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Comment by scott_s | Hacker News Reader

I have always attributed PayPal's problems to having to perform fraud prevention on a massive scale. That's where I understand most of the initial difficulty comes from in getting a PayPal account setup: they have to weed out scams and money laundering. Same with the horror stories I read: most of those people have circumstances that would also preclude them from a standard merchant account.

So is Stripe doing fraud prevention differently? Put another way, are they an entirely different animal from PayPal and Google Checkout, or are they betting that they can do a better job at what PayPal and Google Checkout already do?

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You are absolutely correct. That's one of PayPal's main weaknesses. I am not sure how Stripe is dealing with it; though they probably have to go through a similar screening process, which isn't foolproof.

I am a co-founder of a nascent third party payments aggregator (TPPA) called PayGuard (currently in stealth mode - Beta version is being built), and our system inherently includes automatic fraud prevention; so we not only save money by eliminating the screening process, but we also save by virtually eliminating all 'dispute resolution'-leading scenarios.

As far as a comparison for Stripe, they seem to be similar to Braintree, but geared more towards early stage online merchants. The following link may answer some of your other questions:

http://www.quora.com/What-are-the-advantages-of-using-Stripe...

our system inherently includes automatic fraud prevention

If you're willing to share more, I'm listening. PayPal has "automatic fraud prevention" in the sense that, if you do something that deviates from what they expect, they suspend your account. I assume you mean something different.

Also, I followed the Quora question to this related one: http://www.quora.com/How-are-Square-and-Stripe-able-to-accep... I'm still confused about one thing, though. I understand that PayPal is both an aggregator and the merchant of record. It sounds like Braintree is not and aggregator and not the merchant of record. But this poster claims that Stripe is an aggregator, but not the merchant of record, and I don't understand what that means.

No we won't freeze, close, or withdraw money from people's accounts. Once it's open, it's open. Once the money is cleared, it doesn't go back. This is an ironclad promise we can make to users because of the unique way we process payments. Right now the model for peer-to-peer transactions is that after one party gets paid the other waits for his merchandise or services to be delivered (eWork projects). We solved this problem by creating a system that will give equal distribution of control to both parties during the entire process, disincentivising fraud on both sides. The system is specifically designed for people who outsource projects, freelance workers, and cross border peer-to-peer e-commerce. It would simulate the benefits of a face-to-face interaction by solving the problems created by the distance and time usually involved in these types of exchanges.

Is "we" PayGuard? And are you saying you won't "freeze, close or withdraw", or that you can't? One is a promise. The other is a fact. See Colin Percival's post on the distinction: http://www.daemonology.net/blog/2012-01-19-playing-chicken-w...

It's also not clear to me how what you describe prevents scams and money laundering. Note that in the case of money laundering, it's the same party on both sides of the transaction.

You are absolutely correct, it is a promise. But it is also a guarantee. There are regulations regarding money laundering that we will have to comply with of course. Users are required to fill out certain forms if the the amount of a transaction exceed 3,000 for individuals and 20,000 for businesses. And these are not just "per transaction", it is per month. As with scams our system is specifically designed to prevent users from falling into the trap scam sellers or buyers. Of course it will never be absolutely fool-proof, but it does significantly reduce the incentive for fraudulent activities on both sides. Unfortunately, I cannot give out too much detail on how we do it. We are launching our beta system sometime around March and you will be more than welcome to try it out as a beta tester.

It's probably too soon to tell what's going on.

They are still relatively young and it will take a few more years for the vectors of PayPal's fraud troubles to target them.

I think right now Stripe is primarily know in the HN-type circles, not the eBay-type circles. Hence the good times they are experiencing.

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