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Stripe has decided to nuke my entire business

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Re: Stripe has decided to nuke my entire business

#371

Post by hn_user2 »

joecot wrote: post #238
orionint wrote: post #121

Used to work for a “high risk” payment processor, we inherited tons of accounts that were terminated by Stripe, Square, and PayPal. Here’s one small bit of inside info that may help the newer businesses out there: Most real payment processors (e.g. banks, merchant services companies) “underwrite” a company BEFORE allowing them to process. Underwriting means they look over the business model, financials, etc and make…

The difference is between the company having their own merchant account with a bank (which is what most large companies do) using an online payment gateway, and not having one and leveraging the processor's instead (which is what Stripe, Paypal, etc provide). When you apply for a merchant account you get that approval and underwriting, but with a hefty application fee for obvious reasons. If your payment gateway shut…

One thing that is almost impossible to do on your own is to get a merchant account that you will be using to process payments on behalf of others. So if that is your business model, you are almost certainly in for the fight of your life with banks and merchant providers, along with some stupidly high reserve funds.

Stripe makes this super easy, but it is a house of cards based on stories like this one. So I agree, you still need to get your own merchant account, and not rely on stripe as you get larger, but depending on your business model it might be taking more of your time generating due diligence documents than an acquisition.

Re: Stripe has decided to nuke my entire business

#372

Post by bagels »

toss1 wrote: post #257
bagels wrote: post #10

Earlier quoted context omitted.

It does matter if it actually violates the TOS, or could be vaguely interpreted to do so I guess?

NO, it does not in this case They can determine up front if it violates the TOS They can notify the customer of the SPECIFIC violation IN DETAIL, and what can be done to cure it, and provide time to do so. They can deny access to the transaction instead of nuking the entire business for some algorithmic flag. The Stripes and PayPals of the world do NONE of this. Instead, they act like they accept almost all businesse…

The type of business matters if we're trying to guess whether they violated the TOS or not.

I completely agree with you that how these companies handle these issues is completely wrong, if not fraudulent.

Re: Stripe has decided to nuke my entire business

#373

Post by multiplegeorges »

didgetmaster wrote: post #147
multiplegeorges wrote: post #104

Earlier quoted context omitted.

Is there a self-hosted payment gateway that just works? I hear you about cloud dependencies, but this isn't one of those cases.

I wasn't suggesting that there are decentralized options for every cloud dependency that is viable today. I am just saying that it is issues like this one which will drive innovation toward solutions that do not require you to put your fate in the hands of some central authority.

Fair enough, payments (credit cards, in particular) is a particularly hard area to decentralize... or at least democratize a bit more.

I'd love for an open payment standard for p2p payments and individual-to-business/institution payments to become available so that individuals could establish their own connection point to a fair payment exchange network.

This will only come with regulation that forces it, though. See India's UPI system, for example.

Re: Stripe has decided to nuke my entire business

#374

Post by multiplegeorges »

mindcrime wrote: post #260
jandrese wrote: post #145

Earlier quoted context omitted.

A payment system like that would run face first into Know Your Customer (KYC) laws and bet shut down. This isn't a hard problem for technical reasons, it's all political. It's about preventing money laundering and trying to fight crime via financial instruments. But it also means any payment system that doesn't implement these restrictions will almost instantly be overrun by criminals because they are highly motivate…

A payment system like that would run face first into Know Your Customer (KYC) laws and bet shut down. Great, then let's change those laws.

Why? They are a net benefit to society and above board businesses.

Re: Stripe has decided to nuke my entire business

#375

Post by nova22033 »

hosh wrote: post #61

That sounds a lot like the stories I heard about Paypal, and their fraud detection team. There was an article interviewing someone about it. Back in the day, Paypal had to build tools to detect fraud because no one else was doing it at scale, at the time. I recall something about investigators outside of Paypal started to use those tools as well. I would not be surprised if Stripe had to create similar tools for them…

Back in the day, Paypal had to build tools to detect fraud because no one else was doing it at scale, at the time. I recall something about investigators outside of Paypal started to use those tools as well

Palantir came out of Paypal fraud detection

https://thehustle.co/%F0%9F%92%B3-how-paypal-fraud-made-pala...

Re: Stripe has decided to nuke my entire business

#376

Post by illumin8 »

marcosdumay wrote: post #304
rchaud wrote: post #212

Earlier quoted context omitted.

> a lot of experience seems to show that Stripe, Square and PayPal operate differently: they light up ANYONE, and then only underwrite when the account hits a critical threshold of revenue. Sounds similar to how subprime lenders doled out the mortgages without any due diligence. They skimmed their bit off the top in transaction commissions, but later dumped them before they became a compliance hassle.

As a rule, there's nothing wrong about a default to accepting making deals with strangers. And that's the only thing similar in here. The payment processors are not selling anything by fraudulent claiming they evaluated their quality. What they do have is a very bad customers service that is prone to a different kind of crime (withholding people's money) and create a very unique kind of risk they don't communicate to…

I'm pretty sure this would be considered a deceptive business practice by most courts of law. You can't just straight up lie about the terms of a business agreement - i.e. if you say you've evaluated a customer's creditworthiness but you really haven't I think there is a very good argument that any agreement was not made in good faith, however, Stripe's ToS probably requires mandatory arbitration, etc, so I'm not sure what recourse you have as a customer.

Re: Stripe has decided to nuke my entire business

#377

Post by joecot »

hn_user2 wrote: post #371
joecot wrote: post #238

Earlier quoted context omitted.

The difference is between the company having their own merchant account with a bank (which is what most large companies do) using an online payment gateway, and not having one and leveraging the processor's instead (which is what Stripe, Paypal, etc provide). When you apply for a merchant account you get that approval and underwriting, but with a hefty application fee for obvious reasons. If your payment gateway shut…

One thing that is almost impossible to do on your own is to get a merchant account that you will be using to process payments on behalf of others. So if that is your business model, you are almost certainly in for the fight of your life with banks and merchant providers, along with some stupidly high reserve funds. Stripe makes this super easy, but it is a house of cards based on stories like this one. So I agree, yo…

Yes, this is why my previous company never went the IPSP route (letting customers accept payments with your merchant account). They are incredibly arduous to get approved, you practically need to have a bank CEO as your godfather to get it. Also you need to be at least PCI Level 1, which involves actual auditors going through your business and policies. That part is significantly easier than the IPSP though. OP doesn't sound like they were trying to do that though. They talk about their client's individual Stripe accounts being turned off.

This is probably what a business like OP's would need to do. When their customers are small, use a processor like Paypal or Stripe. But as customers get larger, OP should probably do what we did: partner with an ISO, who can get the customer their own merchant account. OP still does the processing for them, but the risk and finances run directly through the client, not OP. The ISO can also add in a margin on the transaction fees for OP if that's part of their business model.

Re: Stripe has decided to nuke my entire business

#379

Post by bjacobt »

renewiltord wrote: post #288
pc86 wrote: post #264

Earlier quoted context omitted.

There is no such thing. High risk means high transaction costs, high underwriting costs, and lots of insurance/legal/compliance work. Your best bet is to pay the slightly higher fees by going directly through your actual bank.

Right, but who's got all that and an easy API and SDK? i.e. if you were willing to trade off higher fees for safety and slowness of ramping up in a compliance sense, but you do want quick dev ramp-up, who do you use?

You can try CenPOS [1] or tempus [2]. Both are easy and fairly quick to implement.

[1]https://www.elavon.com/industries/cenpos.html [2] https://www.tempuspayment.com/default.aspx

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