Comment by tomelders | Hacker News Reader

Comment by tomelders | Hacker News Reader

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Many people may not realise this, but Europe is the largest economy in the world according to the IMF, who know a thing or two about this stuff.

Since I saw Stripe last week, I've been wondering why no one in Europe has managed to put something similar together. We have the technical expertise and the world largest economy, so what's stopping us?

Sadly, it turns out that Europe is so fragmented and disparate when it comes to banking practices that the benefits of working in the worlds largest economy are completely obliterated by the difficulties of working with all the countries involved, many of which are so fundamentally corrupt (I'm looking at you Italy) that any sane legislation is unlikely to go through.

Stripe may well cobble together solutions for individual countries like Germany, France and the UK, where there's enough money flowing around to warrant it, but the return on investment quickly starts to diminish as you tackle the smaller countries, which is not really a great incentive for Stripe to "pull their finger out". I'm not saying they wont (they've already said they will), I'm saying the incentives aren't all that great. And they're even worse for anyone wanting to implement a homegrown solution because we don't have competitive advantage of the US economy to start from.

It would be nice if everyone in Europe had the Euro, and everyone in Europe also had the same banking practices, but if you rank that possibility on a scale of 1 to 10, the scale explodes.

One alternative I can see happening however is for some savvy EU state to make it ridiculously easy to open up business accounts, with multiple currencies that anyone in Europe (if not the world) can open and run their business through, with the easy transfer of cash from country to country. Other than bureaucracy, I don't see what's stopping them.

In fact, the commercial banks could well be eliminated from the equation. The value of the digital economy is important to any countries future growth that the central banks could plausibly take the initiative here.

I used to work in Payments at Amazon and I don't think people have an appreciation for how complicated and expensive payments in Europe can be. Credit Card penetration in certain countries (Germany and Switzerland for example) is really low and to get competitive rates you'll need a processor in the UK, France, and Germany. Then, when you have a problem, I challenge you to get technical support from a French bank after 5pm and, while you're at it, make sure you have someone on your team that speaks French.

At least it's better than Japan though.

How does it compare to Japan?

Credit card penetration is really low so your other options are bank transfers and CVS (paying at a convenience store). COD is actually quite popular but I can't imagine any SaaS could implement that effectively.

I don't have any experience with direct bank transfer systems in Japan. I believe that a lot of Japanese Banks now offer NetBanking as a payment option for CVS payments but I'm not sure how widespread the use is. I'm also not sure what is culturally common in Japan for billing recurring online services.

Perhaps someone on HN who lives in Japan could comment.

Not sure who you're using as a gateway but I do have memories of being on the line with technical support and a Japanese translator.

Best of luck to you!

I have paid through bank transfers a lot in Japan. Instead of just needing a name and an account number, additionally you need to know name of receiving bank and the branch of that bank the recipient uses.

Looking at the last two payments I made, it seems reference codes are not used. How the businesses know which order a payment relates to is a bit mysterious to me. I suppose someone looks at the accounts and tries to match by sender name and date.

Some things are better left unsaid.

No, really I'd rather hear. We're about to launch a product in Japan and all the advice I've been given from folks in Japan so far is that my standard credit card payment processing will be fine for our target user base. So, seeing a comment like the one in the parent post definitely caught my attention. If I'm going to be missing the mark, I'd rather find out now.

It's a bit dubious to say "Europe is the largest economy in the world", because it's not really a single economy, more a collection of economies of varying sizes, with different currencies, laws and banking systems.

You also have to be careful of what you mean by 'Europe', because there's the European Union, the European Economic Area, Europe the continent, Europe as used in the UK (which often means 'all those other foreign countries but not us' :) etc.

The GDP of the European Union is about 16 trillion dollars; the United States is about $14 trillion: http://en.wikipedia.org/wiki/G-20_major_economies. What's a couple of trillion bucks between friends? ;-)

Who cares? Canada and Mexico account for a trillion each as well. The point is, European Union is not one country.

Indeed. The post's third paragraph explains very nicely why it cannot be considered a single economy.

Stripe may well cobble together solutions for individual countries like Germany, France and the UK, where there's enough money flowing around to warrant it

For germany I feel confident to claim that any projections you could make about ROI should more than warrant it.

Our payment-landscape consists of a crippled paypal and an array of absolutely atrocious gateways (wirecard, ogone, adyen, moneybookers etc.), all of which are firmly stuck in the 1990s in each and every regard.

Whoever moves first with a sane payment-solution will enter the world's 4th largest economy with effectively zero competition.

For germany I feel confident to claim that any projections you could make about ROI should more than warrant it.

I have a suspicion that Americans tend to underestimate Germany, thinking of Europe as something that might be comparable to the US, and Germany as only a small part of that.

In reality, Germany has 80 million people - similar to California, Texas, and New York state put together, and is as you say the world's fourth largest economy.

They also much prefer German over English, so it might well be a good investment for many startups to have a German English student translating their site.

    It would be nice if everyone in Europe had the Euro, 
    and everyone in Europe also had the same banking 
    practices, but if you rank that possibility on a 
    scale of 1 to 10, the scale explodes.

Even just supporting the Euro zone will already be good progress, as it covers most of the wealth in Europe.

Well the Euro brings it's own headaches. Just look at Greece.

Also, the Euro currently has some notable big European countries excluded: UK, Switzerland, Norway, Sweden and Denmark. These countries alone had a combined GDP of almost $4trillion in 2010:

http://www.wolframalpha.com/input/?i=gdp+uk+%2B+gdp+switzerl...

And that doesn't even account for eastern European countries.

just look at Greece

What does this mean? We're talking about end user credit card purchases over the web, not the sovereign bond market!

The post I was responding to said:

"Even just supporting the Euro zone will already be good progress, as it covers most of the wealth in Europe."

The point I was making was that even if Stripe supported the Eurozone countries, that could have it's own problems too. That probably wasn't too clear. The Euro could well slide massively in value versus the dollar which could impact Stripe's expansion to Europe, as there is huge uncertainty about the Euro here at the moment. I mean would you look forward to expanding to a region whose currency could actually collapse?

The US almost defaulted when it almost failed to raise the debt ceiling. Should people stop serving the US market because of that?

As far as I know, Eurozone businesses and individuals can have their bank account anywhere in the Eurozone. Paypal and Stripe may only have offices in Luxembourg to serve all EUR countries. That's the upside of a unified market. The UK and other non-EUR countries have renounced to it.

You don't even have to be in the eurozone, I know UK companies which have euro accounts with international banks such as HSBC, which sit alongside their sterling accounts. The same goes for dollars, and probably other major currencies as well.

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