David Rosenthal: evaluation

Transcript context

…In fact, it's a little bit of a hostage situation. If the consumers weren't demanding I must be able to pay in this way because every other store is letting me. If you came to me David and you're the credit card company and I've never heard of you before and you're saying, by the way, you should start accepting the payments through me. I'll get it to you a month later and I'll take a nice [...] along the way. I'll be like, get the hell out of here. Yeah. I think that's one of the reasons why it took 50 plus years to build up the network of credit card, merchants, and consumers in America—whether that's Visa, MasterCard, American Express, and the like because, yeah, there are some good things here but there are some really bad things to this system too. Then you mentioned debit. Once the rails started getting laid for credit card transactions and the early ones were super cloogy. I think merchants had to call up the issuing banks of the cards. There wasn't the automatic swipe and automatic phone system that checked everything. But as that started to get built up, then the debit rails got laid and banks said okay, we can create check cards that they will call initially. They came out in 1969 I think in America, and used some of these same technology rails but have it be a debit system. That's a little better, but I think it's still pretty slow. I could be wrong on this, but I think it's basically just an automated version or a card version of ACH and the check system. All of these work fine for a long time, but the internet really starts taking off, as we chronicle so much on this show. Once the internet starts taking off, people start spending and having financial relationships and financial transactions in so many more places than they used to. There's a lot more volume in the system than there used to be. Famously, Paul Graham even put out a request for startups—this was in maybe 2007, 2008—about accepting payments online is really hard. Somebody should do that, and of course, two brothers from MIT—the Stripe kids—found that, and they started Stripe and made it easy for businesses to take payments online. Which of course is our modern infrastructure companies and companies like Stripe, as a merchant, you just have a token which is the notion of that customer's card. Where if you pass that token to Stripe, Stripe says yeah, I've got their card stored. You never had to take on that risk of getting hacked or knowing the person's number and the consumers are better off because only Stripe actually knows your credit card number. That certainly was not the case in the first 15 years of the internet.…

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