I’m experimenting with a new collaborative consumption business idea at the moment and I’m trying to set up a payment processing infrastructure. I contacted Paymill, the European clone of Stripe but they seem to be stalling on activating my merchant account. So I got in touch with Braintree Payments, since they opened their services for merchants in Europe last year and they are the payment provider of AirBnB, THE pioneer of collaborative consumption. But this morning, I got the following email:
We would love to have you as a business partner, but unfortunately we cannot move forward with your application. Your payment model is something called Third Party Payment Aggregation. This means you are accepting payment on behalf of someone else, and then passing on payment to them at a later time. TPPA is the highest risk business model there is in payment processing. Unfortunately we do not have a European sponsoring bank willing to underwrite applications for companies with this payment model at the present time.
And they add a link to a post on their blog, explaining what TPPA is and why it is risky.
Now I understand the risk but then it got me thinking. Isn’t it a bank’s job to manage the risk and be paid for it? And what does it mean for the future of collaborative consumption in Europe? Given that collaborative consumption is on its way to replace ad-supported free services as the leading business model family, and that the go-to option for collaborative consumption revenue stream is commission on transactions, how can we do that without a bank supporting this model?
So the next step is to see how existing collaborative consumption businesses in Europe are doing. Let’s try first for 9flats, the European clone of AirBnB (they’re based in Germany). Unfortunately, their terms and conditions do indicate that they process the transactions themselves (“9flats undertakes to pay to the host as the purchase price for the receivable the amount of the accommodation price minus a commission (receivable price)”) but they don’t mention what payment processing service they’re using. Now let’s look at BlaBlaCar, one of the leading ride-sharing services in Europe. Here is what they say in article 2.3 of their Terms and Conditions: “it is the Driver’s responsibility to collect payment from the Passenger at the time of the Trip”. Woops! There seems to be a pattern of avoidance here. I posted a message on OuiShare‘s Facebook group and I got the reference of Leetchi. Going to their website, they say they are using Payline to process payments, which I had never heard about and will investigate (it seems they have the French subsidiary of BlaBlaCar as a customer too). But the smaller the operator, the less likely it is they will support modern API’s enabling mobile payments for example (which both Braintree and Paymill do).
This is going to be harder than I thought. But I guess the point of this post is this: if you are thinking of establishing a business in Europe whose business model relies on taking commissions on transactions, be prepared to fight… or flight! The US of A are so appealing to me right now…