Cutting through red-tape with Stripe

It’s not all about the technology. Stripe does one thing that makes it light-years better than its competition: Time to market. Or in simpler terms, its activation process to allow you to receive actual payments.

My wife and I run a small website selling vintage items from Germany to Japan. So far, my wife was asking all her customers to pay via bank-transfer. This is naturally time-consuming and for most of her customers, Japanese housewives and arts & crafts lovers, inconvenient. A few months ago I suggested to her to introduce credit-card payments on her website. How difficult could this be to implement?

My search started (and after a long journey, also ended) with Stripe. Stripe has been greatly accepted on technical forums like HackerNews. So it was the first place to go. Unfortunately at the time, Stripe did not accept European customers, and did not allow foreign-currency payments. So it was out of the question.

Then came Webpay.jp – the Japanese Stripe-clone. I was happy to discover it, and since my wife’s website is in Japanese, and these guys support the Japanese market – it seemed like a perfect match. Implementing payments was very easy. It took a few hours over the weekend, and it also gave me a chance to play with the Flask microframework. This was running fine in “test mode”. To activate it and accept real payments, we were asked to fill some complicated-looking forms in Japanese. My wife filled those up and sent the details. It took a few days until we got a response that our application was rejected. Why? They didn’t quite say. They did say we can apply for a slightly different route, which would take 2 weeks. So we did, and we waited. And we got rejected again. Still no reason, but they hinted at the fact that the business is not based in Japan. Bummer.

So off I went to search for services that accept European businesses, yet allow accepting credit card transactions in Japanese Yen.

The first company was Paymill. Another Stripe-clone based here in Germany, and they accept international currencies. Great. Adapting the Webpay code I already had was even easier. Only a few hours of some tweaks, and I was able to make some test payments. To activate the account to be able to actually charge cards was a whole different story.

It started by filling a rather long form online in 5 or 6 different sections. This produced a PDF with 6 or so pages, to which I had to scan and email several other documents. I had to send links to pages on the website with data-security policy, privacy policy, contact details, impressum (some kind of a German thing that describes the company, I believe). I had to provide a copy of my passport, a utility bill, bank account details, tax documents and so on.

I was then told to wait a few weeks before these documents get reviewed. This was around Christmas time, so I could understand. A few weeks later I was told that the information I provided was not sufficient. That they require a business-registrtaion documents (called Gewerbeanmeldung), a VAT Id and to submit other pages on the website that weren’t asked for before. When I have all that, they told me it would take around 8 weeks to approve my application. And documents would need to be sent by post for this last and important stage. Applying for a passport is faster and easier.

So I applied for a VAT Id and a Gewerbeanmeldung, but this takes time through the German bureaucracy. So meanwhile, I looked at a few alternatives, just to see if I can get a slightly quicker service with somebody else.

• Paypal – I got lost with the details on their website. I couldn’t even figure out if we can charge in Japanese Yen, if my Paypal account is here in Germany.
• Dalpay – a strange Icelandic website that says you can “Get Started in 3 Easy Steps”. I went through the strange process, and the web interface itself was totally weird and extremely complicated. Even simple things like editing the name of the business were difficult. And they also eventually asked for similar business documents, which I didn’t have yet. That’s after charging my credit card 1 Euro for verification purposes. I even spotted their fraud manager checking out my profile on LinkedIn. Strange and a little spooky.
• Bluesnap – I used them before in a business setting (when they were still called Plimus), and didn’t like their service at all. It was cumbersome and complicated, but I thought I’ll try. I emailed their sales email twice to ask if I can apply, but got no reply whatsoever. They just ignored me.
• Fastspring – I also work with them in another business, and they are great. They were willing to help, but their service is geared towards digital products. Being able to use them to ‘just’ charge cards is not possible.
• Braintree – they (recently?) removed the minimum fee, so I thought I’ll check them out as well. Support was quite friendly and responsive, but they also require some business documents AND a business bank-account. You can’t use a personal bank account to receive payments.

Then, one sunny day, as I was reading HackerNews. The announcment came: Stripe supports multiple currencies. I went to the website. Signed-up for an account, and immediately went to the ‘activation process’, to see what kind of documents or info they need. It was only one very simple form, with the kind of details you’d expect: Personal details, type of business, bank account details, tax number. After that, the account was instantly active. Online. No scans, no documents to send by post, no weeks to wait. Instant. I was ready to go. I could even choose the name to appear on the card when they charge. Amazing.

Having an Information Security background and experience, I think I understand risk pretty well. And I know that credit card payments are rife with fraud, regulation and red-tape. But in my opinion, if a business wants to be successful in this space, they simply must reduce red-tape. They should be the ones owning the risk. Throwing risk at your cutomer, making their lives harder just to cover your own ass just feels wrong. After this experience with Stripe I have no doubt these guys will own this space. I cannot see much future for those Stripe clones, if they offer absolutely no added-value. Previously, Stripe was not available in Europe, and then it wasn’t doing International currencies. That gave those competitors a window-of-opportunity to acquire customers. This Window is closing. Fast. With the ease of use of Stripe (not just the activation process, their API is a work of art, their support is great), I can’t imagine much success for such competition. And I don’t feel the slight-bit disappointed to see them go. This “old-fashioned” business processes have no place in modern times.