Balanced Payments' implementation[0] recently went into private beta. Interesting to note that between Stripe and Balanced, their fees are typically the same, however an important difference here is that Balanced is charging $1.00 versus 25c at Stripe.
Yeah, unfortunately, Balanced doesn't have the same warchest that Stripe does, as they've raised way more funding than we are, so we can't use any of that money to price stuff mega cheap.
There are also multiple ways to build this kind of feature. Balanced is doing it 'the right way,' but you can fake it till you make it, and hope that Visa/MC doesn't get mad at you before you build out the real implementation. That way is also cheaper...
As an example of the benefit of 'the right way,' Balanced will be immediate for a large percentage of cards, rather than the 1-2 days that this page claims.
What is "the right way", if you're allowed to disclose that? I remember that Square Cash was doing their transfer feature using refunds[1], is that the same way that Stripe is doing it?
"Unreferenced refunds" are the 'wrong way': the card networks don't like it for various reasons. ATM networks are starting to offer an API that just does this, which is the 'right way.' Visa OCT was mentioned elsewhere in this thread, for example. This means you have to integrate with a patchwork of different networks if you want to have good coverage.
I don't have any special insight into how Stripe is doing it, but the extremely low cost and the '1-2 days' sounds like unreferenced refunds. I could be wrong.
On a tangent: why does the wrong way cost less money than the right way? Is this a form of price fixing by the credit card companies? I'd imagine Visa could offer these at less money (or free) than MC but it sounds like that's not the case.
I don't have an enormous amount of insight into this, but what I can tell you is that in this industry, pricing is all about risk. The reason unreferenced refunds are cheap is because you're exploiting a loophole in the API, basically. The reason they don't like it is that it messes with fraud calculations, which messes with risk.
The 'right way' is basically a new product, in my understanding and so, like any product, they charge what the market will bear.
> There are also multiple ways to build this kind of feature.
It sounds like both Balanced and Stripe will use them :-). But let's not turn this into a Balanced vs Stripe thread. It's not especially relevant for users and we'll stay out of the way when you guys have your public launch. Continued good luck!
> let's not turn this into a Balanced vs Stripe thread.
Hey, as I said below, I'm a Stripe customer: you guys are great. Frankly, I don't even see Stripe and Balanced as directly competing. Well, Balanced is deep in a vertical of one of your products. When I took the job at Balanced, I kept on selling my books through Stripe: you guys kick ass for that use case.
> we'll stay out of the way when you guys have your public launch.
Interesting this is a customer communication/acquisition channel for your business when many of us see it as a peer discussion forum. I hadn't really considered that before.
Oh, I think it is a peer discussion forum, first and foremost, and shouldn't be treated as a communication/acquisition channel -- which is why I think that having threads veer off into the competitive weeds does the forum a disservice. (As a reader, I find it kinda tedious when it happens in other threads.)
I think the bigger difference for most of us is that Stripe's implementation is actually available to all of us, vs. being in private beta. No sooner did I see this announcement than I forwarded it along to a friend who could use this functionality today in a service he's building.
Actually, I should amend this comment: I'm not even sure why there is a comparison being made here. The potential applications for Stripe are so, so broad, and when you check out the marketing site for the other, the messaging is so niche in comparison. Maybe I should have said the biggest difference between the two is that Stripe actually seems to be applicable to most types of businesses we're all building. Judging from the homepage with Balanced, it seems like all this payment infrastructure is very tightly coupled with a solution for a niche type of business. I'd expect that latter bit to just be a Stripe Connect SaaS app that plugs in on top of the broadly applicable payment infrastructure Stripe provides.
I generally refrain from the Balanced vs Stripe debates because I use and like them both, but this comment is unfair, so much so that if I didn't know any better, I'd guess it were from someone with an interest in Stripe.
I'm in the same boat as you: I was hesitant to actually comment at all earlier, but before I posted, I thought the comments on this thread and others were reading very much like they were being hijacked from being about Stripe's feature release to being all these "me too" comments from the co-founder and a developer at another payment processor. It didn't seem very classy to me at all, so I threw my two cents out there to provide what I thought was some balance to the discussion. I'm sorry if it reads unfair at all, it's just IMHO.
Can't tell if that was a little jab at the end there, but I'll give you the benefit of the doubt. :-) My preference for and interest in Stripe as the operator of a Stripe Connect service is clear to anyone who clicks on my profile. :-)
Was not meant as a jab. It just felt like it had a bit of agenda (the comment). Thanks for clearing it up.
Something I did learn today is that what Balanced really excels at is making marketplaces easy. Stripe doesn't do this well at all...at least not yet. So I think that for now, there's room for both.
It's not entirely clear, unless you go to your website. I'm not saying that as an attack or an accusation, just pointing out that I didn't know until your comment just now that you did :)
I presume with Stripe you can only send from your Stripe balance, which certainly can be funded with credit cards (yours or others), but you'll pay the 2.9% + transaction fee on the "inbound" (CC) side, which (I think?) would cost more than the miles. In that scenario you could skip the debit card part entirely and just charge your own credit card and have the money go to your bank account.
The miles hounds have throught through these scenarios pretty thoroughly :)
One major bank set up an online payment service in the UK about ten years ago which allowed you to load money, fee-free, from a credit card, and then pay other people. Of course, said money, once loaded, could also be withdrawn back to your bank account, but why would anyone do that?
WHILE airmiles < MAXINT do { load, withdraw, pay card bill }
Round and round the money goes. :)
Obviously the fee-free aspect was unusual, perhaps an oversight but more likely an attempt to get some critical mass in the online payments market which, at the time, was primarily only PayPal and a UK outfit called "NoChex" (which of course DID charge a fee.)
Eventually a loading fee did arrive, and a little later on, the service closed up shop entirely.
When the dollar coin was first introduced in the US, you could order them online for no extra cost, as a way of increasing adoption. There would be a $1000 charge on your credit card, and 1000 coins would show up at your door (shipping was free too).
A lot of airline miles were earned at the expense of the US government.
More accurately, at the expense of us currency holders. The mint is self-finaning.
The cost to the mint to produce a coin is far less than the face value.
Whether anyone was actually hurt depends on how the cost to distribute this way compares to the normal cost to distribute new currency.
And, assuming this method was more expensive, calculating who was hurt and by how much would take me a few hours. Maybe someone else has that more on the top of their head.
Square takes a hit for each transaction and makes it free for its users. Stripe has an API that allows anyone to implement this. Making it free and suffering these kinds of losses is a bad business idea.
Given that Stripe charges the same fee as an ACH transfer, it sounds like Visa/MC has given them some sort of API to convert a debit card number to ABA routing/account numbers.
There's no way to map debit card numbers to routing/account numbers (afaik). They're probably using the ATM network primarily and another method if it's not supported.
(I'm a co-founder of Balanced, a payments company also building push to card (p2c) functionality [1])
> There's no way to map debit card numbers to routing/account numbers (afaik).
You're correct.
> They're probably using the ATM network primarily and another method if it's not supported.
Based on the settlement times advertised, it looks like Stripe is simply performing "unreferenced refunds" to debit cards, rather than using the various ATM networks to push funds out to cards. If they were using the ATM networks, you could expect sub-10 min settlement times.
I mean, the funds will be available for use in the recipients bank account within 10 minutes. The API call to perform this operation will have much lower latency than that. Did I understand your questions correctly?
Wow this is awesome. I recently decided to go with Stripe, and this news is only adding on to the positive experience I've had so far. Great work Stripe team, keep it up!
Why don't Balanced and Stripe work together on these features? I understand that they're competitors, but it seems as though we've got good engineers in both companies needlessly duplicating effort. Why not work together to provide this feature and spend that limited engineering time, expertise, and innovation on the things which differentiate the service? Stripe and Balanced aren't direct competitors, I think - why not work together on the common ground and use the time saved to make the differences really shine?
[I think I'm being overly utopian, but I don't understand why. Can someone explain it to me?]
For the same reason most companies don't share trade secrets.
- Stripe and Balanced ARE direct competitors, much more so than say Stripe and Braintree or Balanced and PayPal. Balanced handles the money in a bit of a different way, but the end product is very similar (i.e. receive payments from cards and bank accounts, and send payments to bank accounts [and now debit cards for both as well]).
- One or both companies may feel they have the better solution (see steveklabnik's comment above), and thus collaborating would be giving away intellectual capital for less in return
As a potential customer, you should prefer that they do work separately, because when different teams come up with different solutions, the chances are greater that at least one of those solutions is correct. This leads to greater long-term health in the industry as a whole.
Read the "Founders at Work" chapter on Max Levchin and Paypal. In PayPal's early stages, there were multiple companies all trying to do online money transfers securely. They were all fighting fraud to the tune of millions of dollars daily. Eventually, PayPal was the first to figure out some ingenious ways to combat fraud. With the first reliable online money transfer network, they were able to dominate the market, especially on Ebay then the largest ecommerce site.
tl;dr - Winner-take-all market.
I was excited when I read about this when Balanced launched their beta of this same feature, and I'm equally as excited to read about it WRT Stripe. The competition in this space has provided some wonderful innovations in a very short period of time.
I had to do some integration with Authorize.net some months ago and had terrible flashbacks to the late 90's / early 00's when they were the only real player in the game for self-hosted checkouts. Reading Authorize.net documentation does not invoke happy feelings.
> The competition in this space has provided some wonderful innovations in a very short period of time.
This is absolutely true! Let's do a feature comparison of when Balanced and Stripe have launched some new features:
Balanced Stripe
MP payments 11/16/12 2/24/14
ACH Payouts 2/14/13 6/24/13
Push to Card 1/24/14 5/22/14
Bitcoin 2/20/14 3/27/14
ACH Debits 2/28/13 (in private beta)
metadata 11/16/12 10/30/13
auth/capture 11/16/12 6/20/13
same-day payouts 2/25/13 (2 day payouts in private beta)
Dynamic Soft Descriptor 11/16/12 3/14/14
Everyone wins.
It's tough because we (I've actually just left Balanced, and, in the interest of full disclosure, have been a Stripe customer for a few years) are so open, our roadmap is basically public. Today is the day we originally said we'd launch production push to card, not beta, so it's fun to see Stripe launch this feature today.
Hm. There are actually a bunch of inaccuracies in the above, but I don't think there's much point arguing about the details -- specifics aside, I agree that Balanced has quickly launched some cool stuff. Congrats on your time at Balanced and good luck with whatever comes next!
Thanks Patrick! And thanks for Stripe: it's great that you all kicked off this 'let's make a better payments API' space. And giving people good APIs in general.
Yup. I'm in the final editing stages for Rails 4 in Action, and then I'm hitting that hard. My time at Balanced has certainly given me a lot of good examples for it.
One of the worst parts of the Authorize.net (and similar) era was not their terrible documentation, it was all of the half-complete library implementations. Most only implemented the small subset of Authorize.net API calls that the engineer required and nothing more. Thus most shops had to roll their own, or fork and add to another library and there was no coherency between libraries.
Now APIs are being treated as first class citizens, rather than an afterthought, and libraries are released alongside product launches rather than being tacked on a decade later.
I wonder if banks will close this loophole where anyone can effectively "refund" a debit card as a negative cash transaction. (that is without a matching purchase transaction).
I saw an option to 'send cash' on Hangouts the other day so I presume Google is A/B testing this as well. (Don't get me started on the notion of hangouts where you can send the other person cash, it seems a bit too attractive to the webporn crowd).
Because people are more likely to do things the easier they are, and sex stuff is one of the few ways it's easy for young people to make money.
Due to a confluence of perverse incentives across many facets of life, this becomes part of a sales funnel that recruits young people to the sex industry.
In many cases sex work is not a physically or emotionally healthy way to support yourself.
In every case it is a limited career that does not scale with age, while inculcating habits and attitudes that make traditional employment or switching industries difficult.
>In many cases sex work is not a physically or emotionally healthy way to support yourself.
It's a popular opinion, but is it also true? For example sex professions aren't regarded specially in Germany or Sweden, do you think those people are damaging themselves more than any of the more "legitimate" professions?
Yes, but they come up less frequently in discussions because they're less prevalent. Anyone can have sex, but fewer people can do something like being a wrestler, which also tends to be a crappy job except for a few superstars. Even those superstars can't do the job for very long before physical or emotional breakdown settles in.
Sex "work" is a "job" where the less experienced you are, the more "employers" will want you. What other job prefers inexperienced people? Only exploitative ones do.
We don't want to put people in a place where the only choices available to them are shitty ones. We want a world in which everyone can make a choice they truly want and would still take even when all circumstances in their life are optimal.
Powerful, happy, balanced, rich people do not tend to work in the sex trade. Can you imagine Condolezza Rice or Hillary Clinton or Marissa Mayer deciding that porn or prostitution is what they really wanted to do all along but just could never find the time for?
>Can you imagine Condolezza Rice or Hillary Clinton
You say this like these people are shining examples of people doing good for mankind. They're run-of-the-mill politicians. I couldn't care less about their porn or political careers. I'm sure the void would have been filled by someone.
Sure, I'll go out on a limb and say there's a moral problem with the sex industry — in fact, the combination of the terms sex and industry strikes me as not only wrong but very sad. I didn't think disapproval of the sex industry was so obviously incorrect that we had to shame people for it, but some of the side-threads here seem to be heading that direction.
A lot of people disagree with your opinion, myself included. Morals aren't absolute, obviously, and they differ between people, but the shaming is usually directed at those who work in the sex industry from those who are morally opposed to it. I definitely agree that shaming from either side is wrong, though.
I am so tired of hearing in techy circles how everything about porn and prostitution is an awesome thing. Thanks for counterbalancing against all the dudebros who think everything about selling oneself for sex is great.
(I'm pretty sure this is gonna attract a lot of downvotes, but I just wanted to get this off my chest.)
It has nothing to do with porn and/or prostitution being 'awesome' and everything to do with it not being any of your damn business what consenting adults get up to, whether or not it's 'easy'.
Also; down votes are for not contributing to the conversation. You're not arguing for your position, you're just thanking someone else for appearing to share it.
> It has nothing to do with porn and/or prostitution being 'awesome' and everything to do with it not being any of your damn business what consenting adults get up to, whether or not it's 'easy'.
This whole consent argument is totally flawed and is an attempt to ignore the question about whether the participants in porn and prostitution are being harmed or not. The people working in sweat shops in China are also "consenting" to do that, but we shouldn't be promoting any efforts that put more people in sweat shops.
Whether or not being in porn or prostitution are comparable to being a sweat shop worker is a different matter and a different debate, but it's a debate that should be had and not be dismissed with the consent argument.
Well you stop idolising indentured servitude (well an analogous situation of paying for a job and then having to work in conditions beyond the bounds of human decency often to end with less than you started with) and then perhaps we can get him to think about it.
I'm really not sure whether I'd choose being held prisoner in a factory making high-end gadgets or scraping an existence from the soil and rain and having my family around me a little autonomy. Hobson's choice.
>In June 2011, Zhang and his teenage classmates were taken out of their family homes and dispatched to a factory making electronic gadgets. The pupils were away for a six-month internship at a giant Foxconn plant in the southern city of Shenzhen, a 20-hour train ride from their home in central China. He had no say in the matter, he told researchers. "Unless we could present a medical report certified by the city hospital that we were very ill, we had to go immediately."
>The report details the push to find workers to produce the iPhone 5’s 8-megapixel camera, and the means by which companies like Flextronics International, one of Apple’s largest suppliers, recruit for positions on factory assembly lines. According to Bloomberg, companies recruit across the poor cities and villages of Indonesia, Cambodia, Myanmar, Vietnam, and Nepal to staff up the army of workers needed to create components. To accomplish that task, recruiters hire brokers, who charge families high fees — often a year's worth of wages, with interest — for the opportunity to work on the supply side.
>Factory workers were reportedly also obliged to surrender their passports to brokers to ensure they paid off their debts. This practice amounts to the very same kind of bonded labor that Apple has tried to combat in its recent supply-chain audits. According to Bloomberg, Flextronics has commissioned an outside group to conduct an investigation into the fees being foisted on recruits. Apple spokesperson Chris Gaither told Bloomberg that the company will ensure that "the right payments have been made."
Neither of those is the story I had in mind FWIW. I can find you more such reports from mainstream media if you like.
People get charged for a job, shipped out to a location; kept in a virtual confinement (eg passports taken, not allowed off campus), then sometimes the work disappears and they're left high-and-dry with a debt and still no job.
Yes I imagine many do make more in factories but that's not at all the whole story, not by a long shot.
Ok then, that is a pretty informative API page. Some of the original sequences last year seemed to be more like AFTR type actions rather than OCT actions which, if I recall correctly, avoided a service charge on the transaction.
Could make for an interesting loyalty card program.
U.S. cards just have the card number, which of course is separate from the account number, and then there's the "security code" on the back, which is typically a 3 or 4 digit number. But there is no other account information printed on the card.
Also, I found out when I began working for international clients, the U.S. doesn't participate in the IBAN system. Instead we have something else which necessitates international wire transfer payments be made via an account number, a routing number, and a swift number. It's very annoying. (perhaps business accounts work differently, I get paid directly into my personal account which I'm sure is a bad idea, but it works for me).
> But it seems to me that buying stuff with a debit card isn't that common in USA.
No it is, almost all my purchases are via debit but it comes off my credit card. Most banks come with Credit cards that are just a fee-less low-liability proxy for debit that gets withdrawn from the bank account.
Amazing to see this feature roll out at Balanced and now Stripe. The main reason many of my friends don't like using Venmo and related apps is the burden of putting in your bank account and routing numbers (not even the security worry, just the effort it takes!).
Our API has been built, but we're giving private beta access to anyone that made prepayments via our crowdfunding campaign [1] first. Private beta will launch next week [2]. We want to make sure the performance (instant payouts & high coverage) is on par with our standards before a public release, which will happen later this summer.
Dwolla accounts are still funded over the ACH network (requires account/routing number). The exciting thing here is you only need a debit card number to send money.
"Just like sending funds to bank accounts, a transfer to a debit card costs 25¢ and will arrive in the card’s bank account in 1-2 business days. As always, you’ll need to verify your recipient’s identity.
While we can only support U.S. Visa and MasterCard debit cards at the moment, we’re actively working to bring our transfers API to our users in other countries."
Right now, most of our marketplaces' sellers seem to prefer using their regular bank accounts rather than Bitcoin. But if/when the Bitcoin revolution happens, we'll enthusiastically support that too. (We're running a Bitcoin acceptance beta right now: https://stripe.com/bitcoin)
It's tough to use Bitcoin seriously on a day to day basis when the value fluctuates so much. Yes, there are security advantages and there's less transactional friction. But that friction has a value, and it's way overshadowed by the volatility of the currency (today).
In Europe at least I'd expect it to be a total non-starter.
For starters, there's a ton of alternatives, but more importantly giving out the debit card number is high risk - much worse even than handing out your credit card details (getting charges dropped / charged back is much more effort with a debit card) - whereas giving out your bank account details is not (if bank lets anyone do anything other than depositing money in your account with just your account details, the liability is entirely on them).
And for most transfers within the EU, you can do an online electronic transfer and get the money to the recipient in <2 hours - very often in less than 10 minutes.
Same in Australia. It always amazes me how archaic the US banking system is - particularly the continued use of checks. When my wife (then girlfriend) saw that I owned a check book here in Oz she burst out laughing and called me an old man. That was a decade ago.
[0] https://www.balancedpayments.com/push-to-card