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Comment by alibarber | Hacker News Reader

I naively thought that the likes of Stripe existed in order to abstract away this issue. Sort of like how TransferWise will give you a US, UK, EU, and others, account number. If I want to send Euros to GB, simply pay the local EU account number for free, then cash out in the UK for a minimal TransferWise fee (up to hundredths of the fee for sending it via the banks themselves).

So stripe here would charge an EU card from its EU entity, US from the US, GB from GB etc etc, regardless of where the merchant is actually located. Maybe there is something fundamentally different with the workings of Visa / MC payments and clearing though that means this is not possible?

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TransferWise are not a bank, they are an Electronic Money Institution. Different kettle of fish. The accounts they give you are virtual accounts, not a real bank account.

TransferWise also have larger profit margins than you think, both explicit and implicit by playing funny games cherry-picking rates etc.

So for both of the above reasons, this is why TransferWise can do what they do about giving people accounts cross-border. A lot (most) of it is legal flexibility, the rest is by eating the costs.

There are very few UK banks left that will give you a true EUR account.

Financial services were not part of the Brexit "deal". Which is why UK peeps can't open bank accounts in Europe and vice-versa, too many unaddressed regulatory issues.

Cross-border card fees may well be a similar kettle of fish to the phone roaming charges, i.e. there was protection under EU, but now the UK is outside of the EU it's dog eat dog.

Its a bit like why Amazon UK stopped accepting Visa for a while. Because post-Brexit Visa hiked their rates mostly just because they could.

I'm afraid that given the hard brexit that the UK government has chosen, the UK is only going to see a lot more of this. Brexit itself was bad enough, a dogged persuit of the hard form is, to put it politely, not exactly helping matters.

I don't think Amazon UK ever stopped accepting VISA entirely. They threatened to, and then I think they blinked at the last minute. It was also only specifically VISA Credit, not Debit cards, which continued to work.

I'll be honest, it was a struggle to get a EUR account in the UK before Brexit. I'm not aware of any high street banks that offered it easily, although I have been told it is possible. Most said something along the lines of "you want the international version of our bank" which roughly means either Isle of Man, Channel Islands or Gibraltar established outfit with similar branding. In contrast, I have a EUR account in Switzerland and can easily get a USD or GBP one. Most

Switzerland's historical approach to banking is closer to Guernsey's, and a local resident of Guernsey could open a USD/EUR account at their local branch.

But for what it's worth, Barclays, HSBC, Lloyds and NatWest offer these accounts, and more banks offer them to businesses.

https://wise.com/gb/blog/multi-currency-accounts-you-can-ope...

> I don't think Amazon UK ever stopped accepting VISA entirely. They threatened to, and then I think they blinked at the last minute.

On the former, you are correct, my bad wording. On the latter, I would suggest they probably reached a last-minute deal with VISA rather than blinking of their own accord.

> I'm not aware of any high street banks that offered it easily

Barclays and (IIRC) HSBC. Barclays still do[1], the only pre-requisite being you hold a GBP account with them too.

There's also Starling these days, of course.

Citibank was a great place to get one too, but then they introduced account minimums to keep the unwashed masses out.

[1] https://www.barclays.co.uk/current-accounts/euro-account/

> I would suggest they probably reached a last-minute deal with VISA rather than blinking of their own accord.

Yeah. I honestly wonder how that worked out. I suspect Amazon account for a not-insubstantial amount of payments so you have to wonder how that standoff was resolved.

> Barclays and (IIRC) HSBC

Interesting. Yes, most of the international accounts have some kind of minimum something, which is annoying. Euro and USD accounts are then possible. Other currencies they want you to hold a lot more money to get them.

I can see why transferwise have a market.

I opened an account with HSBC France from my HSBC branch in the UK before Brexit. HSBC France has now been sold to another company so I don't know how this will affect the working of the accounts in future.

> I don't know how this will affect the working of the accounts in future

Was the account opened against a UK or French address ?

If it was opened against a French address, then chances are things will continue as they are.

It if was opened against a UK address, then sooner or later you'll probably be invited to do something about closing it.

IIRC (but don't quote me !) the domicile of the account matters more than the resident status of the holder, since the latter is normally more of concern to the tax authorities than the banks.

The French account is registered to a UK address.

I was thinking more about whether the two accounts would be linked as closely in future. Right now, if I login to one account I can see the account balance of the other as well, transfers are just done in the same way as between two accounts in the same country.

"Amazon UK" is actually Amazon Luxembourg. Visa wasn't picking on them, they were applying the standard cross-border tariff.

> "Amazon UK" is actually Amazon Luxembourg. Visa wasn't picking on them, they were applying the standard cross-border tariff.

Actually if we're nitpicking its a UK branch of Amazon Luxumbourg (UK Company No. FC032354 UK VAT Number: GB 727255821).

But that's not really the point. The crux of the matter was not Amazon, but it was UK-issued VISA cards accepted on Amazon UK (and the post-Brexit removal of the EU’s European Interchange Fee Regulation cap).

Which basically brings us back to the cross-border topic at hand (i.e. EU or branch-of-EU company accepting UK cards).

A branch is not a subsidiary. Like a branch of Tesco, it is the same company. There's a clue in the company number prefix FC: foreign company.

There is no separate legal entity "Amazon UK". So why should a Luxembourg company get UK card rates?

> A branch is not a subsidiary. Like a branch of Tesco, it is the same company. There's a clue in the company number prefix FC: foreign company.

You were the one who said its "Amazon Luxumbourg" mate.

I merely pointed out that technically it was actually a UK branch thereof, so you were not right to call it Amazon Luxumbourg per-se. Its a Local Registered Branch.

Amazon make the differentiation on their website. So should you.

> So why should a Luxembourg company get UK card rates?

Its simple. As I said quite clearly in line two of my post....

What Amazon UK is or is not is not the point of discussion here.

The ultimate cause was the post-Brexit removal of the EU’s European Interchange Fee Regulation cap.

End of story.

This is correct - there was no change in UK to UK transaction caps after Brexit. I'm sure there are other reasons however why it might have been beneficial for Amazon to land the revenue somewhere else...

>I naively thought that the likes of Stripe existed in order to abstract away this issue.

This is the least of your worries when selling globally. VAT is where the real fun starts.

Oh I’m well aware. And recent changed within the EU itself have not made things easier… [even selling within the EU, you must now charge VAT for the product in question at the destination country, not the local rate, and with zero threshold]

At least one applicable VAT rate for each of the 27 EU countries is simple enough to implement yourself. The US has a mess of thousands of jurisdictions with their own taxes, where it's difficult to even tell in which jurisdiction an address falls, so you're pretty much forced to use a service like Avalara.

They've probably been eating up the Visa/MC cross border payment increases until now, and now they're starting to charge for that too.

"So stripe here would charge an EU card from its EU entity, US from the US, GB from GB etc etc, regardless of where the merchant is actually located. Maybe there is something fundamentally different with the workings of Visa / MC payments and clearing though that means this is not possible?"

Not really. The transaction happens on the country the merchant Operates.

If you are a merchant within the EU and stripe accepts a txn on your behalf, if that txn is from a card issued by a UK institution you will be charged the extra fee.

>The transaction happens on the country the merchant Operates.

In order to achieve what parent said, the merchant will have to have a legal entity in every single country where they have customers in, and setup payment processing account within those jurisdiction.

So I am wonder at what sort of revenue does it make sense to do this. Assuming this process could somehow be automated / abstracted and the only cost are legal and accounting. ( i.e Cost that cant be avoided )

Not really, it would be enough to have a single entity in the EU for all EU countries.

I'd imagine there are ways to set up such entities for not a lot of money, but selling to a jurisdiction has a lot more obligations when you're a legal entity in that jurisdiction instead of just exporting to it.

I wish - as an Australian company predominantly selling to US/EU, I pay 3% on almost all transactions...

No, Stripe is a payment processor; they don't want to deal with issues moving your money around.

They do their best abstracting the country- and payment method specific stuff to make it easy for you to accept people's money, but not to shuffle it around countries.

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