and you are missing the point here. Cryptocurrency network is just a publicly available distributed ledger that records "financial" movements, these movements are denominated in the inherent cryptocurrency of the network. They are just units of measure but they themselves do not store any value. The world needs to start actually using crypto for payments, so you can exchange FIAT or precious metals for a crypto coin and then use it to buy groceries. It is just a means of exchange of value, not the value itself. The fact that people take it as store of value should necessitate a nee designation beyond the "retard" classification.
mwenge 1y ago
Well no, as a consumer you need to feel comfortable that you know how to get your money back if there's a problem with your purchase, as a merchant you need similar protections and a stable cost model, and as a bank you need an income model to cover all the costs and risks associated with processing the transaction. Moving the money is the easy part and is not the main set of problems that the card payment schemes have solved.
- nebezb 1y ago
  > Moving the money is the easy part and is not the main set of problems that the card payment schemes have solved. Nailed it. Anyone can move money. As a consumer, I always opt to pay for credit card where available. The safeties provided to me facilitated by everyone in the network – from issuer to acquirer and everyone in between – is exactly why. I don't want to consider waiting 12 months in line at small claims to get back $200 sent over Interac for services that were never provided by a shoddy business owner. The cost of those consumer safeties and convenience is incurred by the merchant. This is the cost of business.
  - latchkey 1y ago
    When you buy something from Amazon, who protects your purchases, Amazon or the credit card company? This "insurance" could be offloaded to a neutral third party that isn't controlled by the credit cards. Often, you purchase additional protection insurance on your big ticket items. This could easily be extended to cover whatever credit cards would have been relied upon in the past.
    - nebezb 1y ago
      > This "insurance" could be offloaded to a neutral third party that isn't controlled by the credit cards. I had not considered this. My first thought is how technically and operationally complex it would be for an insurer to underwrite these transactions "on-the-fly" from merchants they don't know, but it is probably a great idea.
      - 1y ago
latchkey 1y ago
> I am no fan of crypto as today it is being used as store of value(which it is not) instead of mechanism to transfer value(which it is). Once we finally move into the right direction, I know I'll have a good day. People need and like to use credit, but they are doing it wrong by contributing to the "rotten" system. Crypto is a great store of value because you can use it as collateral to borrow against. Supply eth, borrow usdc, withdraw as usd. This is tax free since the conversion is 1:1 and there are no gains to report. Instead of buying things with a credit card and paying it back every month, provide crypto as collateral, borrow against it and then pay it back. The difference is that this takes an upfront investment in order to get yourself started. Not too much different than the way credit works in SE Asia, since they time lock a deposit, to enable a debt card. Maintaining your collateralization ratio (this answers the price volatility question) is no harder to do than paying the exorbitant fees to credit card companies for your balance. This could easily be wrapped into a nice UX. It would work globally and enable all sorts of great commerce. No more giving up all your information to the credit card companies. No more credit scores to get hacked either.
- rcxdude 1y ago
  This is more of a guide to dodge taxes than it is how to use crypto for transactions, or avoid the traditional financial system.
  - latchkey 1y ago
    This has _nothing to do with dodging taxes_. Everyone, including me, should pay their taxes within the rules of law. Do you pay taxes when you "borrow" funds from a credit card and pay them back every month? No. This is really no different except that instead of borrowing from a third party, you're borrowing from yourself. In the same way that you don't pay taxes when you borrow from a bank or when you borrow from your friend. Cut out the middleman and be your own bank. My prediction is that one day, people will think of crypto as the traditional finance system. We're already seeing the transition happening today.
- habinero 1y ago
  You're solving for the completely wrong problem. Several wrong problems, actually. Your scheme is just debit cards with more work, less privacy and a lot more risk. Consumers use credit cards because of chargebacks and fraud protection. If I get my card stolen or I accidentally pay a fraudster, I get that money back. Crypto's irreversibility is one of the worst things about it from a consumer perspective. It's also horrible for privacy since all your transactions are literally public.
stego-tech 1y ago
> I'm not even going to read it because it is pointless. Reading it would’ve saved you the embarrassment of making a comment that effectively retreads the actual article in its entirety while also painting yourself in a negatively arrogant light. This ain’t Reddit. RTA is advised before commenting.
deleted 1y ago
[deleted]
burntpineapple 1y ago
lol you’re being very dramatic, it could absolutely be done in a garage. Legacy orgs are held together with billions of dollars worth of last minute fixes and duct tape in the US
- ta12653421 1y ago
  since I've founded banks over here in Europe, I can tell you: NO! Thats nothing that you could do in a garage :) Even a PSP requires some "minium/fixed setup" on different layers in the org, so building this with two people over your spring break will not be possible.
- immibis 1y ago
  One of the PCI-DSS requirements is that you're not literally doing it in a garage.
deleted 1y ago
[deleted]
dheera 1y ago
As long as people have to do their taxes every time they spend crypto it isn't viable as a value transfer system in the US. In Dubai and Singapore, maybe it works well because capital gains aren't taxed.

throwanem 1y ago

So Valve buys Itch cheap in a year or two?

elevenoh4 1y ago

there's an avalanche of money waiting for more competition to Stripe i've seen too many businesses destroyed by sudden "your account is closed" with no human contact

Keyframe 1y ago
If it's as difficult as they say it is, how did Stripe do it?
- danielmarkbruce 1y ago
  They worked at it for a long time before launch, started with a very narrow product and only had customers they actually knew (reduces fraud a lot), worked like crazy, operated in a market where the competition was abysmal.
danielmarkbruce 1y ago
There's an avalanche of money waiting for more competition to Nvidia too.... The problem is, many folks have absolutely no comprehension of how difficult it is to build a payment processor that can serve lots of customers they don't personally know. The fraud is just insane. The regulation is insane. The card network rules are insane.

FinnKuhn 1y ago

While I'm not the biggest fan of crypto overall this is definitely one instance where you could actually use it in a way that makes sense by offering people to pay with it instead. Only issue is converting it afterwards into fiat currency.

tonyhart7 1y ago
[flagged]
- FinnKuhn 1y ago
  None of that has anything to do with me liking it. There are enough things that are mainstream that you probably don't like either.
kaishiro 1y ago
That's not actually the only issue, unfortunately. Steam did in fact accept Bitcoin for a while, but it was dropped in 2017, with Newell stating: > “We had problems when we started accepting cryptocurrencies as a payment option. 50% of those transactions were fraudulent, which is a mind-boggling number. These were customers we didn’t want to have.” [1] [1] https://finance.yahoo.com/news/steam-co-founder-reveals-why-211430243.html https://finance.yahoo.com/news/steam-co-founder-reveals-why-...
- cosmic_cheese 1y ago
  Seems like a catch-22. Crypto can’t be used like legitimate currency because it’s not used like legitimate currency, and fraud can’t be addressed because there’s no regulation and no mechanisms by which to make victims whole. There are parts of me that can see some appeal in cryptocurrency but I can’t see any way around this, at least not without impacting what made it appealing in the first place.
- Feeble 1y ago
  That's quite interesting, I wonder how they were fraudulent as bitcoin transactions dont have chargebacks etc. In the article they also mention that the price for the game would fluctuate which seems to indicate they actually priced the games in Bitcoin. Normally price would be Euro, USD etc and price conversion to Bitcoin would be done at check out. I guess these were the early days though =)

bob1029 1y ago

> In short, just making your own payment processor is hilariously difficult and far beyond the means of Valve let alone Itch. Depending on what the speaker means by "Payment Processor", they may be suggesting making your own bank, or somehow convincing a bank to let Itch shove payments through them; who will eventually do the exact same thing as what happened here. There's no winning play there. PCI-DSS compliance wasn't even mentioned and it is easily able to overwhelm organizations like Valve and Itch on its own. The hardest part of payment processing is the network. Connecting the acquirers to the issuers in such a way that everyone is happy with the arrangement. Just like the hardest part of the power grid is the transmission infrastructure. The endpoints are far more trivial to replace. If you want to use the existing network, you have to play by all of the rules. The only real way out of this system is to use a completely different kind of currency.

ta12653421 1y ago
For shops like Valve only if they need SAQ-D in case they want to store the credit card numbers on their own, I'd say? SAQ-A til SAQ-C is doable for any e-commerce company.
- notpushkin 1y ago
  Yeah, but assuming they want to build everything from scratch it would get way harder very quickly.
- bob1029 1y ago
  It's likely they would need on-site visits from a QSA if they wanted to go all the way into this. Valve would fall into the Level 1 compliance category. Self-reporting won't work for that kind of transaction volume.
CamouflagedKiwi 1y ago
PCI-DSS can be tough but it is also very specifically scoped and so if done well you can keep it very limited. From the way the article describes Itch (1 person + some part time help - which isn't totally ideal for PCI either), it absolutely could overwhelm them, but Valve are certainly a big enough organisation to handle it just fine - assuming, of course, they they wanted to.

stego-tech 1y ago

The solution to this issue is regulation, pure and simple. It doesn’t even have to be a complicated bill, either: “Financial institutions and financial services providers are barred from blocking, interfering with, restricting, or refusing any consensual transaction that complies with laws regarding content, materials, goods, or services.” Admittedly in the USA this tees up a 1A case over whether companies have freedom of speech (they shouldn’t), but in other jurisdictions it could be the game changer needed to unshackle commerce from the control of a handful of boardroom puritans and risk-adverse compliance departments. If porn has a high rate of chargebacks, then stop allowing them without a higher burden of proof on the person requesting them, for instance. There’s ample room to enforce accountability on consumers and processors without upending the proverbial produce cart.

9dev 1y ago
Instead of tailoring this to financial service providers, create conditions for essential service operators that must ensure service delivery neutrality. That way, the legislation applies to all kinds of infrastructural services, and you don’t even open up the can of worms that is freedom of speech, since the affected companies don’t get to have a say in who they want to do business with.
- stego-tech 1y ago
  For the US specifically (I can’t speak to other countries), that could be an excellent use case for the USPS: digital money orders. Pay with cash or debit card at the post office, claim it back to a bank account. Other postal services could reciprocate/honor those orders in that specific currency (or offer conversion at a publicized daily rate). Since it’s cash only (no credit), it significantly reduces chargebacks - and because it’s through national postal services, it still allows checking/tracking by governments to keep tabs on illicit transactions. Thing is, that would absolutely be blocked by current payment providers and their lobbyists. I fully agree with you, though. EDIT: Hah, I’m late to this party. Physical international money orders have already been discontinued by the USPS as of last year and are dwindling globally thanks to FinTech. The lack of a digital equivalent is definitely frustrating, as their flat fees and discretion were rather appealing.

c0balt 1y ago

That was an interesting read. The core issue unfortunately appears to boil down to being a deeply complex of net of trust and risk distribution. The issue being a "human"/societal problem, instead of technology, makes me wonder if this could be slowly changed over a few generations. The amount of momentum required would be quite high tough.

udev4096 1y ago

[flagged]

thunderfork 1y ago
The actual experience of actually selling or buying actual things with crypto is nearly untenable, and doesn't actually free you from all the legal requirements that make payfac hard
- wmf 1y ago
  Stripechain is going to fix the UX but you're right that it won't fix "reputational risk".
  - thunderfork 1y ago
    [dead]
scyclow 1y ago
> POW is necessary to keep the network secure It's certainly a way to keep the network secure. At best it's marginally better than POS. At worst, it's a ticking time bomb security budget cliff.

debo_ 1y ago

I've built a payfac before, and while I think this author is overstating the difficulty of doing so in 2025, I agree that it wouldn't help Valve to do so. We weren't the ones that decided it was too risky to deal with specific merchant categories; our processor did that for us. It wasn't even a discussion. (Nevermind such policies like "all of Puerto Rico is too risky to deal with.")

meagher 1y ago

In 2018, Patreon almost got kicked off of Stripe because Mastercard objected to NSFW content (probably because of PACs and/or “moralizing busybodies”). Patreon booted most of the NSFW creators and OnlyFans scooped them up. OnlyFans is now significantly bigger than Patreon.

meindnoch 1y ago
And how come the card companies aren't objecting to OnlyFans?
- prasadjoglekar 1y ago
  They grew too fast too quickly. Now the gravy train is too yummy to object to from within.
  - appease7727 1y ago
    Gravy train might not be the best choice of words, here
- throwawaylaptop 1y ago
  The crazies online say it's because OnlyFans owner is Jewish.
  - throwawaylaptop 1y ago
    Did I get downvoted because people don't believe crazy right wingers say this? Or just for giving their thoughts voice? I don't get it.
FinnKuhn 1y ago
Just to add to this. OnlyFans also uses Stripe as their payment processor.
- mansa10 1y ago

NoahZuniga 1y ago

> If you're making your own PayFac, you're suddenly responsible for getting and securely storing that information and handing it up to your sponsoring Acquirer. You're also responsible for verifying it, ... My understanding is that steam already has to do this? Like when I buy a game on steam it goes to steam, who then redistributes the funds to themselves, developer and tax man. Since they are holding the money, are they not defacto already a Payment Facilitator?

Crackula 1y ago
afaik games are not considered money. and steam points are not considered money either. only withdrawable credits (casinos/online payment apps) are considered as money
- Shank 1y ago
  Steam pays developers their cut from sales, which is probably what they’re referring to.
  - NoahZuniga 1y ago
    Yes, steam isn't holding the customers money, but the developers money.
ta12653421 1y ago
Most of the companies store tokens for CC numbers etc., apart from not beeing allowed to store the number itself, it doesnt bring any good to you since every hacker will be pleased to stop by; If someone is stealing the tokens, they can't use it for much.

sschueller 1y ago

The only correct solution is something like the Brasilian pix. No fee paid for by taxes and the central bank just like the management of cash. A digital alternative to cash offered by the central banks which are the ones responsible to enable financial transactions. Since so many are moving to cashless it is important for the central bank to retain control of the currency alternative to cash. We can not allow this explosion of middle men all taking a cut of something they should not be part off especially since they now have such power that they decide what you can and cannot buy instead of the laws of the land.

Voultapher 1y ago
Yep. The EU has also enacted various regulations to enable cheap bank to bank transfers and online payments but pix seems even better - haven't use it though. 3% transaction fees are ridiculous and only possible because Visa/MC have successfully - until now - lobbied against any good alternative in the US. Privatizing water supply is an awful deal for citizen - ask the UK - since the incentives are anti-consumer and public infrastructure is more often than not a monopoly by definition. I'd count transferring money online as public infrastructure and it should get the same treatment.
- sschueller 1y ago
  Switzerland has a huge conflict of interest with the banks and a similar P2P service (TWINT) that isn't free for merchants. This service is owned by the same banks that are supposed to by law implement instant IBAN to IBAN but of course those same banks have added fess to this.
  - mansa10 1y ago
    Same problem in Denmark with our banks. Our popular QR payment system, known as MobilePay, is owned by banks that have a financial interest in letting payments continue to process via visa/mc cards underneath, as they get a big interchange fee from reusing the legacy payment system. (around 0,2% interchange on a typical danish visa transaction). In the past, we had a popular nationally owned cheaper safeguard against foreign payment monopolies in the form of Dankort, a local visa/mc alternative, but the company operating Dankort (NETS) has been sold by our gov+danish banks to an american equity firm, further removing any incentive for danish banks to not just quietly force visa/mc on everyone, so Dankort is now slowly dying. The rent seeking is made even more perverse by the EU PSD2 legislation from 2018 that makes it illegal to forward payment fees onto shoppers, which removes all the textbook consumer behavior (judging price vs quality) from the equation. That law has created a situation where shoppers use whatever payment method their bank hands out to them and merchants are forced to blindly accept whatever shoppers use and pay up the fees which goes back to the same banks that decided what to give shoppers in the first place. End result of this is that the banks best move is to push visa/mc, make everything seem hard to change & confuse politicians. Systems like Pix give me hope but I don't believe the existing system can be saved, it needs to be replaced by a new actor, aggressively supported at EU or national level, probably both.

Shank 1y ago

I think you really need to make a card that isn’t a Visa or MasterCard or a QR payments system that’s wired to common banks. I don’t think anyone has suggested creating a payment processor without this, because the issue is with Visa/MasterCard, not with the middleman. I think Valve could actually find a bank to work with to run a QR payments scheme for the gaming industry (SteamPay perhaps?) that’s “topped up” via ACH. Just ignore the whole card part, since it’s online you don’t even need it. Require biometrics and you can make the fraud burden easier. Of course this would cost a lot of money, but it’s at least in the realm of possible versus a PayFac etc.

tmcz26 1y ago
About a month ago this topic came up and I commented this about “just” creating a new Visa: https://news.ycombinator.com/item?id=44611807 https://news.ycombinator.com/item?id=44611807
- immibis 1y ago
  That's true, but how did Visa and Mastercard come about in the first place, anyway? And could that ever be replicated again? Did they start with a small scope before expanding to be globally accepted? There are services where you enter your username and password for your bank, and they log into your online banking for you, and make a giro transfer outwards, and they can confirm the transfer was sent because they sent it. Bank security departments don't like this, but they can't always do anything about it.
LoganDark 1y ago
> wired to common banks I highly doubt banks would choose some completely new payment processor (or card, etc.) over Visa or Mastercard: Visa and Mastercard can just put in their terms of service that you're not allowed to use that payment processor and that'll kill them real quick. Highly unlikely any existing bank would give up Visa or Mastercard just for that.

elric 1y ago

American hate for wire transfers will never sound anything other than irrational to me. Why don't you have an equivalent of Europe's Instant Payments? The author mentions the storefront pocketing the money, that seems implausible? If an unscrupulous storefront can pocket money that would be wired, it could also pocket money that would be paid by CC. And then there's the weird thing about payment volumes...that's been a solved problem for half a century?

palmfacehn 1y ago
>it could also pocket money that would be paid by CC. No. The card processor will return the customer's funds for various reasons. In many cases, "no reason" is sufficient for a chargeback, especially if you are dealing in intangibles, such as software licenses or digital media. In addition to returning the customer's funds, the merchant is typically penalized a "chargeback fee". This means as a merchant, if your chargeback fee is $25 and the product is $5, one chargeback can set you back 6 sales. For these reasons, as well as other minimum rates, certain price levels are untenable. Consequently, many products are either not sold at all or sold at a much higher price. The conditions make it more sensible for the merchant to sell high priced items to less troublesome customers. The percentage of the card processor's fees are relatively less. The probability of a chargeback is lower. As you have less customers, you can more easily provide support and contact them directly.
- elric 1y ago
  In the case of fraud (like the article's example of a thieving storefront), banks can simply reverse the transfer. This is not an all-or-nothing deal where CCs are always safe because of theoretical chargebacks, and bank transfers are not. Also: no-reason chargebacks are absolute BS. I worked on a PSP for a largeish adult entertainment business, and I remain convinced that most porn chargebacks are a case of "post nut clarity".
  - palmfacehn 1y ago
    I'm not sure how that works on the continent for transfers, but with cards or PayPal the chargeback/dispute policies are usually pretty clear. Basically, the merchant is always wrong for even being in the neighborhood of a disputed transaction. If you don't have a signed delivery confirmation for your card-not-present transaction, you're out of luck.

palmfacehn 1y ago

Cryptocurrencies are many different things to different people. Putting aside the speculative mania, the payment processor problem is one of the main problems private cryptocurrencies solve. Stablecoins are not without issues, but they've largely solved the problem of price volatility. Objections around issuance and backing might be raised, but this is more interesting for trading and less relevant for merchant transactions. Yes, there are no chargebacks with cryptocurrencies. This is an advantage for the merchant. Before anyone goes off the deep end here, let's recall the context of the discussion: one time payments to reputable merchants for trivial amounts. Game purchases do not require life changing amounts of currency to change hands. Steam and Itch are well known brands. So what is left to object to? My impression is that there is excessive cultural and political baggage. From the article: >Capitalism sucks. The economic ecosystem sucks. People unrelated to transactions in any way except "They have the tech to facilitate them" deciding that entire industries don't get to make money and feed their staff because "It's risky to handle these payments" suck. That these entities can also be attacked by PACs and shamed into being the morality police sucks. ... >But I still hate crypto. Note that even though the author correctly observes the high regulatory overhead and political, non-market forces, they still manage to blame "Capitalism".

gavinray 1y ago

I tried to build a SaaS for niche fetish content creators to connect with fans Got as far as several emails to vendors who all replied they wouldn't facilitate the payments, and saying "Good luck" trying to find one that would Absolutely stupid system if you ask me.

ta12653421 1y ago
There are "dediacated P0rn billing" companies, reach out to them.

starkparker 1y ago

I remember working on POS for a non-porn industry also shut out by payment processors, and the increasingly obtuse hoops and loopholes they had to navigate were wild to hear about after working in more traditional SaaS and eCom. Reverse ATMs, cash-to-crypto, cash-to-barter, all different state-to-state and between nations. This shit is hard when you're arbitrarily frozen out of access. Really made me rethink how I pay for things, especially at in-person retail.

djfobbz 1y ago

Would you like to collaborate on this endeavor? I can contribute $36M in annual processing if that helps in bringing additional volume to get setup.

jjangkke 1y ago

Problem with accepting crypto is the on-ramp/off-ramp to fiat Everybody, except for the few that are holding crypto and expect it to irrationally keep rising forever, are looking to convert it into ironically fiat money which they swear is the enemy. This means other than bordering purely illegal or prohibited businesses that payment processors cannot handle (remember there are adult processors too), crypto will never become mainstream replacement for fiat. Right now liquidity is there to absorb the ramping process but long term observers will note how fragile and quickly this can go away. Already, the number of new wallets being created on Bitcoin is plummeting. Search terms for bitcoin has tapered off. There is almost no real interest in it being a replacement for fiat or gold. I wish gold could become more accepted but we all know the history of e-gold and many of us know its connection to Bitcoin and its curious proximity of origin. It's just not a good look for companies selling mainstream products to suddenly accept a medium which is clearly being used for pump and dump and laundering of money for transnational crime and no amount of gaslighting or pushing crypto will change it, in fact it achieves the opposite of their goals. We might at some point see a digital currency but this would be completely different from the crypto in existence today and all stablecoins that isn't issued by the government runs the risk of reporting what is different than what is there in the vaults as if governments haven't been caught doing this in the past. ex) Tether's reserves unaudited unverified mystery

meagher 1y ago
Seems possible that on/off-ramps are leveled up in the next few years as Stripe and other large financial institutions all try to launch and dominate stablecoins.

Gurunanak 1y ago

Look at India, the UPI generates a billion+ transaction per day. Just amazing how to include mom and pop merchants into digital economy and not to suck up to Master/VISA networks.

lovelearning 1y ago
Misses the point of the article. UPI relies on the same moralizing acquirers (banks) and facilitators (like RazorPay) as the card networks.

czhu12 1y ago

Just a personal story: I built and ran a site that allowed users to upload a stable diffusion model and generate images with them. I originally received money via stripe, and then promptly got kicked off after about 9 months. They threatened (via a clearly automated message), that the fines could be as high as 400k, ended up paying a 4k fine and getting off ASAP. While we were on stripe though, the charge back rate was probably ~2-3%, which, I think is probably fine. Moved over to Coinbase commerce and sales dropped from ~5k / month to 1k / month.

TZubiri 1y ago
Were your users generating CSAM images?
llsf 1y ago
Could you share this automated message (anonymized if need be) ? Very curious to hear what ground and verbiage was used to close your account.

bokohut 1y ago

I enjoy reading others' complaints about payments and only after the correct person gets frustrated enough, shunning the buyout greed, will a feasible domestic solution manifest. Having written all the code and founded my own "Payment Processor" twice in the last few decades, this is an interesting space that demands subject matter expertise 24/7/365. Having lived through many global events of all kinds, that the general public never saw since being in payments at the inception of the internet, I learned things not possible today. I recall vividly those that laughed at me in the 90's when responding to inquiries about what I did for a living. After stating that I was building a payment server for the internet all balked stating no one would pay for anything online and then PayPal became our client followed by many other well known brands. Is anyone still paying online? Stay Healthy!