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Carolina Cloud pays SOFR on unused prepaid credits

docs.carolinacloud.io

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Re: Carolina Cloud pays SOFR on unused prepaid credits

#21

Post by addandsubtract »

infecto wrote: post #16
bojangleslover wrote: post #10

Earlier quoted context omitted.

This is interest on credits, not on cash. Once you start paying interest on cash you need a banking license. I think you'd be fine even in Europe paying interest on credits.

Why would you think credits and cash would be treated differently? I am not a EU tax expert but it would be shocking if that’s the case because you could create some pretty interesting schemes if by turning cash into a “credit” meant it was treated entirely different. Maybe that’s the case for the EU but it would be surprising.

Probably because you can't turn credits back into cash.

Re: Carolina Cloud pays SOFR on unused prepaid credits

#22

Post by mynegation »

badatnames wrote: post #2

I've looked at doing this in Europe before, interest-bearing completely changes the classification of the prepayment. I didn't dig too deeply, but the general gist was that regulation-wise it really wasn't worth doing for a relatively gimmick-level feature

I think that is why Carolina Cloud pays the interest in credits (redeemable for their services), as opposed to cash. It is not much different how some business give you a discount if you pay the amount upfront or in a more convenient form of payment.

Re: Carolina Cloud pays SOFR on unused prepaid credits

#23

Post by infecto »

addandsubtract wrote: post #21
infecto wrote: post #16

Earlier quoted context omitted.

Why would you think credits and cash would be treated differently? I am not a EU tax expert but it would be shocking if that’s the case because you could create some pretty interesting schemes if by turning cash into a “credit” meant it was treated entirely different. Maybe that’s the case for the EU but it would be surprising.

Probably because you can't turn credits back into cash.

Is that a law?

Re: Carolina Cloud pays SOFR on unused prepaid credits

#24

Post by dannyw »

bojangleslover wrote: post #19
dannyw wrote: post #17

Earlier quoted context omitted.

How many small hobbyists really want to front load $150, instead of paying $5 a month, and would only be swayed if they got interest/credits? At 5% simple interest, your $150 would give you 62.5c per month. So you'd need closer to ~~$1200 to have a perpetual hosting machine; for a $5/month VPS or whatever. You also now have an additional problem: $1200 of committed spend on a cloud provider; which could go out of bus…

This is aimed at CFOs, not hobbyists

I do appreciate you doing this btw, I find it nice and clever. I like how it democratizes a mechanism that enterprises have (net discounts, similar effective mechanisms) and makes it accessible to everyone.

I was replying to the parent comment, I'm just saying "prepay and commit thousands of credits so you get to run $5/month" isn't a good idea to me, but I do like your mechanism.

Re: Carolina Cloud pays SOFR on unused prepaid credits

#25

Post by dannyw »

mynegation wrote: post #22
badatnames wrote: post #2

I've looked at doing this in Europe before, interest-bearing completely changes the classification of the prepayment. I didn't dig too deeply, but the general gist was that regulation-wise it really wasn't worth doing for a relatively gimmick-level feature

I think that is why Carolina Cloud pays the interest in credits (redeemable for their services), as opposed to cash. It is not much different how some business give you a discount if you pay the amount upfront or in a more convenient form of payment.

At scale, a decent number of commercial/business agreements have Net Discount provisions (or provisions to that effect); basically get a % discount if you pay within X days; or pay the full amount with no discount in Y days, so the general arrangement is far from unorthodox.

Opening it up to everyone is nice.

Re: Carolina Cloud pays SOFR on unused prepaid credits

#27

Post by dannyw »

jwrallie wrote: post #20
badatnames wrote: post #2

I've looked at doing this in Europe before, interest-bearing completely changes the classification of the prepayment. I didn't dig too deeply, but the general gist was that regulation-wise it really wasn't worth doing for a relatively gimmick-level feature

In some regulations you can also be expected to declare and pay tax on the money you earned from the interest, which can be annoying to do for such small values.

Definitely annoying, and YMMV, but a lot of jurisdictions don't treat credits (that cannot be redeemed back to cash) as income.

In the same way signing up for $App and getting $100 in API credits isn't income; paying a bill early for a 3% discount isn't income; and frequent flyer points or cash back you get on our credit card isn't income.

Re: Carolina Cloud pays SOFR on unused prepaid credits

#29

Post by infecto »

kachnuv_ocasek wrote: post #28
infecto wrote: post #23

Earlier quoted context omitted.

Is that a law?

I'd guess that's a part of the TOS.

TOS is not the point.

The root of this thread was surprise over rules around interest. I am saying it’s not surprising because companies could then easily create weird schemes.

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