I mean this in the most constructive way possible.
As a stripe customer for 6 years, I effectively only care about reducing transaction costs. Period.
Stripe's core business is being a part of a "credit card sales tax" that is substantial. Much of this is the fault of Visa/Mastercard/Amex, but that is the problem-space they exist in. Payments are transferring bits, and should be effectively free. If they want to "make the world better", that is basically the only problem that matters in their space, and I never see any recognition of this fact in anything Stripe puts out.
They do a LOT of work to try and make me feel better about the tax (e.g. your money goes towards book publishing!). None of it works, it just seems like the "your tax dollars at work" road signs.
Now maybe people at Stripe are working on ways to reduce the tax on businesses/consumers. It is not a technical problem, its societal. I hope they are, and they will announce something amazing and I can worship at their feet.
Please Stripe, work on reducing the costs to transact online by 1-2 orders of magnitude, where it should be.
This is another phrasing of what jackdeansmith says, but this is not right:
> Payments are transferring bits, and should be effectively free.
Payments is taking on a short term risk that the (slow) transaction between a customer's bank and a vendor's bank will not settle, because of (a) fraud, (b) chargeback-like issues, (c) insolvency. This isn't exactly right, but overally its not quite 0 risk without crypto, which people don't trust (from a UX perspective).
And all kinds of risk-taking charges for it: loans, mortgages, etc. If you want to shoulder the risk yourself and save the fees, pay with a debit card.
One thing that often gets overlooked with respect to payments is consumer preference (and this is actually the primary driver of cost).
Why do credit cards cost 2-3% to process? Because of expensive rewards programs given to the consumers who use the card. Why are there expensive rewards programs? Because consumers like them! And they insist on paying with a credit card because of them. Except in edge cases, merchants have no choice but to accept credit cards despite the cost.
While Visa, Mastercard & Amex frequently get the blame, the lions share of the processing fee flows to the issuing bank of the card, and the lions share of that fee goes to fund rewards programs. (There are other perks to credit cards that encourage consumer usage, including chargeback protections, free 30 days of float, near universal acceptance, etc)
Payment costs won't materially decrease unless someone invents a form of payment that consumers prefer which doesn't have these cost burdens. Or if you, as the merchant, have such market power that you can mandate a less preferred but cheaper form of payment (like cash or debit card or ACH - this is why you often can't use your credit card to pay a parking ticket or your taxes)
This is just credit card stockholm syndrome. Nearly all the risk you mention is because of the insane and greedy design of credit cards.
In most of Europe, people pay with debit cards and the money goes straight off their bank accounts. If there's insufficient funds, there's no purchase. If the network fails, there's no purchase. If your bank goes bust 5ms before your purchase would clear, there's no purchase. I'm no banker and I'm sure there's some risk somewhere, but it's really not very much.
Agree. I think that’s a very glaring omission in the original argument and one can interpret that as a simple misunderstanding or purposeful omission to misrepresent the totality of what comprises the cost to present a biased argument for more favorable terms.
But what the comment is advocating for is systemic change/disruption. In that context, the whole complex (bank settlement, chargebacks, insolvency) are a single thing. There are always reasons for things being the way they are, but that doesn't mean that things can't change.
As the OP says, payments move bits around. There is no fundamental reason why this should represent such a big slice.
Besides technical challenges, and whether or not these can be overcome... I think the greater hurdle is entrenched structure and entrenched interests. Stripe is, at this point, a part of that. They have an overwhelming microeconomic interest in payments remaining a large "tax."
Imagine an imports "agent." Her job is to get your goods into country X and navigate the labyrinth of rules, chaos, fees and taxes on your behalf. The whole game costs Y. She earns a % of Y. She may have more, and more nuanced complaints about the labyrinth than anyone but... If Y becomes less, she will earn less.
Couldn't much of this be scaled back if we removed some of the layers and intermediaries?
If we had a single state-run bank (even if it were just as the fulfillment "back end" behind different consumer-facing servicing organizations), then a transfer would occur on a single ledger in a matter of milliseconds, rather than waiting for the East Podunk Bank, Trust, and Pork Cannery to pull a batched update file over a T-1 they put in in the first Bush administration.
Fraud could be handled better than it is now. We have terrible security/convenience compromises (Chip + Signature, anyone?) and when we try to improve matters (3-D Secure) it is presented so badly and clumsily that it basically dies on arrival (it's coming back, but mostly because the EU is cramming it down people's throats)
Chargebacks are a weird case. It feels like they come from two places-- either as the first response to a fraudulent transaction, or as an escalation for when there's no other way to get satisfaction. If you're fair with your refund policy, your chargeback rate should be close to nil.
As a customer of Stripe too, I almost[1] couldn't disagree more.
Running a global online/SaaS business is hard. So much complexity everywhere. I wish Stripe would handle MORE problems & complexity and would happily pay for it.
Just a few examples Stripe could handle:
- Checkout + Portal is a great start, but it still takes too much (expensive) design+dev brainpower to create the entire experience of a high quality trial-to-paid and existing-customer billing management in a SaaS app.
- Running a SaaS company at any scale is full of Support headaches that Stripe Dashboard simply does not handle well - stuff like tweaking a billing date, and doing combination (e.g. wire transfer + credit card) payments, "can you re-send my invoice but with my VAT ID on it this time?" and many more. At any scale, lots of effort is spend on custom billing support tickets and building internal tooling even if you use all of Stripe's features.
- Are you a SaaS company selling all over the US? Good luck being complaint with all 50 states in terms of sales tax reporting without expensive legal/accounting help. Did you hire any remote out-of-state employees? Good luck -- now your financial compliance got even more complicated.
Stripe doesn't do any of these things well today. And if they did, it would likely be much cheaper than the in-house solutions everyone is coming up with instead. I think Stripe should handle 10x as much complexity for a SaaS company than it does today, and of course they should get paid for doing so.
[1] I agree it would be amazing to see Stripe come up with smoother flows for supporting payments that bypassing the expensive card network's fees.
Fully agree, I don't have a problem paying Stripe if it means they are properly incentivized to help me run my business.
I'd be happy to throw them a few more percent if they could handle more of the complexity you've mentioned above. Right now, Stripe is both too complex to set up and too simple from a feature perspective.
I'm optimistic though since it seems companies like Paddle, Chargebee and others are blazing that path. As much as I love Stripe and what they originally did for online commerce, they're already starting to look like the lazy incumbent compared to the challengers right now. Market dominance is not a great incentive to create better products.
> Payments are transferring bits, and should be effectively free
Payments are also about establishing trust, which goes wrong a lot. You can in practice make payments very cheap with some cryptocurrency schemes, but don't get fraud protection, chargebacks, and customer service that credit cards provide (unless you introduce another party in the middle taking a cut).
It seems to me the innovation required to actually reduce costs would replace the credit card system, not build on top of it.
I worked on a project where the client wanted to switch to Authorize.net from Stripe midway through because of Stripe’s cost. From a developer perspective, it was a lot more miserable to work with than Stripe. Other projects I’ve worked on have had a similar motivation for not using Stripe.
Annoyingly, the cost of implementing the replacement and getting it working with React Native (which involved creating native modules for iOS and Android) ended up costing them as much as several years of fees. Also the client was a startup that went bust, so they never really got the value out of it that they hoped.
Yea, when companies really want to lower the cost, they implement directly with the bank, like say JP Morgan. That makes authorize.net even seem good. Stripe is really a pleasure to work with as a developer.
Interestingly, I tended to prefer Authorize.net to other alternatives. But a lot of that is likely a 'moment in time" thing when I got into development.
There were a few years where Authnet was the "default" gateway. Other gateways offered compatibility modes for their SIM and AIM APIs, and if you had some random off-the-shelf cart, it probably spoke AIM out of the box.
Part of the difference in experience is also likely due to their model. The Authnet model was very much "take direct card data and relay it to your server and then to us", and the Stripe model is very much "JavaScript up your checkout process to do tokenization, so you never see the card number." If you're at a point in time when JavaScript is a bit sketchy (the IE6-is-the-dominant-browser era), you might be more willing to go for a worse PCI compliance scope in exchange for the comparative bulletproofness of doing things server-side.
Now I work for a firm competing with both of them, so I can hardly express a preference today. :)
Could it also be you only care about transaction cost because everything else works so well? The time I spent on customer support with paypal/visa/plaid, ridiculous documentation from other payment processors and payouts snags make me appreciate Stripe even more.
EDIT: As in I haven't touch my stripe code for 2 years. They still work.
Here in The Netherlands, we have a platform called iDeal. All dutch banks are connected and all webshops accept it (it's hard to find a place to use your creditcard here). Transactions are instant and non-refundable. Costs are around 0.35 per transaction and NO % fees. Just a fixed amount per transaction. For big volumes, that per-transaction amount can be lower. It's amazing and I wished they'd just roll that out worldwide. No risk for merchants at all.
It's also much less reliable than the credit card networks. Fundamentally it's not ready to be a large instant payment provider, as it's still based on the same slow batch processes that run your normal bank transfers.
This doesn't really solve the problem, it just shifts all risk onto the buyer. Under this system, if you take my money and run, I have no possible recourse
Transferring those bits with just the right logic for each transaction scenario is what still costs something. I'm sure the margin is massively excessive today. But I don't think it can be quite 'effectively free'.
To that end at least allow payouts in USD to the non-US banks.
We charge in USD and we pay for our infrastructure in USD, so the hit we get on the double currency conversion is really unpleasant... as it is completely avoidable.
This has been asked of Stripe for AGES and they did nothing. The only explanation is that this is by design, which means that they have no problem bleeding merchants with unnecessary fees just like all other payment companies. It's just that these fees are disguised differently.
>>Please Stripe, work on reducing the costs to transact online by 1-2 orders of magnitude, where it should be.
I agree with the could and should. Payment costs could be a tiny fraction of current. It is a tax. I'm dubious of the who. Stripe is now a big player. They're have no interest in turning their $X00bn sector into a $Xbn sector.
Incidentally, I think the current economy harbours a lot of sectors that could be orders of magnitude smaller. This has always been a debate in the financial sectors. Today though, there are some (IMO) less ambiguous sectors/companies.
Does facebook actually need $70bn in revenue to operate facebook. Could it be done on $7bn? To me, it seems like an obvious yes. Quite a glaring inefficiency, IMO.
It seems like a lot of people are defending credit card pricing, but the idea that they’ve been charging the same % since before the internet and are still absorbing the same “cost” of fraud protection is absurd.
I would love Stripe to start advocating for lowering credit card fees, either through regulation or providing more avenues for competition.
It’s too late. Much of that extra savings on fraud protection has already been funneled back to the card owner in the form of cash back or reward points. Not a whole lot can be done to break that unless the government comes in and legislates something as they do in Europe.
There are many costs that remain stubbornly fixed as a portion of GDP (Ads has been 2% of GDP for > 100 years). Fraud as an industry, and corresponding fraud protection services likely fall under this umbrella barring substantial technological innovation.
You barking wrong tree here, what USA needs is new competitors to credit card giants if you go about anywhere world there is already pretty good competitors with superior user experience to credit cards eg Mobilepay(Denmark and Finland),Swish(Sweden) and of course Alipay(chnina) etc.
The best thing I read was Australian regulator capped cc interchange fees at 0.5% and allowed merchants to charge as an extra fee over the price. I guess it'll never happen in the US but maybe Europe? https://en.wikipedia.org/wiki/Interchange_fee#Australia_and_...
What a wonderful advertisement for working at Stripe. The impact of long-form well-written essays like this is huge, and fits perfectly with the theme of the essay itself about helping others succeed at scale.
I like the personal notes included a ton, e.g. mentioning that he has struggled with depression personally, which I wouldn't have guessed, even if naively so. Being open and helpful with those topics helps a lot of people out in a serious way. Also love quotes like "I cannot say this enough: pick your peer group wisely because you’re giving them write access to both your conscious thoughts and your entire worldview".
Just reading this post makes it tempting for me to apply at Stripe (They apparently have 530 roles open, wow! https://stripe.com/jobs/search), especially given all the other positive comments I've seen about the company.
> What a wonderful advertisement for working at Stripe.
Exactly, which is why some of this should be taken with a grain of salt.
By all accounts, Stripe really is a good place to work and their success speaks for itself. Yet, it's important to remember that this article is at least one part advertisement. I'm not suggesting anyone dismiss the contents, but keep the context in mind. The article goes to great lengths to speak about the positives of working at Stripe, but the section about terrible work/life balance is written vaguely enough for the reader to dismiss it as a personal quirk, for example.
Indeed, the part about choosing peers to form one’s worldview really struck home for me. Probably also applies to who you follow on Twitter or which sites you read (like this one).
This is one of the few blogs where I'll always read the entire article, consistently great writing and thought-provoking ideas.
I agree with the other commenter regarding the Stripe application process. I've applied 2-3 times starting in 2015 and as recently as early 2020 and have never heard back, it's been the only company that never gets back to me!
Everything worked out, since I've landed some great positions at promising startups in the meantime, but I would have loved to experience the growth from ~500 to ~3000 employees like Patrick has.
Small improvement in this paragraph:
> “If you sell to doctors you prefer futures in which more money goes to doctors. Those are much better futures for you than futures with less money going to...
Since the article was just talking about call options, my first thought went to futures contracts instead of possible timelines. I think using "timelines" instead of futures would make this a bit more readable.
The theory is that it's better not to respond at that point, because if they change their mind in 3 months, they'd rather not have rejected you so they can say "sorry we were slow".
It is likely they don't really have many open positions no matter how good the applicants are. Seems they have some outside of the USA specific positions open.
Kind of crazy how all these articles come out about what it's like working at Stripe and how to apply. Everyone I've talked to who has applied has not received a response from their application.
Even in my most recent experience I wrote a cover letter, reached out to multiple Stripe recruiters. Most of them either ignored me, or said that they were not working on that role and said my status is still "pending".
I imagine that Stripe's recruiting team is overwhelmed but it was unfortunate that they weren't able to get back to me. I ended up accepting an engineering manager position over payments at another company.
Oh man. I have a juicy Stripe story from a friend, but I'd rather not share all of the details in case anyone from Stripe is here listening.
The gist is that I had a friend apply, go through a few interviews, and then just get completely ghosted. After several emails and attempts to reach out, the hiring manager replied to his email with a two word reply when my friend asked about his application status. That reply was "no thanks".
In my experience, stories like this are par for the course. While at Stripe, a few of my close friends and former co-workers were treated so poorly during the application process that I stopped referring anyone over a year before I left.
I went through the whole loop, "cleared" the interviews (as per the recruiter) and was told to stand by for the offer. A week later, instead of the offer, they just said they ran out of headcount. Never heard back from them again (even though they said they'll reach out when they get headcount back).
Doesn't surprise me. I did an on-site a while back and several of the interviewers seemed like they'd rather be anywhere else rather than in the interview room. It's a good thing the product has scaled well because it seems like the culture hasn't.
At almost every large, successful company there is a huge disconnect between what hiring is screening for and what corporate blog posts might suggest, to the point of engineers themselves being unaware of how the experience is for most applicants (after all, they are self-selected…) Usually this boils down to "you don't seem to have enough experience" or "you don't know anyone on the team who can vouch for you to get through the initial resume screen". A real shame, since it leaves a number of qualified applicants in a poor position, but presumably Stripe has enough people applying that they can afford passing up people.
I applied for a new grad position two months ago, did the coding challenge and passed all test cases with clean code and time to spare and haven't heard a peep from them since. It's a shame considering how I only hear good things about the company and the recruiting process but almost all the big companies I've applied to have at least had the decency to let me know they aren't moving forward
I applied for the new grad position too a couple months back, having a previous FAANG internship and starting (and selling) my own startup during college. Never heard back or even got the coding challenge. I’ve used Stripe in my own projects a few times and have also heard good things so I’m bummed too.
what an amazing industry we work in! denying top talent every day because people aren't motivated enough to check emails, make phone calls, click buttons to schedule things.
I'm sorry to hear this and apologize. We're definitely still a comparatively small team wishing we had more efficient ways to handle our inbound funnel. (We do have some ideas here.) But this is good feedback and we should absolutely have provided a better experience.
Ironically, this is almost the exact same attitude I got in my poor experience interviewing with Stripe. Interviewers were constantly late to our calls and mixed up who would be interviewing me more than once. Despite that, I still was told I was going to receive an offer... only to be ghosted for weeks. Once the recruiter finally reached back out, they said the position had been cancelled but they would find me another position. Spoiler: I never heard back from them, and they ignored all of my further communications.
Throughout all of this, I was apologized to several times (credit is due there, I guess) and each time the excuse was "ha ha sorry things are such a mess, that's just how things are when you work at a start up!" First of all, "haha we're a startup" is not a valid excuse for being late to meetings and ignoring communication.
Second: you're a company worth tens of billions of dollars, have thousands of employees in offices around the globe, and were founded a decade ago. You are not a startup. You are not a "small team". Stop using it as an excuse.
Stripe was founded over ten years ago, is worth tens of billions of dollars, thousands of employees, and has tons of software expertise. And the excuse for bad candidate experience is a lack of resources.
Crazy suggestion: figure out a way to dogfood your hiring process. Have an engineer with a few years experience at Stripe try to get through the application process and see what kind of feedback they bring back. Kind of like secret shoppers but for hiring.
My college classmate put in a referral for a specific role a couple of weeks ago, and no word. Not even an email acknowledgement that my job application is in the system.
what sort of ideas are required besides sending an email to your IT folks and telling them to set up a JIRA project for tracking job applications? you could, in an afternoon, ensure that no applications are ever mysteriously forgotten about.
I do mainly frontend work and am just shy of 10 years experience. My resume is solid and I can at least get my foot in the door at well known companies including FAANG. I'm not saying I'm going to get the job, but I feel like I can at least get a response.
I was job hunting earlier this year due to my last company (a fintech start up) shutting down and Stripe was the only company that just handed me an immediate "No" without even a recruiter call. I know one other engineer who is more mid level and she said she had applied and never even got a response.
I harbor no ill will toward them, but I'm really curious what their hiring criteria is and why it seems so different that most of the other major companies out there.
I'm tangentially familiar with the process, so let me paint a picture.
Imagine you have enough high-quality candidates such that you could have every single employee interviewing candidates all day every day, doing no other work. What do you do?
In the real world, most engineers top out at one or two phone screens a week, and/or one or two on-site interviews a week. Sometimes more. Each is 45 minutes at least, usually an hour. Each involves writing deliberate, thoughtful feedback and a professional assessment. Candidates that do well lead to decision meetings that take more time for all the interviewers to discuss -- candidates that do poorly can circuit-break.
Then there is scheduling! Is there physical space available for the candidate to interview? Can we get all the necessary interviewers? What if one or more of them can't make it (sick, etc.)? What if the candidate needs to reschedule? Time zones? Holidays?
Imagine Stripe has 100 recruiters (this is at least accurate within an order of magnitude). What does the back-of-the-napkin math look like for their maximum interviewing bandwidth?
Hiring is a really hard problem, even for well-equipped organizations. Even the best in the world do it badly sometimes. And the anecdote cases tend to shout the loudest. Maybe you had a typo on your resume. Maybe other candidates looked better. Maybe there is a nasty rumor about you. Maybe the recruiter was having a bad day. Or maybe you were just unlucky and arbitrarily cut.
This happened to a friend too, got totally ghosted by Stripe.
This is generally how our industry works, though, which is that it's not worth it to go through loop for a job unless you were referred by someone on the inside.
I interviewed in March, thought I did really well in the interviews, had great conversations with the hiring manager etc. After Covid hit they told me they were postponing hiring decisions and I never heard anything since. Sort of a weird way to manage things but I suppose the lockdowns have added quite a bit of chaos.
Well I don't know for Stripe but subconsciously recruiters will always consider people who apply to be needy compared to people who are 'hunted' via Linkedin.
When you do that kind of blog posts, you try to improve the image of the company externally so that more people want to work there. It could help with more people applying but also increase the acceptance rate of the offers.
When you have a lot of people applying then you just cherry pick the best ones
I'm surprised to hear so many in this thread had negative experiences. My experience as an applicant at Stripe was stellar from beginning to end, probably the most professional and well-executed interview process I've seen in my career. I can say that without bias because I ended up choosing another offer, but it was really difficult to turn down Stripe's after that.
"pick your peer group wisely because you’re giving them write access to both your conscious thoughts and your entire worldview." is something I have found to be difficult but required. Very nice friends of mine have simplistic views on issues I am interested in or lack the ambition I would like to have. We still close but we chat about personal problems, not work.
"every time I convince a Stripe customer to raise their prices ... we benefit directly" sounds like the exact words of an illegal cartel. While I doubt that that is Patrick's intent, if I were an antitrust attorney, this would convince me that the notion of payment processors as clearinghouses for price-fixing merits investigation.
This is a great example of how one can do something well-meaning at small scale (Advise tiny, tiny businesses that they would be better served having more confidence in their value) that can turn into something illegal at scale (Advise price leaders that they can safely lead by less and so-on).
A stripe customer is free to tell Stripe "Your fees are too high, and I'd prefer switching processors than raising prices".
I could be wrong. Is there an example of an illegal cartel, trying to persuade customers from whom it makes transaction fees, to raise prices? Surely this isn't a new thing under the sun.
Of course the customer can say that. And nowhere does Patrick suggest that taking his advice is a condition of continuing a relationship with Stripe. That's not the issue.
The issue is that coordinating pricing is illegal in any form. In any industry, each company could make more money if they knew their competitors would raise prices. Even calling a competitor to tell them that you are raising prices is illegal if they raise prices.
If there's even a single incident of two companies being advised to raise prices on products which compete with each other, it's about as close as it comes to an open and shut price fixing case. And this post makes it easier to prove because it suggests that companies know he's giving the same advice to their competitors. Whether that's said explicitly or not won't matter.
Ultimately consumers foot the bill. It's why antitrust legislation gets pursued in the first place.
It's the raising of prices in the absence of market forces that gives room for the payment processor to increase fees. Theoretically all payment processors benefit from advocating that their clients raise prices. If some companies raise their prices, no issue, but the coordinated effort to do it is where you "smell a rat".
It's then up to the litigating party to try to find collusion between companies to do this. This is like how the anti-competitive hiring practices of Google/Apple/Facebook/etc were surfaced. They all had a set of practices that stood out as anomalous and during the subsequent investigation it was found that they colluded with each other to set the market (rate for hiring talent).
It's probably not the case here...and also patio11 has little risk saying so while living in Japan where industries are highly vertically-integrated/monopolistic.
The idea that any form of price optimization among firms violates antitrust laws would put basically all management and marketing consulting at antitrust risk. This doesn’t sound plausible.
You will find that management consulting firms (and the companies that hire them) have fairly clear rules about how they approach and talk about pricing and competition to avoid the appearance of impropriety. Most notably, they would never ever: 1. Indicate that their advice always is to raise prices 2. They would never share the pricing advice they gave to a competitor.
I don't know if what Patrick does is problematic. It wouldn't surprise me if he was trying to be glib and his actual advice is more nuanced.
If one interprets it literally: Someone who receives advice from him to raise prices can look down Stripe's customer list and find its competition and feel confident that the competition will receive the same advice.
Again, I don't know what he does. All I know is that what he says if read by the right person would be sufficient to trigger their curiosity to ask for records of his correspondence and find out.
Every time I read about Stripe, it seems that the most interesting people work/have worked there (Julia Evans, Aditya Mukerjee, Mudge, Brandur, Greg Brockman). And it seems like a great culture.
But the CEO's "progress studies" thing repels me because it reeks of the Kochs' efforts to implant conservatism into education. I don't want to enable that. It sucks.
BTW, I am one of the people who had their YC app reviewed by patio11 and it was a great experience. It's amazing how much time he's able to dedicate to individual Stripe Atlas participants -- thanks!
Can you explain what stood out to you as conservative about the "progress studies" article?
Wikipedia defines conservatism as "a political and social philosophy promoting traditional social institutions in the context of culture and civilization".
Patrick Collison's article [1] to me seems to be saying "we should be a lot more systematic and scientific in figuring out the drivers of societal progress, and aggressively invest in those things." That seems in direct opposition to conservatism, since it advocates a dramatic overhaul of ineffective institutions.
Collison's definition of progress does seem narrowly focused on measurable economic metrics. Is that the source of your grievance? I think that developments like women's suffrage and racial desegration should be included in discussions of "progress studies", whether or not they led to improvements in measurable metrics. Collison neglects to include examples of this type in his article, but it's not clear to me that he considers them unworthy of study.
> But the CEO's "progress studies" thing repels me because it reeks of the Kochs' efforts to implant conservatism into education. I don't want to enable that. It sucks.
If you had that amount of money (and that reputation), you'd probably try to improve the world _according to your vision of improvement_ too.
> Incidentally, invoking such questions ritualistically is a fairly accurate description of the job of a YC partner. If you start asking questions like "what's preventing you from launching today?" the answer, to the founders' own surprise, quite often turns out to be nothing.
Readit News
As a stripe customer for 6 years, I effectively only care about reducing transaction costs. Period.
Stripe's core business is being a part of a "credit card sales tax" that is substantial. Much of this is the fault of Visa/Mastercard/Amex, but that is the problem-space they exist in. Payments are transferring bits, and should be effectively free. If they want to "make the world better", that is basically the only problem that matters in their space, and I never see any recognition of this fact in anything Stripe puts out.
They do a LOT of work to try and make me feel better about the tax (e.g. your money goes towards book publishing!). None of it works, it just seems like the "your tax dollars at work" road signs.
Now maybe people at Stripe are working on ways to reduce the tax on businesses/consumers. It is not a technical problem, its societal. I hope they are, and they will announce something amazing and I can worship at their feet.
Please Stripe, work on reducing the costs to transact online by 1-2 orders of magnitude, where it should be.
> Payments are transferring bits, and should be effectively free.
Payments is taking on a short term risk that the (slow) transaction between a customer's bank and a vendor's bank will not settle, because of (a) fraud, (b) chargeback-like issues, (c) insolvency. This isn't exactly right, but overally its not quite 0 risk without crypto, which people don't trust (from a UX perspective).
And all kinds of risk-taking charges for it: loans, mortgages, etc. If you want to shoulder the risk yourself and save the fees, pay with a debit card.
Why do credit cards cost 2-3% to process? Because of expensive rewards programs given to the consumers who use the card. Why are there expensive rewards programs? Because consumers like them! And they insist on paying with a credit card because of them. Except in edge cases, merchants have no choice but to accept credit cards despite the cost.
While Visa, Mastercard & Amex frequently get the blame, the lions share of the processing fee flows to the issuing bank of the card, and the lions share of that fee goes to fund rewards programs. (There are other perks to credit cards that encourage consumer usage, including chargeback protections, free 30 days of float, near universal acceptance, etc)
Payment costs won't materially decrease unless someone invents a form of payment that consumers prefer which doesn't have these cost burdens. Or if you, as the merchant, have such market power that you can mandate a less preferred but cheaper form of payment (like cash or debit card or ACH - this is why you often can't use your credit card to pay a parking ticket or your taxes)
In most of Europe, people pay with debit cards and the money goes straight off their bank accounts. If there's insufficient funds, there's no purchase. If the network fails, there's no purchase. If your bank goes bust 5ms before your purchase would clear, there's no purchase. I'm no banker and I'm sure there's some risk somewhere, but it's really not very much.
But what the comment is advocating for is systemic change/disruption. In that context, the whole complex (bank settlement, chargebacks, insolvency) are a single thing. There are always reasons for things being the way they are, but that doesn't mean that things can't change.
As the OP says, payments move bits around. There is no fundamental reason why this should represent such a big slice.
Besides technical challenges, and whether or not these can be overcome... I think the greater hurdle is entrenched structure and entrenched interests. Stripe is, at this point, a part of that. They have an overwhelming microeconomic interest in payments remaining a large "tax."
Imagine an imports "agent." Her job is to get your goods into country X and navigate the labyrinth of rules, chaos, fees and taxes on your behalf. The whole game costs Y. She earns a % of Y. She may have more, and more nuanced complaints about the labyrinth than anyone but... If Y becomes less, she will earn less.
If we had a single state-run bank (even if it were just as the fulfillment "back end" behind different consumer-facing servicing organizations), then a transfer would occur on a single ledger in a matter of milliseconds, rather than waiting for the East Podunk Bank, Trust, and Pork Cannery to pull a batched update file over a T-1 they put in in the first Bush administration.
Fraud could be handled better than it is now. We have terrible security/convenience compromises (Chip + Signature, anyone?) and when we try to improve matters (3-D Secure) it is presented so badly and clumsily that it basically dies on arrival (it's coming back, but mostly because the EU is cramming it down people's throats)
Chargebacks are a weird case. It feels like they come from two places-- either as the first response to a fraudulent transaction, or as an escalation for when there's no other way to get satisfaction. If you're fair with your refund policy, your chargeback rate should be close to nil.
Running a global online/SaaS business is hard. So much complexity everywhere. I wish Stripe would handle MORE problems & complexity and would happily pay for it.
Just a few examples Stripe could handle:
- Checkout + Portal is a great start, but it still takes too much (expensive) design+dev brainpower to create the entire experience of a high quality trial-to-paid and existing-customer billing management in a SaaS app.
- Running a SaaS company at any scale is full of Support headaches that Stripe Dashboard simply does not handle well - stuff like tweaking a billing date, and doing combination (e.g. wire transfer + credit card) payments, "can you re-send my invoice but with my VAT ID on it this time?" and many more. At any scale, lots of effort is spend on custom billing support tickets and building internal tooling even if you use all of Stripe's features.
- Are you a SaaS company selling all over the US? Good luck being complaint with all 50 states in terms of sales tax reporting without expensive legal/accounting help. Did you hire any remote out-of-state employees? Good luck -- now your financial compliance got even more complicated.
Stripe doesn't do any of these things well today. And if they did, it would likely be much cheaper than the in-house solutions everyone is coming up with instead. I think Stripe should handle 10x as much complexity for a SaaS company than it does today, and of course they should get paid for doing so.
[1] I agree it would be amazing to see Stripe come up with smoother flows for supporting payments that bypassing the expensive card network's fees.
I'd be happy to throw them a few more percent if they could handle more of the complexity you've mentioned above. Right now, Stripe is both too complex to set up and too simple from a feature perspective.
I'm optimistic though since it seems companies like Paddle, Chargebee and others are blazing that path. As much as I love Stripe and what they originally did for online commerce, they're already starting to look like the lazy incumbent compared to the challengers right now. Market dominance is not a great incentive to create better products.
Payments are also about establishing trust, which goes wrong a lot. You can in practice make payments very cheap with some cryptocurrency schemes, but don't get fraud protection, chargebacks, and customer service that credit cards provide (unless you introduce another party in the middle taking a cut).
It seems to me the innovation required to actually reduce costs would replace the credit card system, not build on top of it.
Annoyingly, the cost of implementing the replacement and getting it working with React Native (which involved creating native modules for iOS and Android) ended up costing them as much as several years of fees. Also the client was a startup that went bust, so they never really got the value out of it that they hoped.
There were a few years where Authnet was the "default" gateway. Other gateways offered compatibility modes for their SIM and AIM APIs, and if you had some random off-the-shelf cart, it probably spoke AIM out of the box.
Part of the difference in experience is also likely due to their model. The Authnet model was very much "take direct card data and relay it to your server and then to us", and the Stripe model is very much "JavaScript up your checkout process to do tokenization, so you never see the card number." If you're at a point in time when JavaScript is a bit sketchy (the IE6-is-the-dominant-browser era), you might be more willing to go for a worse PCI compliance scope in exchange for the comparative bulletproofness of doing things server-side.
Now I work for a firm competing with both of them, so I can hardly express a preference today. :)
EDIT: As in I haven't touch my stripe code for 2 years. They still work.
They are an ISO, payment processor, merchant bank, payfac and gateway all rolled into one.
Add all of those up and you can see why its actually, generally speaking, cheaper.
We charge in USD and we pay for our infrastructure in USD, so the hit we get on the double currency conversion is really unpleasant... as it is completely avoidable.
This has been asked of Stripe for AGES and they did nothing. The only explanation is that this is by design, which means that they have no problem bleeding merchants with unnecessary fees just like all other payment companies. It's just that these fees are disguised differently.
I agree with the could and should. Payment costs could be a tiny fraction of current. It is a tax. I'm dubious of the who. Stripe is now a big player. They're have no interest in turning their $X00bn sector into a $Xbn sector.
Incidentally, I think the current economy harbours a lot of sectors that could be orders of magnitude smaller. This has always been a debate in the financial sectors. Today though, there are some (IMO) less ambiguous sectors/companies.
Does facebook actually need $70bn in revenue to operate facebook. Could it be done on $7bn? To me, it seems like an obvious yes. Quite a glaring inefficiency, IMO.
I would love Stripe to start advocating for lowering credit card fees, either through regulation or providing more avenues for competition.
Of course the reduced savings where not passed on to the end consumer
However the biggest slice of the pie is Visa and MasterCard.
Stripe could release no new features in a year, if they could lower my rate by .1% I would be far happier.
I like the personal notes included a ton, e.g. mentioning that he has struggled with depression personally, which I wouldn't have guessed, even if naively so. Being open and helpful with those topics helps a lot of people out in a serious way. Also love quotes like "I cannot say this enough: pick your peer group wisely because you’re giving them write access to both your conscious thoughts and your entire worldview".
Just reading this post makes it tempting for me to apply at Stripe (They apparently have 530 roles open, wow! https://stripe.com/jobs/search), especially given all the other positive comments I've seen about the company.
Exactly, which is why some of this should be taken with a grain of salt.
By all accounts, Stripe really is a good place to work and their success speaks for itself. Yet, it's important to remember that this article is at least one part advertisement. I'm not suggesting anyone dismiss the contents, but keep the context in mind. The article goes to great lengths to speak about the positives of working at Stripe, but the section about terrible work/life balance is written vaguely enough for the reader to dismiss it as a personal quirk, for example.
I agree with the other commenter regarding the Stripe application process. I've applied 2-3 times starting in 2015 and as recently as early 2020 and have never heard back, it's been the only company that never gets back to me!
Everything worked out, since I've landed some great positions at promising startups in the meantime, but I would have loved to experience the growth from ~500 to ~3000 employees like Patrick has.
Small improvement in this paragraph:
> “If you sell to doctors you prefer futures in which more money goes to doctors. Those are much better futures for you than futures with less money going to...
Since the article was just talking about call options, my first thought went to futures contracts instead of possible timelines. I think using "timelines" instead of futures would make this a bit more readable.
Even in my most recent experience I wrote a cover letter, reached out to multiple Stripe recruiters. Most of them either ignored me, or said that they were not working on that role and said my status is still "pending".
I imagine that Stripe's recruiting team is overwhelmed but it was unfortunate that they weren't able to get back to me. I ended up accepting an engineering manager position over payments at another company.
The gist is that I had a friend apply, go through a few interviews, and then just get completely ghosted. After several emails and attempts to reach out, the hiring manager replied to his email with a two word reply when my friend asked about his application status. That reply was "no thanks".
They said “ we don’t want you in our band “
It was oddly personal and upsetting. Lol
How tone deaf is hr sometimes
This was for a pretty senior position.
- You have a referral
- You went to MIT, Stanford, Caltech, CMU, Cal
- You're coming from FAANG or similar
The frontdoor is a waste of time.
Even with the above odds are against you, but at least you have someone to ask about progress/move things along for you.
Ironically, this is almost the exact same attitude I got in my poor experience interviewing with Stripe. Interviewers were constantly late to our calls and mixed up who would be interviewing me more than once. Despite that, I still was told I was going to receive an offer... only to be ghosted for weeks. Once the recruiter finally reached back out, they said the position had been cancelled but they would find me another position. Spoiler: I never heard back from them, and they ignored all of my further communications.
Throughout all of this, I was apologized to several times (credit is due there, I guess) and each time the excuse was "ha ha sorry things are such a mess, that's just how things are when you work at a start up!" First of all, "haha we're a startup" is not a valid excuse for being late to meetings and ignoring communication.
Second: you're a company worth tens of billions of dollars, have thousands of employees in offices around the globe, and were founded a decade ago. You are not a startup. You are not a "small team". Stop using it as an excuse.
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I was job hunting earlier this year due to my last company (a fintech start up) shutting down and Stripe was the only company that just handed me an immediate "No" without even a recruiter call. I know one other engineer who is more mid level and she said she had applied and never even got a response.
I harbor no ill will toward them, but I'm really curious what their hiring criteria is and why it seems so different that most of the other major companies out there.
Imagine you have enough high-quality candidates such that you could have every single employee interviewing candidates all day every day, doing no other work. What do you do?
In the real world, most engineers top out at one or two phone screens a week, and/or one or two on-site interviews a week. Sometimes more. Each is 45 minutes at least, usually an hour. Each involves writing deliberate, thoughtful feedback and a professional assessment. Candidates that do well lead to decision meetings that take more time for all the interviewers to discuss -- candidates that do poorly can circuit-break.
Then there is scheduling! Is there physical space available for the candidate to interview? Can we get all the necessary interviewers? What if one or more of them can't make it (sick, etc.)? What if the candidate needs to reschedule? Time zones? Holidays?
Imagine Stripe has 100 recruiters (this is at least accurate within an order of magnitude). What does the back-of-the-napkin math look like for their maximum interviewing bandwidth?
Hiring is a really hard problem, even for well-equipped organizations. Even the best in the world do it badly sometimes. And the anecdote cases tend to shout the loudest. Maybe you had a typo on your resume. Maybe other candidates looked better. Maybe there is a nasty rumor about you. Maybe the recruiter was having a bad day. Or maybe you were just unlucky and arbitrarily cut.
This is generally how our industry works, though, which is that it's not worth it to go through loop for a job unless you were referred by someone on the inside.
When you do that kind of blog posts, you try to improve the image of the company externally so that more people want to work there. It could help with more people applying but also increase the acceptance rate of the offers.
When you have a lot of people applying then you just cherry pick the best ones
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This is a great example of how one can do something well-meaning at small scale (Advise tiny, tiny businesses that they would be better served having more confidence in their value) that can turn into something illegal at scale (Advise price leaders that they can safely lead by less and so-on).
A stripe customer is free to tell Stripe "Your fees are too high, and I'd prefer switching processors than raising prices".
I could be wrong. Is there an example of an illegal cartel, trying to persuade customers from whom it makes transaction fees, to raise prices? Surely this isn't a new thing under the sun.
The issue is that coordinating pricing is illegal in any form. In any industry, each company could make more money if they knew their competitors would raise prices. Even calling a competitor to tell them that you are raising prices is illegal if they raise prices.
If there's even a single incident of two companies being advised to raise prices on products which compete with each other, it's about as close as it comes to an open and shut price fixing case. And this post makes it easier to prove because it suggests that companies know he's giving the same advice to their competitors. Whether that's said explicitly or not won't matter.
It's the raising of prices in the absence of market forces that gives room for the payment processor to increase fees. Theoretically all payment processors benefit from advocating that their clients raise prices. If some companies raise their prices, no issue, but the coordinated effort to do it is where you "smell a rat".
It's then up to the litigating party to try to find collusion between companies to do this. This is like how the anti-competitive hiring practices of Google/Apple/Facebook/etc were surfaced. They all had a set of practices that stood out as anomalous and during the subsequent investigation it was found that they colluded with each other to set the market (rate for hiring talent).
It's probably not the case here...and also patio11 has little risk saying so while living in Japan where industries are highly vertically-integrated/monopolistic.
I don't know if what Patrick does is problematic. It wouldn't surprise me if he was trying to be glib and his actual advice is more nuanced.
If one interprets it literally: Someone who receives advice from him to raise prices can look down Stripe's customer list and find its competition and feel confident that the competition will receive the same advice.
Again, I don't know what he does. All I know is that what he says if read by the right person would be sufficient to trigger their curiosity to ask for records of his correspondence and find out.
But the CEO's "progress studies" thing repels me because it reeks of the Kochs' efforts to implant conservatism into education. I don't want to enable that. It sucks.
BTW, I am one of the people who had their YC app reviewed by patio11 and it was a great experience. It's amazing how much time he's able to dedicate to individual Stripe Atlas participants -- thanks!
Wikipedia defines conservatism as "a political and social philosophy promoting traditional social institutions in the context of culture and civilization".
Patrick Collison's article [1] to me seems to be saying "we should be a lot more systematic and scientific in figuring out the drivers of societal progress, and aggressively invest in those things." That seems in direct opposition to conservatism, since it advocates a dramatic overhaul of ineffective institutions.
Collison's definition of progress does seem narrowly focused on measurable economic metrics. Is that the source of your grievance? I think that developments like women's suffrage and racial desegration should be included in discussions of "progress studies", whether or not they led to improvements in measurable metrics. Collison neglects to include examples of this type in his article, but it's not clear to me that he considers them unworthy of study.
[1] https://www.theatlantic.com/science/archive/2019/07/we-need-...
If you had that amount of money (and that reputation), you'd probably try to improve the world _according to your vision of improvement_ too.
> Incidentally, invoking such questions ritualistically is a fairly accurate description of the job of a YC partner. If you start asking questions like "what's preventing you from launching today?" the answer, to the founders' own surprise, quite often turns out to be nothing.