There are other "Paypal replacements" that fail in one important aspect for me: They don't allow you to keep your money in the same currency it's paid in. All the others convert it to your base currency, and then transfer to your bank shortly afterwards.
Build a service that allows me to keep multiple currencies, and then to connect to more than one bank, and you'll have a winner.
And you can pay my 1% of the first million dollar year you have for that tip.
I've got experience, since it's what my startup is. It's a lot of work, a lot of research, there is a lot of regulation to navigate especially around AML/CTF. Happy to have a chat and make sure you aren't going to infringe on our patent ;) I'd be interested to hear your point of difference.
@Dave, interested why you want to keep money in multiple currencies and banks? I'm guessing because you are moving around a fair bit?
From a payment gateway perspective this would be a challenge because of the AML/CTF (Anti Money laundering Counter Terrorism Financing) regs, and every country has different rules. It raises alarm bells straight away actually when someone wants to do this.
From a business perspective wouldn't it be a challenge to reconcile all your accounts? Why not have one account and just transfer when you travel/move?
Tangent here, but I am doing a UX course which seems to be heavily leaning into the Lean Startup movement - idea, build, test etc. Would like to know how applicable all this is to a real world startup.
How much user research did you embark on before building?
@Jomapi Thanks! I like the lean startup methodology but I don't subscribe to the fail fast idea, I think it can lead to good ideas being thrown out too soon - but I'm a fan of assessing what you have against feedback all the time. Where are you doing your course?
I made our first proof of concept with very little user research. It was just to give us something as a talking point to potential customers and to flesh out the problem and workflow - time spent, one weekend. Then I did a lot of market research. Once I established that there was demand and growth projection to justify the effort we went ahead.
Since then our iterations follow feedback. Obviously I have experience and have a good idea of what features will be required but the market can always surprise you. When making a feature list, if it isn't critical to functionality and will take more than a day to dev, I'll put it on the 'confirm with the market' list. I don't always implement a feature request, but the market has dramatically shaped our product and plan for the future. So far we're up to major version 4.
I've heard many stories of people who spent a lot of time and money on a product without getting market feedback only to discover there was no demand, very sad.
Just consider how I use my current Paypal account (I'm sure I'm not alone):
- I get paid in multiple currencies from clients in different countries (true whether I'm in Oz or overseas).
- If I choose, I can keep my funds in Paypal in the original currencies they are paid.
- I can then use my USD (for example) to purchase items online from the US, rather than losing money converting it initially from USD to AUD, and then back again to USD to make the purchase. This also worked in the UK when I was there on holiday, and was able to use UK pounds from a client in my Paypal account to purchase some items online without losing out on the various currency exchange steps.
When I was living in Aus for a decade at a stretch, I still purchased fairly frequently from US stores, if I had USD in hand it was certainly cheaper usually to use that than buy in AUD. Consider the users who use a service such as Paypal and Stripe, are they more or less likely to be purchasing things online internationally than "average"?
There are bank accounts that allow for multiple currencies, for similar reasons behind the Paypal functionality (proving it's a fairly common need of people). However they usually require a higher amount of funds in the account, and/or higher account fees.
I hate Paypal and a lot of the issues people have with them (I've had my account frozen twice for really stupid reasons, trust me) however until another alternative offers multi-currencies they will continue to lead the pack. I'm patiently waiting for services such as Stripe to do so (which they and a couple of others have said is in their future plans sometime, I've chatted quite extensively with most of the Paypal alternatives), then would make the jump for certain. I would almost guarantee (with as much certainty as possible without doing the market research that would uncover it with certainty) it's a factor in many who are still with Paypal instead of some of the major new players in the market.
And yes, I'm sure one of the issues in implementation of this is the legal aspect, however Paypal do it so it obviously is possible.
I think you'll find the main reason is the legal/reg aspects, the main impediment to anything in fintech is regulation or legacy systems. PayPal can do it because they have scale, have been around for a long time and have accumulated a lot of regulatory expertise (to put it in perspective PayPal has a market cap of about 10x Stripe's). I'm part of the PayPal Blueprint program, so I have contact with decision makers at PayPal. Every time there is a reg change in any country they operate in, it causes a lot of work and associated headaches.
Like you've alluded to, it will take time for any PayPal alternative to reach the level of penetration where they get down to granular markets like the one you represent. I'm sure it will happen but it will take time. In the mean time have you looked something like https://transferwise.com ?
Out of interest have you weighed up the time it takes you to balance your books and taxes with multiple currency vs the currency lost from exchanging to make purchases?