Hacker News Reader

Comment by jermaustin1 | Hacker News Reader

You aren't passing the fee on to the END customer, you are just acting as the payment processor for YOUR customer. You can charge them what ever you want. Apple, Amazon, Google all charge you 30% to use THEIR credit card processors.

So the end customer buying a $20 product still only pays $20, but you charge the store/company they bought from $1. The company ends up with earning only $19, and you end up earning something like $0.50 after you pay the portion of the fee you were charged by stripe or paypal or whoever.

View on HN

I think this is likely a really bad idea for 'side projects' ... by acting as the middle man here you are taking on a huge amount more liability than you would be if you are using the (non-managed) Stripe connect model where the your customer has their own processing account.

Sure, there is money to be made here, but it isn't free and you need to manage the extra risk and liability that comes with it. What if someone discovers your platform hasn't got the same anti-fraud/verification processes that the larger players can afford by virtue of being a larger player, and decides to take advantage of it?

This, this, this, this. Commented about this issue above but then found this comment here later. I've read about side-project startups that have gone under because they tried to do their own payment stack and lost at the fraud detection game.

See https://news.ycombinator.com/item?id=10234287

--------

Since pro accounts initially cost £6 for month, it turns out that this is low enough that it won't send red flags to stolen cards. ... If there's a dispute on Stripe, there's transaction fees for reversing charges. £15.34 in fact. Since I know I'll lose the dispute, it's cost me, £21.54 to allow some shithead to use JS Bin as a stolen card testing facility.

--------

Another good story about reducing test fraud: https://www.candyjapan.com/how-i-got-credit-card-fraud-somew...

> "..Sure, there is money to be made here, but it isn't free and you need to manage the extra risk and liability that comes with it."

What's behind the EXRTRA risk? Couldn't he just simply pass over the liability to Stripe who's the actually payment processor?

You can, and we did.

We had an accounting software that was used in some pretty big Martial Arts schools, we handled their payments through Authorize.Net (stripe didn't exist yet), but in the contract, we told them a reversal will cost (making the numbers up because it has been so long) $25 + the transaction and a bounced eCheck was $30 + transaction. These fees were directly pass through, we didn't try to profit on them.

That said, the number of fraudulent card/check or bounces was 0.

We were the payment processor for a business, not working with skeezy customers directly (like Duet is).

If there is fraud, you bill that back to YOUR customer. Just like Stripe bills you for a bounced check or a reversal, you bill your SaaS customer.

The fraud I'm worried about isn't from a bona-fida customer, it's from a fraudulent customer.

BadGuy uses your service to sign up for BadGuyDojo, and attaches a stolen bank account. 10 "customers" sign up with stolen credit cards, process payment, and the money is gone along with them. A month or two later the credit card companies come looking to you for the money.

The experience you are talking about wouldn't really jive with the real world scenario which this would be deployed in.

I'm a small business owner and you are my client. You and I have a relationship. You aren't a random BadGuy. The likelihood of you purposefully bouncing a check or committing fraud is next to nil. In this scenario, similar to what Duet is doing (facilitating communications and payments between known vendor-client relationships) the SaaS that processes the payments is pretty safe from fraud.

Now, I would never roll this out on any of our SEO services. When we had credit card payments on the earliest version of Linklicious, we fought over $1200/mo in charge backs from fraud or "fraud." After nearly 3 months of our mailbox filled with chargebacks and complaints, we switched to PayPal and only once did we have an obscene amount of fraud (hundreds of signups from stolen French PayPal accounts) at which point we blocked the country of origin for a week and the problem disappeared.

You have to be intelligent no mater what payment method you chose. There are negatives on both fronts.

Reply on news.ycombinator.com