After the recent banning of Sargon of Akkad (Carl Benjamin) from Patreon, Dave Rubin and Jordon Peterson has been mulling options on how to come up with a Patreon-like system. I'm going to side-step the convtroversey for the most part - almost everything that can be said about it, has.
There are multiple tiers to the payment processing problem that to most lay-people might be forgiven for thinking it is easy to just set up processing and go. That problem was brought to light by the subsequent shit-canning of SubscribeStar, the alternative Sargon moved to after being ejected from Patreon.
The problem of processing payments on the Internet is complex but not insurmountable.
Invisible Becomes Visible
PayPal has a huge chunk of the market. But PayPal's problems were cast in stone from the beginning. The payment processing giant lowered the barrier to entry for people to accept credit card payments. They lowered it so far that people flocking to the platform to accept credit card payments were hit with the reality of accepting credit card payments - there's a byzantine system of rules to follow and they don't always work out in their favor.
People have, for quite some time, shit on PayPal for holding money, how chargebacks are handled, and a littany of other perceived slights. What most don't realize is these are systemic issues with credit card processing.
- When someone files a chargeback with their credit card company, shit rolls downhill. The card issuer is the decision maker. PayPal can only go so far to protect sellers.
- If the dispute is filed through PayPal, they can work to limit the costs involved in mediating the dispute.
- PayPal's buyer protection systems are largely based on industry standards. If you sell something, it is far harder to claim fraud if the goods are shipped to a known, good address for the cardholder.
- People who have set up sites to take charity donations often don't realize the myriad of potential laws they may be breaking. And PayPal (and other processors) must protect themselves.
- Holding back money often commensurates with risk. If there's a higher potential for risk, holding back funds ensures funds are available in the case of a dispute.
The largest problem is that PayPal is a visible broker of transactions. Think about it for a few moments - how many real-world transactions do you make in a day where they take your card and swipe/read your card at a terminal? Do you know who the processor is? What gateway is being used? What bank is behind the transaction? Usually not. Square and Clover are pretty easy to spot in reatail - but with Clover, you have no knowledge of what is happening on the backend.
PayPal, and to some degree Stripe, have made themselves visible actors in the transaction and far more susceptible to the actions of the mob outrage machine. Where before the Internet credit card processor's biggest exposure to risk was focused on transactions it has now added public relations as a significant vector.
And with that risk... shit rolls downhill.
Patreon just repeated this process. And every Patreon clone will repeat this process.
Moving Up The Food Chain
Just like consumers faced a rude awakening when accepting credit cards for the first time, anyone wanting to move up the payments ladder are in for a similar shock. The regulatory hurdles are only going to get higher.
Sure, you need a website and some technology for taking and processing data - but you also need to store data and the regulatory compliance that goes with it.
You need a definitive process for:
- Onboarding clients and screening (KYC - Know Your Customer)
- Regulatory reporting requirements (AML/BSA)
- Risk analysis (transaction screening/monitoring)
- Dispute resolution
- Customer support
You also need to reflect - are you going to be the operator behind the scenes or are you going to be the middle man? The middle man serves as the nexus for connecting payers and recipients. The behing-the-scenes operator leaves all of this up to the recipients. You might think Stripe can, to some degree, be hidden - but their product portfolio pushes their brand up the stack.
These are not easy problems to solve. You might be able to get by on naivete for a minute - but eventually the regulators will catch up.
A Third Way
A third way may be to create a community platform allowing people to sign up and integrating multiple payment platforms. Every user who wants to receive payments are responsible for establishing the relationships with the processor, providing API credentials to the community site. This way the community site has no direct power over who can accept payments or any ability to interfere with the relationship.
Color Me Skeptical
I'm skeptical if this can be pulled off to a significant degree of success. Dave Rubin and Jordan Peterson do, however, have some deep connections into the technology world. Their network is relatively powerful. While I don't see Peter Thiel being directly involved, his influence alone could help open doors to like minded people - or at least those who can provide valuable guidance.