Stripe's list of prohibited businesses | Hacker News Reader

Stripe's list of prohibited businesses

stripe.com

31 pointshundsim46 comments

I'm one of Stripe's cofounders.

There are a few reasons businesses end up on our prohibited list: they're full of fraud (get rich quick schemes), legally regulated (guns, drugs), or regulated by card companies (pornography).

In many ways, I'd prefer a world where Stripe's prohibited business list was no more specific than that of a web hosting service, and didn't prohibit anything beyond what's required by law.

However, there's an essential neutrality in the routing of packets that's absent in the routing of dollars: credit card networks are emphatically not neutral about the businesses they support on their rails. As such, no matter what stance we might intrinsically want, the outcome is largely determined by what Visa, MasterCard, etc., seek to enforce.

This might seem unfair, and the techno-libertarian in me finds the enumeration distasteful and arbitrary. On the other hand, the card networks have accomplished something very hard: billions of people are willing to give online businesses access to arbitrary amounts of money, sight unseen. This is an impressive achievement, and they pulled it off in part by minimizing the number of bad businesses that exist on their network. So there's a trade-off.

Tl;dr: though we have some influence, we mostly don't get to set the rules.

    There are a few reasons businesses end up on our 
    prohibited list: they're full of fraud (get rich quick
    schemes), legally regulated (guns, drugs), or regulated 
    by card companies (pornography).

I'm curious about which category "(51) personal computer technical support" and "(54) human hair, fake hair or hair-extensions" fall into?

Both are, weirdly enough, replete with fraud. I've no idea why -- human hair seems especially baffling. (Though I've heard suggestions that it relates to human trafficking.)

We can waive these when it seems reasonable (and we're not otherwise precluded from working with the business). If we ever do come across a legitimate business selling human hair, we might try to figure out a way to make it work.

Do you enjoy being at the mercy of the credit card companies? How hard would it be to remove them from the equation?

They're a company that makes it easy to accept credit cards on the web. How can you remove credit card companies from the equation?

Some payment companies accept credit cards to reduce signup friction and then try to switch users over to ACH to reduce fees.

Doesn't using ACH imply giving a company direct access to your bank account? Credit cards offer all sorts of consumer protections that ACH doesn't have, e.g., the customer can be immediately reimbursed for fraudulent transactions, etc.

Not to mention that credit cards allow people to buy stuff they can't really afford on credit. If you remove that ability, you'll be losing a lot of potential customers.

It's a bit like asking how you feel about being at the mercy of Linux, or web browsers, or SSL. We work with the technology that exists.

That's a little bit facetious, but though there are lots of aspects of the card networks that I dislike (and suspect will change), they work pretty damn well for most transactions. We could devote ourselves to usurping them, but it feels more interesting to see how rapidly we can advance the state of the art instead.

Aaaaaand it's gone. The censorship is a bit high lately.

This might seem unfair...

If it were unfair, your ToS would categorically prohibit itself, under B.5.56 "any... service... that is... unfair".

Touché. We should probably remove that term.

Perhaps, support on Bitcoin transactions with a caveat emptor notice for those that are full of fraud and regulated by card companies. I'm not sure what you can do about the legally regulated industries outside of operating via a joint partnership with an organization in a different jurisdiction than the US.

I don't completely buy it. Your proscribed list includes "(49) weapons and munitions", yet at least in the US, outside of a few slave states, there's no regulation of ammunition once it's imported or manufactured besides the usual ORD-M shipping requirements (ground). And I know for an absolute fact Mastercard has no trouble processing payments for mail order ammo, and the sites I use say they accept , Visa, Discover and Amex. Ditto for knives (e.g. see how many are for sale at Amazon).

For guns you're refusing to do business with Federal Firearms Licensees, the BATF even has a nice page allowing you to verify them: https://www.atfonline.gov/fflezcheck/

I am not aware of any case where the authorities have gone after a payment processor serving a store selling any of these items. It's certainly not common, we watch this because of all the illicit efforts by them to shut down gun stores and manufacturers.

In the long run you might find this policy politically crippling; e.g. it says something that 42 states, with Illinois joining them in a few months, have shall issue concealed carry regimes.

Compare to Braintree (VERY similar):

[1] We are unable to underwrite the following business models: (1) door-to-door sales, (2) offering substantial rebates or special incentives to the Cardholder subsequent to the original purchase, (3) negative response marketing, (4) engaging in deceptive marketing practices, (5) sharing Cardholder’s data with another merchant for payment of up-sell or cross-sell product or service, (6) evading Card Network’s chargeback monitoring programs, (7) engaging in any form of licensed or unlicensed aggregation or factoring, (8) airlines, (9) tour operator, (10) age restricted products or services, (11) bail bonds, (12) bankruptcy lawyers, (13) bidding fee auctions, (14) collection agencies, (15) chain letters, (16) check cashing, wire transfers or money orders, (17) counterfeit goods or any product or service that infringes upon the copyright, trademark or trade secrets of any third party, (18) currency exchanges or dealers, (19) embassies, foreign consulates or other foreign governments, (20) firms selling business opportunities, investment opportunities, mortgage consulting or reduction, credit counseling, repair or protection or real estate purchases with no money down, (21) credit card and identity theft protection, (22) cruise lines, (23) essay mills, (24) flea markets, (25) drug paraphernalia, (26) extended warranties, (27) fortune tellers, (28) “get rich quick” schemes; (28) gambling (including but not limited to lotteries, Internet gaming, contests, sweepstakes, or offering of prizes as an inducement to purchase goods or services), (29) sports forecasting or odds making, (30) illegal products or services, (31) mail-order brides, (32) marijuana dispensaries and related businesses, (33) money transmitters or money service businesses, (34) multi-level marketing or pyramid schemes, (35) online or other non-face-to-face pharmacies or pharmacy referral services, (36) prepaid phone cards, phone services or cell phones, (37) pseudo pharmaceuticals, (38) quasi-cash or stored value, (39) securities brokers, (40) sexually-oriented or pornographic products or services, (41) shipping or forwarding brokers, (42) substances designed to mimic illegal drugs, (43) telemarketing, (44) timeshares, (45) travel agencies or travel clubs, (46) online or other non-face-to-face tobacco or e-cigarette sales, (47) weapons and munitions (48) virtual currency or credits that can be monetized, re-sold or converted to physical or digital goods or services or otherwise exit the virtual world, (49) personal computer technical support, (50) human hair, fake hair or hair-extensions, (51) selling social media activity, such as Twitter followers, Facebook likes or Youtube views, (52) Telecommunications equipment and telephone sales, or (53) any product, service or activity that is deceptive, unfair, predatory or prohibited by one or more Card Networks.

https://www.braintreepayments.com/faq

What's worse with Braintree is that they won't even touch Crowdfunding with a 10ft pole.

What is absurd about this? This seems to be a list of things where the law is inconsistent across the various states in the US. Accepting these things would likely place a severe state-by-state oversight and compliance burden on Stripe, for very little actual value. It seems pretty smart to me.

I think most of these are reasonable, and I immediately see why they are on the list.

I think I know why this is on there:

"(10) age restricted products or services"

But wouldn't that also apply to every business that has a COPPA disclaimer in its ToS.

Even though I said it wasn't absurd, this does seem contradictory since they seem to allow face-to-face tobacco sales, which are certainly age restricted.

face to face is CP (card present) . it's far less prone to any sort of fraud and IDs can be checked.

The only one on here that strikes me as odd is the prohibition on selling fake hair or hair extensions. I'm curious why that is? I suppose I could see prohibitions on selling human hair, but fake hair seems odd.

Arg.. there goes my new startup idea. Foiled again. <rimshot>

Edit: Scrolling down reveals the answer, https://news.ycombinator.com/item?id=6188918

A number of the items on that list are restricted due to legal limitations and/or concerns. There are a multitude of regulations and requirements that one would have to follow to collect payments on behalf of a legal entity for any number of things on that list. It's much easier to just not deal with it.

(50) virtual currency that can be monetized, re-sold or converted to physical or digital goods or services or otherwise exit the virtual world

Too bad, indeed.

Does someone more versed in the space care to comment? The title seems like link bait, and I'd bet there are some not so absurd reasons for a lot of these.

Nearly all of them seem to be areas with a high potential for fraud.

Looks like they want to avoid shady businesses, con men, and being placed in arduous regulation regimes (e.g. banking, financial regulations, etc.)

I don't know about a lot of these, but I run a travel startup so I can comment about the travel agencies restriction.

Travel in general is seen as a high risk industry. Try going to a bank for a merchant account, tell them you run a travel company and watch their reaction. They don't really want you as a customer anymore. The risk profile is too high.

There's a couple main reasons for this.

One, there's a higher than normal chargeback rate in travel. Think about this, you get to your destination and find out that the online pictures of your hotel are nothing like reality. You feel like you've been scammed, but the owner refuses to give you a refund. You aren't left with a lot of options. But if you booked with your credit card, you can request a chargeback and go stay some place nicer.

This same idea can be applied to inclement weather, an inferior tour, etc. Your expectations are different than reality, you can't get a refund, so you request a chargeback.

Two, the average transaction size is travel is quite large. If I'm upset with my dinner at a restaurant, I might be out $20. If I'm upset with my hotel on a vacation, I might be out $500-$1,000. That's a big difference. I might be able to live with losing $20, but definitely not $500+. So I go through the hassle of a chargeback since the dollar amount makes it worth it.

Between the two of these reasons, you end up with a high risk industry.

I'd imagine all the other industries that are prohibited have similar risk profiles.

Maybe by absurd it means the number of prohibited businesses? Otherwise it just looks Stripe does not to be involved with shady/spammy businesses.

I'm not sure these are that spammy:

* personal computer technical support

* travel agencies

* hair-extensions

What all of them is the ability to be a scam, but any business can scam you. Surprised fortune tellers aren't on there.

It is.

Surprised fortune tellers aren't on there

They are. #27

Personal tech support would be a high-chargeback environment with very little way to defend against fraud allegations. Travel agencies sell a product that is to be delivered in a foreign country, which is a scammer's favourite promise. And hair extensions... I guess that must be a high scam market, but I don't know why. Being at the end of the list, I assume it was added after experiencing a lot of issues with that type of business.

Travel agencies also sell a product that’s often delivered much later, when the agency or a supplier (hotel, airline, etc.) may no longer exist. This increases the risk of chargebacks.

* personal computer technical support *

Is this possibly related to the fake Anti-Virus warning popups and the companies that make them?

I thought that those bogus phone calls about "We have detected that your computer has a virus ..." end up directing you to a website to pay to down load some kind of anti-virus software. In which case the "personal computer technical support" business does have a big problem with its spammy end.

Would a service like Listia.com be against their terms of service? Specifically these seem contradicting:

(50) virtual currency that can be monetized, re-sold or converted to physical or digital goods or services or otherwise exit the virtual world

===

(52) selling video game or virtual world credits (unless you are the operator of the video game or virtual world),

Funny, maybe, but not absurd, at least not in a way that's Stripe's fault. I'm curious about the hair one. I wouldn't expect selling hair to be a real problem. Is there a story that motivated that restriction? I notice it's also in the list of Braintree's restrictions that toomuchtodo posted.

The hair extension biz is chock full of fraudsters. Lots of people passing off synthetic as real hair, etc.

And no doubt, like contracts, behind every one of those there is a story ...

Does #10 mean vineyards are not allowed to use Stripe?

fake hair is only one that stands out.

It's an old link, but human hair and very realistic extensions are super valuable, and nearly impossible to trace once stolen. Governments are trying to de-incentivize theft by regulating the secondary market. http://business.time.com/2011/09/13/now-people-are-stealing-...

This is totally in line with everything else that comes out of USA these days. Logical and not surprising at all. But it makes me sad.

Why is it absurd?

Do you think it's absurdly long? Their agreement in general is much shorter than any single one of the several I had to go through to get a merchant account and CC processing service before.

Is it absurd because you think the business types they mention are silly? Well, they are silly. But people do them.

Is it absurd because you are angry your business is on the list? Well, that's life. I, as a valid business owner who uses Stripe, am very glad Stripe protects their relationships / value / company / customer rep time by refusing to serve illegal or borderline illegal businesses, and those with ridiculously high rates of fraud. Yay!

Why does this matter?

That's not absurd

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