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Comment by voakbasda | Hacker News Reader

The fun here stems from the fact that many small business owners use the friend-to-friend side of these payment services. These services either will be cracking down on business use of those accounts (and thus push people off their platform), or they will be forced to report all transactions across all accounts.

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The fun here stems from the fact that many small business owners use the friend-to-friend side of these payment services.

Unpopular opinion, but I'm OK with eliminating this loophole.

I went to a record shop a couple of weeks ago and when I went to pay, the guy didn't take Apple Pay. Or any kind of credit card. All he took was Venmo and Facebook. Fortunately, I had cash. But if you can't even shell out $5 for a Square reader to take credit cards, you're not a business — you're a hobby.

And yes, I have owned small businesses before. Three times. Each time, I took credit cards as payment. It's known as "cost of doing business." No different than paying to put up a sign, or renting a storefront.

Sometimes vendors don’t offer credit cards because their own credit is not good and they can’t get a merchant account. Or if they can it’s with huge per-transaction charges. This is particularly problematic when starting out and not having enough sales to get better rates Eventually when/if they grow they qualify. With the emergence of Venmo et al the chronically small vendor may never be motivated to get credit cards.

For low-volume use the cost is a noticeable percent. If the lost business due to not taking cards is less than what you would pay in transaction fees it's the right decision.

That would constitute tax fraud right? And intentionally bypassing the reporting built into the platform surely increases your culpability.

If you're doing a relatively low volume you might get away with it, but you are committing a crime.

They’re bypassing the fees, primarily, not the reporting.

Or maybe the government should keep their grubby mitts off my money until they’re willing to go after the billionaire class. But the IRS only prosecuted about 1500 tax fraud cases last year, so you’re probably not going to jail. Enough stuff in this world is illegal that a little cash under the table is no big deal.

Not a crime, as long as they are reporting the income on their tax returns.

However, it is definitely against the terms of use and will get their accounts suspended. As PayPal has shown, they might also confiscate any money left in the accounts.

The services don't seem too concerned about small businesses abusing the friend to friend options for their own purposes, so I can easily see it being the latter.

Venmo, at least, is absolutely concerned about it. The app really tries to get you to flag payments as "business" any time you're paying someone.

If you pay someone as a business, they eat the transaction fees. If they have you pay as a “friend”, then the customer pays additional fees, increasing the total cost of the transaction. Any business doing that is breaking the terms of use. I can imagine it only a matter of time until they start suspending customer accounts for not flagging such transactions.

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