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Comment by joshuakelly | Hacker News Reader

There's a reason "marketplaces" get a call out on this landing page. Every single startup that has to manage buyers and sellers ends up needing to implement their own bespoke "treasury" operations. There are other players in this space (Modern Treasury for example), but obviously the distinct Stripe advantage is integrating with the payment stack.

This would have saved years of development efforts and maintenance on treasury operations for my team at a previous gig (in the live events/ticketing space, who are probably going to read this comment - hi guys).

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Outsourcing KYC is a questionable decision though - I’m wondering how much of a black box that is or you get the same info as if you implemented it yourself.

There’s always false negatives for systems like this, and if Stripe wrongly tells you someone is good then are you liable for acting on that decision?

Outsourcing KYC is essential if you want preventative measures. Having your own just allows you to learn from getting stung.

So much this. I would have zero interest in building out kyc vs having stripe do it for me

It’s a question of defensibility if some regulator came to you and asked why you allowed certain individuals through because a black box told you without any additional context.

And I don’t think anyone builds their own KYC from ground up - it’s more whether you have context for a decision with your own vendor implementation vs a black box yes or no.

Isn’t it Stripe’s partner bank that is ultimately underwriting all the KYC on a platform like this? I assume they’ve signed off on how Stripe has implemented it so as to be sufficiently defensible

Ding ding. Notice to open the Treasury account, you need to specify the bank. Stripe is not owning the accounts, the bank is, so KYC is pushed to them.

EDIT: For those that think that just opening the accounts as Stripe would be a workaround, the answer to that is "beneficial ownership" and is part of KYC.

Ah, this is illuminating. So the built an API to interface developers with existing bank infrastructure (likely to support their own operations).

They're not the treasury, they're the link that doesn't require me to be a huge entity with bargaining power to convince a bank to partner with me.

TIL that Stripe's Treasury service is a marketplace connecting bank treasury services to marketplace services that require a treasury.

Corollary: Outsourcing KYC means they learn from you getting stung.

Which in turn means you benefit from everyone else who's already been stung. KYC solutions' risk:reward ratios start high, but asymptotically approach 0 as the provider learns from its customers' problems. If you're signing up for a well-established one, you're able to free-ride on all the learning that's already been done.

You can have your cake and eat it, too: - Start with a third-party KYC solution - Slowly develop your own and compare the results with the one from the provider - When your own solution provides something similar to the other one, you can abort the subscription

Sort of like Apple cutting out Intel :P

I can't speak specifically to the liability question since I don't want to provide any inaccurate information.

To the false negatives problem itself though, I think your implicit assumption is the correct one - that false negatives are a bigger potential problem than false positives. In my experience, the false positive rate on declines was immaterial to the business. The impact of a false negative is definitely a different question.

Outsourcing KYC is standard practice. There are expensive systems you can license that do this as correctly as possible, ensuring banned persons (due to sanctions, international most wanted lists, whatever) are not allowed to transact with your system.

Yes, they are black boxes, but they work pretty well considering banks all over the world use them.

In my country relying on someone else's advice even if that is a qualified professional advice won't remove any liability from a person acting on such advice. It's just an information that one needs to decide for themselves and accept consequences.

Hello anon589, no, it is the only right thing to do. Proper KYC is a thing that only works at scale, just like fraud prevention. Without access to amounts of data much larger than what any single company (even a larger one) sees you are simply going to learn all of the available lessons the hard way. KYC and UBO tracing are specialist jobs that a smaller entity will not be able to do even remotely as good as a larger one, especially not if that larger one has access to many other parties just like yours.

Will Stripe indemnify you against inaccurate results?

This has an incredible amount of potential in the events space --- I'm excited to see what new advances this tech will enable

Why?

I'm really not getting the usefulness of this offering, so can't have been exposed to or dealt with companies that have the problem it's solving.

I have worked with events companies on ticketing systems, so any example scenario you can share around events would be great to help me understand.

If I understand Stripe Treasury correctly, then a full-suite event management platform that implements this tech can drastically reduce friction for starting a small events business

(sorry for the hasty weak reply; just wanted to get a response in before the thread locks. I'll email you some specific use cases in a couple days)

Would you mind sharing the uses cases regarding events/ticketing with me as well?

I'd be interested as well, would appreciate an email

My email address was wrong - I've fixed that now.

Seems like that would be more inline with the stripe connect platform.

Today, yes, but I think in the long run a platform that implements something like Stripe Treasury has the opportunity to provide a ton of value for bottom-market event planners (think: those people that run 10 person workshops out of a community center)

It's also true at the high end. Business decisions around key service providers in the AAA+ live events space are driven primarily by access to what effectively are financial services (advances and other lifecycle events, and in general the ability of your counter party to act as an underwriter). Access to quasi-financial services are the key differentiator at the top of the market.

This will be especially true looking forward to the post-COVID relaunch of tours and festivals.

So now anyone can create their own Venmo app, and just use Stripe Treasury on the backend? What's the idea behind this?

Treasury at this time appears to be limited to businesses that serve other business, not businesses that serve end-users.

Obviously there is a lot of potential overlap there, but in those situations I suspect that the "rules" would be that you could use Treasury services for your "serving businesses" side, but not for your "end-consumer" side.

I don't think so, this is not really meant for consumer oriented applications. Completely different regulatory animal.

Why would you provide ticket sellers with their own bank accounts? Why not send their funds straight to their actual bank accounts?

Isn't that just stripe connect?

hi josh

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