- I don't see an idempotency key in the request to authorize a charge; that might be something nice for people looking to build reliable systems on this. - How long are accessTokens valid? Forever? Do they become invalid if the subject metadata (firstName, lastName, email) changes?
I think this is a super-cool idea, but I think the idea of extending net30 terms to every customer of some B2C product seems pretty iffy; since you're deferring charging until the end of the month, you won't get most of the fraud signals from Stripe until then and anything popular that used this system seems like it'd be pretty inundated with fraud. I would at least consider doing the charges more frequently (i.e., charge at the end of the month or every $50, whichever comes first) to put a better bound on how long you can go before finding out that someone gave you a stolen card.
The balances are not settled just at the end of the month. Each customer has a "maximum owed limit", which starts low (currently 10 USD) and grows with successful payments (up to 30 USD currently). The customer is charged as soon as they hit that limit (with some grace to allow for continued use).
Idempotency keys are on the near-term roadmap. Access tokens do not currently expire; however, they can be revoked by the customer at any time.
I coined "micropayments means microfraud"; I would expect this to have similar situations to the AWS mystery bill problem, but on a tiny scale. If you can charge customers without their confirmation it's easy to run up bills. And of course the amounts are so tiny you can't afford dispute resolution.
- Each merchant requires an OAuth grant, and customers can revoke it at any time.
- A customer ledger shows what, when, and how much each merchant charged. This can be shown in the customer's dashboard and monthly statement emails.
- Customers have account-level spending caps to limit exposure. We will add per-merchant caps.
- If patterns look off or we get complaints, we can pause new charges and review.It’s similar to a digital wallet, but without currency conversion: customers cannot exchange tokens back into money.
I'd especially love a video platform using this model. I can't afford patreon for every YouTube channel, but I'd love to pay 10¢ per hour of video watched.
The platform's biggest risk that I see is a customer defaulting after using a merchant's service. The platform currently mitigates that with Stripe Radar, 3-D Secure, and spending caps, but I'm keen to hear anything specific you're thinking about.
Paying the merchant before the customer's card payment settles would mean advancing funds, which would start to resemble lending/guarantee rather than payments, raising regulatory issues. It would also concentrate risk at the platform: defaults from one merchant’s customers could jeopardize the platform for all merchants.
What if you just reserve it on the card?
Just my commute listening to a podcast that I downloaded before leaving would cost me $1.50 each way? Nah I'll keep my subscription thanks.
Several years ago Stripe offered more favorable pricing for small transactions but it's my understanding that that pricing is no longer available to new Stripe businesses.
Small Transfers: card rails (Stripe), account-based, off-session, batched billing with spend caps; no tokens/wallets.
Secondly, the legal aspect. Will this be considered as a wallet?
Anyways, loved to see it implemented by someone.
Since Small Transfers doesn't store customers' funds or allow them to withdraw a balance, the platform is not considered an e-money institution or a "wallet".
When the customers pay their balance, we immediately forward the funds to the merchants.
What happens when the charge attempt fails after initial preauth?
If a merchant successfully authorizes a charge, the amount is reserved for that merchant for a limited period. Trying to capture that amount (or less) during this period will succeed.
Details: https://smalltransfers.com/terms
With Small Transfers:
- There is no wallet or funding for the account. Customers simply pay for what they owe, usually at the end of each month.
- There is a lower psychological barrier, since there is no subscription or prepay commitment. Customers who dislike recurring payments are more willing to try something new that avoids this.
- Merchants need to introduce customers to just one extra service, Small Transfers.
As more merchants adopt Small Transfers, customers will still only need one account, making micro-billing even more convenient.
In 2018 I built a pay-per-call API paywall using the Lightning Network (a Bitcoin Layer 2 protocol/network that enables instant, low-fee payments): https://github.com/philippgille/ln-paywall
But most people are either unwilling to touch crypto at all, or holding on to it tightly as investment and not willing to use as payment. So I wish you luck to make this work in the fiat world!
credit cards solve that market need and are wildly popular for decades
many crypto services give passive fungible rewards to users for volume too, and they are wildly popular in that ecosystem
most large and growing platforms onchain do that, and people farm them hoping they begin doing that as they reward earliest users, later
Small Transfers can be added to help with:
- users who dislike subscriptions
- infrequent users
- reducing/removing free-trial costs for non-converting users
I believe that Small Transfers also enables services that aren't viable with subscriptions or prepaid credits, e.g., a movie-suggestion service.