The Internet Needs a Better Way to Handle Money. This Startup Has the Key | Hacker News Reader

The Internet Needs a Better Way to Handle Money. This Startup Has the Key

wired.com

28 pointsdenzil_correa10 comments

Econ 101: favorable transactions that would otherwise happen don't in the face of transaction costs. This fact of life plagues the web, because there are a lot of potential transactions that are, individually, only worth a few cents to the user. Advertising is the backbone of the web, I think not because users like it so much, but because it's a way to monetize clicks a few cents at a time. There is, for the time being, no practical alternative for these sorts of micro-transactions.

I think the holy grail of reducing transaction costs and friction for online payments is allowing better monetization strategies for the web. Imagine going to a website and having it auto-bill an account for a few cents per page view, instead of being greeted with a pop-over ad that's impossible to dismiss on a mobile device without accidentally clicking through. This is the big value of Stripe and its ilk. Not just reducing the cost of accepting payments (which has the economic effect of just shifting revenue away from payment processors to merchants), but enabling valuable transactions that wouldn't have happened before.

This idea is certainly compelling from some perspectives but isn't there a lot of evidence that most people hate being nickel and dimed (which is literally what this proposal is) and in basically every instance have preferred purchasing goods in bundles?

The psychological aspect is definitely a hurdle, and can be viewed as a transaction cost in itself. I wonder if there's any practical ways to reduce it.

There might be, but I'm not optimistic.

So, this article is talking alot about tech and not so much about the bureaucracy that is involved getting paid online.

I'm building a marketplace, airbnb, model, and have applied to braintree, the process has taken 10 days and counting, so far they have asked for the following documents.

- Copy of my passport,

- Company registration papers

- Bank account statement,

- Buisness plan,

- Terms of service,

- Privacy Policy

(Physical address and phone on website, apperently a requirement from VISA/Mastercard)

How does Stripe solve this problem? I have never needed to provide a business plan when embedding a YouTube Video.

Note, I'm in a country where Braintree's Marketplace offering (or Stripes, or Balanced) is not available. So I'm doing the payouts to the service providers myself.

easy integration is cool, obviously, but 2.9% + .30 is the same price as paypal. businesses ultimately don't care about how easy it is to integrate but how much it costs.

They do when they are starting out, but care less as they grow.

The problem with paypal is they have different APIs with different features that are non-overlapping.

There is no API that allows you to chain payments through my account to the seller and the affiliate when you check out multiple items when the user does not have a PayPal account.

That combination of features is mutually exclusive, but it should be like the most common thing in the world for an e-commerce website with an affiliate program and multiple item check-out.

> businesses ultimately don't care about how easy it is to integrate but how much it costs.

For many large-scale businesses, the ongoing cost of a higher rate will overwhelm the startup costs of building it and you will be correct.

But that is not the only sort of business in the world. For many tiny businesses the startup costs exceed their available funds -- they would pay ANY rate so long as the profit from the new customers it brings exceeds the cost to existing customers.

For some startup companies, the savings in integration (both of dollars and more significantly savings of time) is a short-term cost to be minimized even if it means a larger cost in processing fees to be shouldered next month or next year. After all, if we don't get a demo out the door there won't BE a next month or next year.

And 2.9% + 0.30 really isn't all that high. It's high enough to hurt, but not high enough to drive away customers. For some, this amount really makes a difference and they can do better, but don't fall into the trap of assuming that EVERYONE is like that.

I think integration IS a cost.

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