Brothers' firm worth €500m – all thanks to credit-card problems
Businesses really need hassle-free online transactions writes Adrian Weckler
Why is the online payments firm set up by two young Limerick brothers – Patrick and John Collison – now valued at €500m? Is it hype? Is it some Silicon Valley crusade to identify 'the next big thing'?
No. It's because small firms continue to have a murderous time finding solutions for accepting credit cards online.
The Collisons' service – called Stripe – gives them a way to do that without hassle.
Ask any small Irish company about this scenario. You'll hear tales of bank admonitions, regulatory excuses and immovable policies. It is not unusual for those applying for a merchant account to be asked for six-figure 'security deposits'.
"You're going to AIB or Bank Of Ireland and it's literally like getting a mortgage," Patrick Collison told me earlier this week.
"On top of this, for developers the software is desperately bad."
Collison is right. Banks equate small firms with risk. For this reason, they don't like giving small traders online 'merchant' (credit card accepting) accounts. They say that it's because of fraud. But it is also down to an oddly conservative, ambivalent attitude toward small traders.
What the Collisons have done is to make it easy for small firms to embed a pre-set credit-card payment system – with no intrusive branding – into their website.
They are not the only ones to do this, but their offering is probably the cleanest, easiest, most customisable offering around. This is one reason why Silicon Valley's biggest venture capitalists – including PayPal co-founder Peter Thiel and Tesla founder Elon Musk – are backing them to the hilt.
It is also why the company is growing so quickly, with thousands of customers processing "millions" of euro (according to Collison) every day.
It now employs 62 people and has launched in the US, Canada, Britain and Ireland, with trial services continuing in Germany, Australia and other countries.
And that is all nice for the Collisons and their reputations. What really matters, though, is the possibility of expanding online trading services for ordinary small businesses.
"If you look at the state of the economy and the internet, only about 2pc of consumer spending is happening online," said Collison.
"You have to wonder how many more businesses could be enabled in Ireland or Britain or Romania or wherever if they had better tools.
"There is surprisingly little cross-border commerce taking place right now."
So what options are available for small Irish firms without their own bank-approved merchant accounts?
Below are three online services you can look at.