5 ms·

Most of Paypal's competitors weren't wiped out by Paypal being good, they were wiped out because they weren't as good as handling risk and fraud as Paypal. They

by ig1 13y ago

Most of Paypal's competitors weren't wiped out by Paypal being good, they were wiped out because they weren't as good as handling risk and fraud as Paypal. They got wiped out by criminals. Paypal is risk averse, which means you shouldn't use them for cases where you're taking a large amount of money up front and not delivering in the near future (i.e events, crowd-funding), or alternatively get pre-approval from Paypal. I've no idea what the current fraud level against Stripe is, but as they become more mainstream they're going to need to employ more anti-fraud and anti-risk measures as their exposure increases.

pc 13y ago
> I've no idea what the current fraud level against Stripe is, but as they become more mainstream they're going to need to employ more anti-fraud and anti-risk measures as their exposure increases. I'm one of Stripe's cofounders. For what it's worth -- we already process billions of dollars a year. (More than PayPal when it was acquired.) There'll always be more we can do on the fraud/risk side, but we're already operating at a scale that requires a decent amount of sophistication.
- matznerd 13y ago
  Stripe rocks :)
- Uchikoma 13y ago
  You're right, but then there was no PayPal when PayPal reached their size, so the situation now seems different to me.
- pcunite 13y ago
  Thank you for Stripe ... it freed us from PayPal's chains.
- ig1 13y ago
  (in a previous life I worked in front office investment banking so had to undergo anti-fraud and anti-money laundering training as well as worked on general exposure risk issues) The problem is that fraud/risk (like tech security) is it often involves black swan events. Everything seems fine right until the point where it's not and you're on the hook for millions of dollars (Stripe is probably in the position where you can afford to take a few black swan type events and survive; a lot of Paypal competitors weren't). Given that Stripe don't do the "wallet" approach of Paypal and is primarily focused on API customers I'm guessing your risks in general are lower, but I'd recommend you be careful about becoming over-complacent.
  - pc 13y ago
    > I'd recommend you be careful about becoming over-complacent. Absolutely. Indeed, I'd characterize us as actively paranoid. My point was merely that we're already operating at a scale that needs pretty good fraud systems. (I think we're mostly in strong agreement.)
    - brudgers 13y ago
      Does fraud follow the power law?
MacsHeadroom 13y ago
And then there's Bitcoin- no fraud, no charge backs. Payments are final and instant and, best of all, don't require a middle man.
- danielweber 13y ago
  > no fraud Only for extremely specific and useless definitions of "no fraud." If I send my bitcoins to someone to buy something, I have no protection if they decide not to deliver. At which point the Bitcoin enthusiasts will say "but you can use a third party escrow service," which is true, and puts us right back into the same situation we are with PayPal.
  - MacsHeadroom 13y ago
    The difference is you have the option to offer buyer protection or not offer it with Bitcoin. With Credit Card companies and their proxies, Stripe, PayPal, etc. there is no option of choosing a buyer protection service provider which meets your needs (unless you consider strict to extremely strict a choice). Buyer protection isn't always a good thing. Often it is a hindrance to progress. Merchants should be able to chose the level of buyer protection they want to offer.
  - M4v3R 13y ago
    But with Bitcoin, if you trust the merchant/recipient you can opt out of using escrow and transfer the money directly to him. With Paypal it's impossible.
    - danielweber 13y ago
      This merchant offered Bitcoin. The vast majority of payors chose to use PayPal with its built-in buyer protection instead.
      - a3_nm 13y ago
        The fact that the vast majority of payors used PayPal rather than Bitcoin certainly has nothing to do with PayPal's buyer protection and everything to do with Bitcoin being obscure and more complex to use.
calpaterson 13y ago
While fraud was a big deal for PayPal, based on reading The Paypal Wars (http://en.wikipedia.org/wiki/The_PayPal_Wars http://en.wikipedia.org/wiki/The_PayPal_Wars) network effects, good early customer engagement and the fact that the dotcom bust killed everyone else's funding were also pretty important. Everyone keeps saying that fraud will be a serious problem for Stripe, but they move a huge amount of money now which is probably comparable to the period when PayPal nearly got destroyed by fraud - which was around the year 2000 when the web was a lot smaller.

by ig1 13y ago

pc 13y ago

> I've no idea what the current fraud level against Stripe is, but as they become more mainstream they're going to need to employ more anti-fraud and anti-risk measures as their exposure increases. I'm one of Stripe's cofounders. For what it's worth -- we already process billions of dollars a year. (More than PayPal when it was acquired.) There'll always be more we can do on the fraud/risk side, but we're already operating at a scale that requires a decent amount of sophistication.

matznerd 13y ago
Stripe rocks :)
Uchikoma 13y ago
You're right, but then there was no PayPal when PayPal reached their size, so the situation now seems different to me.
pcunite 13y ago
Thank you for Stripe ... it freed us from PayPal's chains.
ig1 13y ago
(in a previous life I worked in front office investment banking so had to undergo anti-fraud and anti-money laundering training as well as worked on general exposure risk issues) The problem is that fraud/risk (like tech security) is it often involves black swan events. Everything seems fine right until the point where it's not and you're on the hook for millions of dollars (Stripe is probably in the position where you can afford to take a few black swan type events and survive; a lot of Paypal competitors weren't). Given that Stripe don't do the "wallet" approach of Paypal and is primarily focused on API customers I'm guessing your risks in general are lower, but I'd recommend you be careful about becoming over-complacent.
- pc 13y ago
  > I'd recommend you be careful about becoming over-complacent. Absolutely. Indeed, I'd characterize us as actively paranoid. My point was merely that we're already operating at a scale that needs pretty good fraud systems. (I think we're mostly in strong agreement.)
  - brudgers 13y ago
    Does fraud follow the power law?

MacsHeadroom 13y ago

And then there's Bitcoin- no fraud, no charge backs. Payments are final and instant and, best of all, don't require a middle man.

danielweber 13y ago
> no fraud Only for extremely specific and useless definitions of "no fraud." If I send my bitcoins to someone to buy something, I have no protection if they decide not to deliver. At which point the Bitcoin enthusiasts will say "but you can use a third party escrow service," which is true, and puts us right back into the same situation we are with PayPal.
- MacsHeadroom 13y ago
  The difference is you have the option to offer buyer protection or not offer it with Bitcoin. With Credit Card companies and their proxies, Stripe, PayPal, etc. there is no option of choosing a buyer protection service provider which meets your needs (unless you consider strict to extremely strict a choice). Buyer protection isn't always a good thing. Often it is a hindrance to progress. Merchants should be able to chose the level of buyer protection they want to offer.
- M4v3R 13y ago
  But with Bitcoin, if you trust the merchant/recipient you can opt out of using escrow and transfer the money directly to him. With Paypal it's impossible.
  - danielweber 13y ago
    This merchant offered Bitcoin. The vast majority of payors chose to use PayPal with its built-in buyer protection instead.
    - a3_nm 13y ago
      The fact that the vast majority of payors used PayPal rather than Bitcoin certainly has nothing to do with PayPal's buyer protection and everything to do with Bitcoin being obscure and more complex to use.

calpaterson 13y ago

While fraud was a big deal for PayPal, based on reading The Paypal Wars (http://en.wikipedia.org/wiki/The_PayPal_Wars http://en.wikipedia.org/wiki/The_PayPal_Wars) network effects, good early customer engagement and the fact that the dotcom bust killed everyone else's funding were also pretty important. Everyone keeps saying that fraud will be a serious problem for Stripe, but they move a huge amount of money now which is probably comparable to the period when PayPal nearly got destroyed by fraud - which was around the year 2000 when the web was a lot smaller.