When I entered the Internet marketing world back in 2001, I decided to use Bank of America for our credit-card processing, figuring it was a safe bet to go with the biggest player in the field.
Result? There is no way to describe what Bank of America put us through. I wasn’t that involved in the details, but, as best I can recall, the signup dragged on for a month or two. The information they requested was stunning. They even wanted to see three years of personal tax returns.
I got the feeling that the bank’s assumption was that most companies selling on the Internet were conducting scams, and it was up to you to prove you were legitimate … you know, the old guilty-until-proven-innocent approach.
I also recall that we had to deal separately with Arrogance, Incorporated (a.k.a. American Express). Amex had its own forms that had to be filled out, on top of all the paperwork we had already provided to Bank of America. To this day, I have no idea why Amex needed additional information, other to maintain its inflated posture of being in a class by itself.
Interestingly, after years of dealing with Bank of America, I came to realize that it’s really nothing more than a glorified middleman. That’s right, the credit cards are actually processed by a third party (even though B of A insists it isn’t true). It’s remarkable what a company can get away with if it has the financial clout and name recognition — not to mention your tax dollars to prop it up when it gets into trouble.
On top of all this, we had to pay Authorize.net a percentage of sales just for providing the “merchant account payment gateway,” as they call it — a conduit through which the orders can be processed.
What was remarkable about Authorize was that they made it crystal clear early on that they didn’t want to hear about any problems. Whenever we called them about an issue, they insisted that they had no involvement in the actual processing of the orders, and that we would have to contact our credit-card processor. It was kind of like pleading the Fifth Amendment. Talk about passive income, for Authorize.net it’s like having its own ATM machine.
But everything changed late last year when my webmaster discovered a relatively new company called Stripe, whose business model is based on eliminating the very kind of hassles that an Internet marketer has to endure when dealing with the Bank of Americas and Authorize.nets of the Internet world. I was skeptical at first, but everything my webmaster told me about the company turned out to be true.
You can sign up for Stripe’s service in twenty minutes and be processing orders within a few hours. The company requires almost no information, which puzzled me at first. How can they operate like this? I think it’s primarily because they don’t release your funds for seven days, so they’ve calculated their risk to be very small.
And if they do incur any losses, I assume they just look at it as an ordinary cost of doing business. No big deal like it is to the Internet dinosaurs who remain intent on checking your underwear.
However, once Stripe has enough experience with a client, it cuts the delay down to two days, so it’s not really a factor. In our case, based on our perfect track record, they reduced the hold time to two days just a few months after we signed on with them.
We’ve had similar experiences with other aspects of the Internet world, such as email delivery services (“CRMs”). After endless hassles, bad service, exorbitant charges, and putting up with a great deal of arrogance (a trait that runs rampant in all areas of the Internet marketing world), we finally dropped the e-mail vendor we had used for seven years, and signed on with MailChimp to do our mailings.
The difference has been stunning — a more user-friendly setup, far fewer glitches, much more reliable service — and all at a fraction of what our previous vendor had been charging us.
Amazon.com, Skype, Droplr, Gmail — the list of no-hassle companies making things simple, better, and less expensive is overwhelming the fat and sassy companies that are still living in a dream world of yesteryear. Which raises the question, how do so many companies get away with providing bad service at inflated prices manage to stay in business? One answer is homeostasis, the tendency of people to live with existing conditions and avoid change.
But another reason, I believe, is to be found in the CNBC series “American Greed.” Even though the name of the show makes me cringe (see “The Desire to Acquire”), it’s interesting because it tells you a lot about human nature. Virtually every episode is the same — a high-level con artist bilks hardworking or retired folks out of their life savings by promoting a Ponzi scheme.
That’s right, nothing clever. Just your everyday, garden-variety Ponzi scheme, used over and over again. I was discussing this with a friend, and, at one point, he shook his head and said, “I’ve often wondered how this same old scam can be used ad infinitum when it’s been exposed so many times on television for everyone to see.”
But that’s the problem — not everyone does see it. In fact, probably not more than two or three million people — out of a population of 320 million — have seen even one episode of “American Greed.”
We all know about low-information voters, but low-information people are not unique to the political realm. Staying informed takes time and work, and most people are too busy or too lazy to do much investigation.
Remember, we’re now living in a Stripe world – one where you can safely assume that there is a newer, better, less complicated, less expensive service coming on the market every day. As a consumer, you don’t have to settle for hassles, arrogance, and high costs. In the words of Milton Friedman, you are free to choose.
And if you or your company participates in the high-stakes Internet game, be vigilant about fighting complacency. No matter how secure you may believe your position in the marketplace to be, rest assured that there’s a salivating pack of high-tech whiz kids taking aim at you. Whatever you’re doing, you can take it to the bank that someone is working, right this second, on a way to do it better, faster, less expensively, and, above all, with far less hassle for customers to deal with.
Thank you, Stripe, for the reminder. A Stripe world equates to a hassle-free world. What a great objective.