While I'm not the biggest fan of crypto overall this is definitely one instance where you could actually use it in a way that makes sense by offering people to pay with it instead. Only issue is converting it afterwards into fiat currency.
> In short, just making your own payment processor is hilariously difficult and far beyond the means of Valve let alone Itch. Depending on what the speaker means by "Payment Processor", they may be suggesting making your own bank, or somehow convincing a bank to let Itch shove payments through them; who will eventually do the exact same thing as what happened here. There's no winning play there.
PCI-DSS compliance wasn't even mentioned and it is easily able to overwhelm organizations like Valve and Itch on its own. The hardest part of payment processing is the network. Connecting the acquirers to the issuers in such a way that everyone is happy with the arrangement. Just like the hardest part of the power grid is the transmission infrastructure. The endpoints are far more trivial to replace. If you want to use the existing network, you have to play by all of the rules. The only real way out of this system is to use a completely different kind of currency.
The solution to this issue is regulation, pure and simple. It doesn’t even have to be a complicated bill, either:
“Financial institutions and financial services providers are barred from blocking, interfering with, restricting, or refusing any consensual transaction that complies with laws regarding content, materials, goods, or services.”
Admittedly in the USA this tees up a 1A case over whether companies have freedom of speech (they shouldn’t), but in other jurisdictions it could be the game changer needed to unshackle commerce from the control of a handful of boardroom puritans and risk-adverse compliance departments. If porn has a high rate of chargebacks, then stop allowing them without a higher burden of proof on the person requesting them, for instance. There’s ample room to enforce accountability on consumers and processors without upending the proverbial produce cart.
That was an interesting read. The core issue unfortunately appears to boil down to being a deeply complex of net of trust and risk distribution.
The issue being a "human"/societal problem, instead of technology, makes me wonder if this could be slowly changed over a few generations. The amount of momentum required would be quite high tough.
I've built a payfac before, and while I think this author is overstating the difficulty of doing so in 2025, I agree that it wouldn't help Valve to do so. We weren't the ones that decided it was too risky to deal with specific merchant categories; our processor did that for us. It wasn't even a discussion. (Nevermind such policies like "all of Puerto Rico is too risky to deal with.")
In 2018, Patreon almost got kicked off of Stripe because Mastercard objected to NSFW content (probably because of PACs and/or “moralizing busybodies”). Patreon booted most of the NSFW creators and OnlyFans scooped them up. OnlyFans is now significantly bigger than Patreon.
> If you're making your own PayFac, you're suddenly responsible for getting and securely storing that information and handing it up to your sponsoring Acquirer. You're also responsible for verifying it, ...
My understanding is that steam already has to do this? Like when I buy a game on steam it goes to steam, who then redistributes the funds to themselves, developer and tax man. Since they are holding the money, are they not defacto already a Payment Facilitator?
The only correct solution is something like the Brasilian pix. No fee paid for by taxes and the central bank just like the management of cash.
A digital alternative to cash offered by the central banks which are the ones responsible to enable financial transactions. Since so many are moving to cashless it is important for the central bank to retain control of the currency alternative to cash.
We can not allow this explosion of middle men all taking a cut of something they should not be part off especially since they now have such power that they decide what you can and cannot buy instead of the laws of the land.
I think you really need to make a card that isn’t a Visa or MasterCard or a QR payments system that’s wired to common banks. I don’t think anyone has suggested creating a payment processor without this, because the issue is with Visa/MasterCard, not with the middleman.
I think Valve could actually find a bank to work with to run a QR payments scheme for the gaming industry (SteamPay perhaps?) that’s “topped up” via ACH. Just ignore the whole card part, since it’s online you don’t even need it. Require biometrics and you can make the fraud burden easier.
Of course this would cost a lot of money, but it’s at least in the realm of possible versus a PayFac etc.
American hate for wire transfers will never sound anything other than irrational to me. Why don't you have an equivalent of Europe's Instant Payments?
The author mentions the storefront pocketing the money, that seems implausible? If an unscrupulous storefront can pocket money that would be wired, it could also pocket money that would be paid by CC.
And then there's the weird thing about payment volumes...that's been a solved problem for half a century?
We also have usury, private credit rating services, transaction reordering, payday loans, charging the unbanked to cash their paychecks, required minimum balances, dark patterns, zombie subscriptions, and probably a dozen more grifts.
Our economy is now financialization of everything, rent seeking, wealth transfer instead of wealth creation, ad nauseum.
I'm nostalgic for when we could create wealth by making and doing, and punished people for stealing. (Perhaps it was never true, I've always been delusional.)
Cryptocurrencies are many different things to different people. Putting aside the speculative mania, the payment processor problem is one of the main problems private cryptocurrencies solve.
Stablecoins are not without issues, but they've largely solved the problem of price volatility. Objections around issuance and backing might be raised, but this is more interesting for trading and less relevant for merchant transactions.
Yes, there are no chargebacks with cryptocurrencies. This is an advantage for the merchant. Before anyone goes off the deep end here, let's recall the context of the discussion: one time payments to reputable merchants for trivial amounts. Game purchases do not require life changing amounts of currency to change hands. Steam and Itch are well known brands.
So what is left to object to? My impression is that there is excessive cultural and political baggage.
From the article:
>Capitalism sucks. The economic ecosystem sucks. People unrelated to transactions in any way except "They have the tech to facilitate them" deciding that entire industries don't get to make money and feed their staff because "It's risky to handle these payments" suck. That these entities can also be attacked by PACs and shamed into being the morality police sucks.
...
>But I still hate crypto.
Note that even though the author correctly observes the high regulatory overhead and political, non-market forces, they still manage to blame "Capitalism".
I remember working on POS for a non-porn industry also shut out by payment processors, and the increasingly obtuse hoops and loopholes they had to navigate were wild to hear about after working in more traditional SaaS and eCom. Reverse ATMs, cash-to-crypto, cash-to-barter, all different state-to-state and between nations. This shit is hard when you're arbitrarily frozen out of access. Really made me rethink how I pay for things, especially at in-person retail.
Problem with accepting crypto is the on-ramp/off-ramp to fiat
Everybody, except for the few that are holding crypto and expect it to irrationally keep rising forever, are looking to convert it into ironically fiat money which they swear is the enemy.
This means other than bordering purely illegal or prohibited businesses that payment processors cannot handle (remember there are adult processors too), crypto will never become mainstream replacement for fiat.
Right now liquidity is there to absorb the ramping process but long term observers will note how fragile and quickly this can go away. Already, the number of new wallets being created on Bitcoin is plummeting. Search terms for bitcoin has tapered off. There is almost no real interest in it being a replacement for fiat or gold.
I wish gold could become more accepted but we all know the history of e-gold and many of us know its connection to Bitcoin and its curious proximity of origin.
It's just not a good look for companies selling mainstream products to suddenly accept a medium which is clearly being used for pump and dump and laundering of money for transnational crime and no amount of gaslighting or pushing crypto will change it, in fact it achieves the opposite of their goals.
We might at some point see a digital currency but this would be completely different from the crypto in existence today and all stablecoins that isn't issued by the government runs the risk of reporting what is different than what is there in the vaults as if governments haven't been caught doing this in the past. ex) Tether's reserves unaudited unverified mystery
Look at India, the UPI generates a billion+ transaction per day. Just amazing how to include mom and pop merchants into digital economy and not to suck up to Master/VISA networks.
I built and ran a site that allowed users to upload a stable diffusion model and generate images with them. I originally received money via stripe, and then promptly got kicked off after about 9 months. They threatened (via a clearly automated message), that the fines could be as high as 400k, ended up paying a 4k fine and getting off ASAP.
While we were on stripe though, the charge back rate was probably ~2-3%, which, I think is probably fine.
Moved over to Coinbase commerce and sales dropped from ~5k / month to 1k / month.
I enjoy reading others' complaints about payments and only after the correct person gets frustrated enough, shunning the buyout greed, will a feasible domestic solution manifest.
Having written all the code and founded my own "Payment Processor" twice in the last few decades, this is an interesting space that demands subject matter expertise 24/7/365. Having lived through many global events of all kinds, that the general public never saw since being in payments at the inception of the internet, I learned things not possible today. I recall vividly those that laughed at me in the 90's when responding to inquiries about what I did for a living. After stating that I was building a payment server for the internet all balked stating no one would pay for anything online and then PayPal became our client followed by many other well known brands. Is anyone still paying online?
23 comments
[ 2.7 ms ] story [ 43.6 ms ] threadi've seen too many businesses destroyed by sudden "your account is closed" with no human contact
PCI-DSS compliance wasn't even mentioned and it is easily able to overwhelm organizations like Valve and Itch on its own. The hardest part of payment processing is the network. Connecting the acquirers to the issuers in such a way that everyone is happy with the arrangement. Just like the hardest part of the power grid is the transmission infrastructure. The endpoints are far more trivial to replace. If you want to use the existing network, you have to play by all of the rules. The only real way out of this system is to use a completely different kind of currency.
“Financial institutions and financial services providers are barred from blocking, interfering with, restricting, or refusing any consensual transaction that complies with laws regarding content, materials, goods, or services.”
Admittedly in the USA this tees up a 1A case over whether companies have freedom of speech (they shouldn’t), but in other jurisdictions it could be the game changer needed to unshackle commerce from the control of a handful of boardroom puritans and risk-adverse compliance departments. If porn has a high rate of chargebacks, then stop allowing them without a higher burden of proof on the person requesting them, for instance. There’s ample room to enforce accountability on consumers and processors without upending the proverbial produce cart.
The issue being a "human"/societal problem, instead of technology, makes me wonder if this could be slowly changed over a few generations. The amount of momentum required would be quite high tough.
My understanding is that steam already has to do this? Like when I buy a game on steam it goes to steam, who then redistributes the funds to themselves, developer and tax man. Since they are holding the money, are they not defacto already a Payment Facilitator?
A digital alternative to cash offered by the central banks which are the ones responsible to enable financial transactions. Since so many are moving to cashless it is important for the central bank to retain control of the currency alternative to cash.
We can not allow this explosion of middle men all taking a cut of something they should not be part off especially since they now have such power that they decide what you can and cannot buy instead of the laws of the land.
I think Valve could actually find a bank to work with to run a QR payments scheme for the gaming industry (SteamPay perhaps?) that’s “topped up” via ACH. Just ignore the whole card part, since it’s online you don’t even need it. Require biometrics and you can make the fraud burden easier.
Of course this would cost a lot of money, but it’s at least in the realm of possible versus a PayFac etc.
The author mentions the storefront pocketing the money, that seems implausible? If an unscrupulous storefront can pocket money that would be wired, it could also pocket money that would be paid by CC.
And then there's the weird thing about payment volumes...that's been a solved problem for half a century?
Our economy is now financialization of everything, rent seeking, wealth transfer instead of wealth creation, ad nauseum.
I'm nostalgic for when we could create wealth by making and doing, and punished people for stealing. (Perhaps it was never true, I've always been delusional.)
Stablecoins are not without issues, but they've largely solved the problem of price volatility. Objections around issuance and backing might be raised, but this is more interesting for trading and less relevant for merchant transactions.
Yes, there are no chargebacks with cryptocurrencies. This is an advantage for the merchant. Before anyone goes off the deep end here, let's recall the context of the discussion: one time payments to reputable merchants for trivial amounts. Game purchases do not require life changing amounts of currency to change hands. Steam and Itch are well known brands.
So what is left to object to? My impression is that there is excessive cultural and political baggage.
From the article:
>Capitalism sucks. The economic ecosystem sucks. People unrelated to transactions in any way except "They have the tech to facilitate them" deciding that entire industries don't get to make money and feed their staff because "It's risky to handle these payments" suck. That these entities can also be attacked by PACs and shamed into being the morality police sucks.
...
>But I still hate crypto.
Note that even though the author correctly observes the high regulatory overhead and political, non-market forces, they still manage to blame "Capitalism".
Got as far as several emails to vendors who all replied they wouldn't facilitate the payments, and saying "Good luck" trying to find one that would
Absolutely stupid system if you ask me.
Everybody, except for the few that are holding crypto and expect it to irrationally keep rising forever, are looking to convert it into ironically fiat money which they swear is the enemy.
This means other than bordering purely illegal or prohibited businesses that payment processors cannot handle (remember there are adult processors too), crypto will never become mainstream replacement for fiat.
Right now liquidity is there to absorb the ramping process but long term observers will note how fragile and quickly this can go away. Already, the number of new wallets being created on Bitcoin is plummeting. Search terms for bitcoin has tapered off. There is almost no real interest in it being a replacement for fiat or gold.
I wish gold could become more accepted but we all know the history of e-gold and many of us know its connection to Bitcoin and its curious proximity of origin.
It's just not a good look for companies selling mainstream products to suddenly accept a medium which is clearly being used for pump and dump and laundering of money for transnational crime and no amount of gaslighting or pushing crypto will change it, in fact it achieves the opposite of their goals.
We might at some point see a digital currency but this would be completely different from the crypto in existence today and all stablecoins that isn't issued by the government runs the risk of reporting what is different than what is there in the vaults as if governments haven't been caught doing this in the past. ex) Tether's reserves unaudited unverified mystery
I built and ran a site that allowed users to upload a stable diffusion model and generate images with them. I originally received money via stripe, and then promptly got kicked off after about 9 months. They threatened (via a clearly automated message), that the fines could be as high as 400k, ended up paying a 4k fine and getting off ASAP.
While we were on stripe though, the charge back rate was probably ~2-3%, which, I think is probably fine.
Moved over to Coinbase commerce and sales dropped from ~5k / month to 1k / month.
Having written all the code and founded my own "Payment Processor" twice in the last few decades, this is an interesting space that demands subject matter expertise 24/7/365. Having lived through many global events of all kinds, that the general public never saw since being in payments at the inception of the internet, I learned things not possible today. I recall vividly those that laughed at me in the 90's when responding to inquiries about what I did for a living. After stating that I was building a payment server for the internet all balked stating no one would pay for anything online and then PayPal became our client followed by many other well known brands. Is anyone still paying online?
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