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Thanks for the feedback. I've closed the service

discuss.joelonsoftware.com

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Re: Thanks for the feedback. I've closed the service

#11

Post by il »

pinksoda wrote: post #3

There is still room for quality payment services like this. In particular, high-risk and micro-payments, would be great niches to get into. The primary problem is that to do this right, you will need to spend a lot on legal fees or find a lawyer to work for equity in your idea(you wouldn't even have a single customer yet). I've run the scenario a million times and I would love to create a start-up that can disrupt, m…

Even if you avoid fraud and the payment processors, the US government will almost certainly shut you down. They don't like competition.

See e-gold,1mdc, Liberty Reserve,Phoenix Dollar,etc,etc - pretty much anyone who has tried to create an alternative currency or payment system.

Re: Thanks for the feedback. I've closed the service

#12

Post by pinksoda »

jasonlotito wrote: post #7
pinksoda wrote: post #3

There is still room for quality payment services like this. In particular, high-risk and micro-payments, would be great niches to get into. The primary problem is that to do this right, you will need to spend a lot on legal fees or find a lawyer to work for equity in your idea(you wouldn't even have a single customer yet). I've run the scenario a million times and I would love to create a start-up that can disrupt, m…

Yes, and no. I had a startup in this industry, and I still work in it. Here's your biggest problem. It isn't PayPal or Google or any online service. It's the credit card companies and the banks that control this. The best part is, your entire business will be based on the premise that the bank lets you process. They can drop you for whatever reason. It's not hard. Trust me, they'll manufacture whatever evidence they…

The banks only want to drop you if you're attracting too many charge-backs, fraud, or money laundering. If you have a good system in place to minimize these problems, they will gladly take their processing fee from each and every transaction you process and they will do it with a smile.

PayPal's automated fraud detection is notoriously inaccurate. They also don't have very good customer service. For years their phone number was hidden 10 pages deep where no one could find it. They freeze your account and hide from you.

A while back they ran into some trouble with the bank that was sponsoring their merchant account, they had to quickly make changes to keep processing.

Instead of spending money to improve their fraud/risk algorithm, they just lowered the threshold that triggers an account freeze, which helps with fraud but also drastically increases the number of false-positives, which they consider acceptable collateral damage.

They aren't even nice about it. Why tell me my account is "frozen"? Why can't they say "Congratulations on the recent spike in transactions. Your business must be doing well and we are delighted to hear that! Please give us a call when you can so we can go over some additional documentation that we will need from you".

Think about this: PayPal freezes your account, which brings your business to a halt, then you have to scramble to fix it. PayPal doesn't need to freeze your account, they can just as easily prevent you from withdrawing money to your bank account, which sucks but it probably won't kill your business. At least your customers can still pay you. They even have a "window" to reverse most transactions, but they would rather just freeze your account and act all nonchalant about it.

The logistics of PayPal is all wrong. Work with your customers, not against them.

Re: Thanks for the feedback. I've closed the service

#13

Post by arethuza »

pinksoda wrote: post #3

There is still room for quality payment services like this. In particular, high-risk and micro-payments, would be great niches to get into. The primary problem is that to do this right, you will need to spend a lot on legal fees or find a lawyer to work for equity in your idea(you wouldn't even have a single customer yet). I've run the scenario a million times and I would love to create a start-up that can disrupt, m…

You mean something like Xbox Live points but for any site - not just linked to Xbox content?

Re: Thanks for the feedback. I've closed the service

#14

Post by kranner »

jhuckestein wrote: post #9

Everybody here seems in agreement with the guy just shutting down the service. My first reaction was WTF. In fact, I think the OPs last comment is a little rude. None of the commenters were advising him to shut down the service. They were trying to help improve the service ... Altogether it's just weird.

As the first commenter on that thread, I can tell you I felt like shit when I read the last comment. And all I told OP was to change the copy a little.

Re: Thanks for the feedback. I've closed the service

#15

Post by pinksoda »

il wrote: post #11
pinksoda wrote: post #3

There is still room for quality payment services like this. In particular, high-risk and micro-payments, would be great niches to get into. The primary problem is that to do this right, you will need to spend a lot on legal fees or find a lawyer to work for equity in your idea(you wouldn't even have a single customer yet). I've run the scenario a million times and I would love to create a start-up that can disrupt, m…

Even if you avoid fraud and the payment processors, the US government will almost certainly shut you down. They don't like competition. See e-gold,1mdc, Liberty Reserve,Phoenix Dollar,etc,etc - pretty much anyone who has tried to create an alternative currency or payment system.

If you comply with state, federal and any other involved regulatory agency then you'll be fine. Payment systems can have a huge impact on the entire economy, create new businesses, and drive existing business growth.

Re: Thanks for the feedback. I've closed the service

#16

Post by Raphael »

arethuza wrote: post #13
pinksoda wrote: post #3

There is still room for quality payment services like this. In particular, high-risk and micro-payments, would be great niches to get into. The primary problem is that to do this right, you will need to spend a lot on legal fees or find a lawyer to work for equity in your idea(you wouldn't even have a single customer yet). I've run the scenario a million times and I would love to create a start-up that can disrupt, m…

You mean something like Xbox Live points but for any site - not just linked to Xbox content?

Actually, one could leverage existing "points" platforms: give them something nominal in-platform, such as a game or virtual item, but also credit some points of your own. Then partner with many websites to make your points valuable (sharing revenue from the first platform when your points are spent on the websites).

Re: Thanks for the feedback. I've closed the service

#17

Post by tudorw »

il wrote: post #11
pinksoda wrote: post #3

There is still room for quality payment services like this. In particular, high-risk and micro-payments, would be great niches to get into. The primary problem is that to do this right, you will need to spend a lot on legal fees or find a lawyer to work for equity in your idea(you wouldn't even have a single customer yet). I've run the scenario a million times and I would love to create a start-up that can disrupt, m…

Even if you avoid fraud and the payment processors, the US government will almost certainly shut you down. They don't like competition. See e-gold,1mdc, Liberty Reserve,Phoenix Dollar,etc,etc - pretty much anyone who has tried to create an alternative currency or payment system.

anyone accepting bitcoin?

Re: Thanks for the feedback. I've closed the service

#19

Post by jasonlotito »

pinksoda wrote: post #12
jasonlotito wrote: post #7

Earlier quoted context omitted.

Yes, and no. I had a startup in this industry, and I still work in it. Here's your biggest problem. It isn't PayPal or Google or any online service. It's the credit card companies and the banks that control this. The best part is, your entire business will be based on the premise that the bank lets you process. They can drop you for whatever reason. It's not hard. Trust me, they'll manufacture whatever evidence they…

The banks only want to drop you if you're attracting too many charge-backs, fraud, or money laundering. If you have a good system in place to minimize these problems, they will gladly take their processing fee from each and every transaction you process and they will do it with a smile. PayPal's automated fraud detection is notoriously inaccurate. They also don't have very good customer service. For years their phone…

> The banks only want to drop you if you're attracting too many charge-backs, fraud, or money laundering. If you have a good system in place to minimize these problems, they will gladly take their processing fee from each and every transaction you process and they will do it with a smile.

Wrong. I know this first hand. First, "banks" do not decide whether you process or not. People do, and these people are, in my experience, fairly corrupt. Most people don't deal with the banks directly, but even if they do, the agents their aren't just dealing with you. All it takes is for you and a competitor to end up using the same bank, and if that competitor is bigger than you, they can push you out.

It's not difficult.

I've been on the receiving end of this. I've heard it all. I've had the agent on the phone, and wouldn't answer the question regarding which transaction they were claiming was against their policy. A few weeks later, after closing us down, the send us the information for a transaction that occurred after they shut us down, claiming that was why we were closed.

Chargeback levels? Well below the threshold. We had practically no actual fraudulent transactions, and more than 95% of the transactions that were pending chargebacks were friendly fraud (authorized card holder claiming a chargeback).

I'm not talking about some small time shop. We were pumping 8 figures through our banks at our prime, all as legit as we could make it (which at the time, was far more secure than most other processors at the time).

Your sentiments are right. The banks are interested in money, and if you are bringing in the transactions, they'll process. Unfortunately, if you're a small fish in a big pond (and yes, a small fish processing in the 10s of millions a year), and a bigger fish wants you put down, the bank will take the work to keep the big fish happy.

And if it sounds like I'm pissed, it's because I am. It's working so hard for so many years, pushing forth so many cool things, just to see it collapse. Not because you did anything wrong, but because someone maliciously screwed you over.

That's why I avoid looking at anything as a startup that forces me to rely on a single point of failure. Working with Visa and MasterCard puts you under their control. Sure, accepting money online puts you at their mercy as well, but it's not the same as building your business being an actual processor.

Anyways, I've rambled on long enough. Don't take offense if I caused any. That wasn't my intent.

Re: Thanks for the feedback. I've closed the service

#20

Post by gabrielroth »

kranner wrote: post #14
jhuckestein wrote: post #9

Everybody here seems in agreement with the guy just shutting down the service. My first reaction was WTF. In fact, I think the OPs last comment is a little rude. None of the commenters were advising him to shut down the service. They were trying to help improve the service ... Altogether it's just weird.

As the first commenter on that thread, I can tell you I felt like shit when I read the last comment. And all I told OP was to change the copy a little.

We can't know what was in the guy's head, but it doesn't make sense to me that you'd feel like shit. You suggested he change the copy a little. Someone else asked if he'd consulted a lawyer. Someone else pointed him to the Wikipedia page for Flooz.com, which includes the sentence, "In 2001, Flooz.com was notified by the Federal Bureau of Investigation that a Russian organized crime syndicate was using Flooz and stolen credit card numbers as part of a money-laundering scheme, in which stolen credit cards were used to purchase currency and then redeemed."

My guess is that it's the realization that he was in way over his head, rather than your suggestion that he edit the copy on his site, that led him to change course.

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