Why We Switched from Stripe to Balanced

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There are a lot of great online payment solutions out there that come loaded with all kinds of features. At LocalOn, we’ve evaluated many of these solutions and wanted to share our findings for the sake of others doing a similar investigation. I want to concentrate specifically on Balanced and Stripe for the simple reason that they stand out as systems written by hackers for hackers, and are the ones we considered most seriously. At first glance, Stripe and Balanced are not that different: both offer a white-labeled API to facilitate payments online, both are made with developers in mind, and both offer well-written, simple client libraries in numerous languages. Stripe clearly has the better marketing team with a nicer, cleaner, sexier homepage but Balanced appears to be the superior product with a clearer roadmap. Below, I’ll outline specific features and frustrations that made us switch from Stripe to Balanced.

True White-Label: Credit Card Descriptor Control

Balanced allows us to specify what appears on a customer’s credit card statement (known as the soft-descriptor) on a per-transaction basis. It might not sound like a big deal, but this white-label enabling feature allows us to charge customers on our clients’ behalf and was a lifesaver for LocalOn . We help hundreds of merchants associations collect membership dues and, when we used Stripe, we were only able to provide our own name on the credit card description.

Previously, end customers would be confused to see our company listed on their credit card. This unexpected charge on the statement was usually followed by a frantic call demanding to know who we were and why in the world we charged their account. The cost in time and sanity to respond to such calls, explaining that we are just the guys who facilitate due collection for the merchant association was significant, and we are happy to not have to deal with that problem anymore.  Now association members see charges on their statements from the associations themselves, not LocalOn. LaunchTrack, another Balanced customer experienced a similar pain before switching from Stripe to Balanced.

Some might point out that Stripe Connect lets developers collect payments on behalf of various different entities, therefore solving this problem. I address Stripe Connect in detail below.

Bank Account Debits

Balanced’s ability to charge bank accounts directly is also an invaluable feature. We work with many non-profit organizations that, like us, favor low transaction fees and, unlike us, do not use credit cards. In fact, many of our clients prefer to send us paper checks, even cash, for their monthly bill.  The low transaction fee and the ability to charge bank accounts directly circumvented this major barrier. Unfortunately, Stripe does not offer such capability and it is unclear whether they have even considered this in their roadmap.

Stripe Connect: The Good, The Bad and The Ugly

Stripe Connect is Stripe’s attempt to let developers collect payments on behalf of multiple entities. The good part is, integration is straightforward using OAuth2 protocol.  A ton of libraries help you handle authentication and because OAuth2 is very much standardized, there are no nasty surprises during implementation. Also, once authenticated, access to users’ data is just as easy. However, there is one major caveat. Stripe requires these entities to each set up their own Stripe account before you can make charges on their behalf.

The ugly part comes when you realize that Stripe essentially broke its promise to let you build a white-labeled software. Now I have to explain to my not-very-tech-savvy users what Stripe is, and why they are redirected to some third party to authenticate something they do not understand (and do not want to). Why does Stripe take this approach?

A quote from Cristina Cordova, head of business development at Stripe:

Cristina from Stripe here. Thanks for the comment.

Many marketplaces want to avoid the liability for transactions that take place on their platform. This is specifically why we built Stripe Connect (https://stripe.com/connect). It allows the marketplace to provide a way to accept payments to their sellers. The buyers and sellers can then transact with each other and the marketplace avoids liability.

I don’t buy this. Here is an example of what happens when the liability is on the seller. If PayPal, which has been in business for decades, is failing to manage liabilities in their marketplace, Stripe’s approach of forcing merchants and buyers to transact directly seems like a step in the wrong direction. The only viable approach is to hold the money in escrow until the customer receives the goods and is happy with them, and only then release the funds to the merchant. This puts some pressure on the marketplace to ascertain who is responsible for what, but at the same time it incorporates flexibility in resolving disputes that inevitably arise. Balanced allows you to do just that.

Stripe Support vs Balanced Support

Whenever asked about any specific feature, Stripe support will always provide as vague an answer as possible. There is no issue tracking system (at least not one publicly available) where one can check the roadmap or see the list of issues in progress. Even when Stripe is creating a feature that is crucial to their clients, they don’t, for some reason, admit that they’re working on it. Here is an example. This is a question about ACH payments on Stripe’s support section of the website:

Plans or suggestions about accepting e-check (ACH) payments?

I would like my users to enter their checking account and routing information so that we can receive a direct payment from their bank account.

We don’t currently support the ability to accept inbound ACH payments. That said, we can certainly see just how helpful this would be, and may add something along these lines going forward.

I believe it would be to their benefit to say that they are working on a certain feature so that at least people don’t start looking for alternative solutions the way we did. Balanced, on the other hand, takes a more transparent approach with a publicly available issue tracker on github.  Not only is the roadmap clear and comments are welcome but you can fork and contribute code.

Also, on multiple occasions, I had noticed that Stripe’s forum moderator had deleted questions asked earlier. I would return after a period of time to check for additional responses, only to find the query had mysteriously disappeared. Luckily, this one was documented on Stack Overflow before it got deleted. I am still unsure as to why. It just left me with a bad taste in my mouth. Balanced on the other hand publicly logs everything that goes on in their developer chat room.

LocalOn’s Stripe vs Balanced pros and cons summary

Pros Cons
Stripe Almost white-labeled API Lack of ACH debits
Really nice UI Lack of soft credit card description
Stripe Connect is not the right solution for marketplaces
Vague support answers
No roadmap
Balanced White-labeled API UI could be better
ACH debits
Allows creating escrow holdings which are essential for a marketplace
Clear roadmap + great support

Conclusion

Stripe perfected their UX and I truly miss their high contrast colors, clear interface and informative graphs. Using Stripe’s interface felt like every little detail was thoroughly thought out, starting from the homepage to every last bit in the dashboard.  Despite the beautiful design, we switched to Balanced because Stripe was missing numerous features crucial to us, like soft descriptor control, ACH debits, and escrow.  Stripe’s support team’s vague responses coupled with the lack of communication about what they have in the works certainly reinforced our decision.  Since switching to Balanced, we’ve been able to build our product the way we’ve wanted, taking advantage of Balanced’s flexibility, and responsive customer support team.

The 88 Percent

I don’t know if it’s the technological advancements or simply a reflection of the state of the economy, but businesses are getting smaller. I have three jobs, I manage operations for the Potrero Dogpatch Merchants Association (PDMA) and Allpointe Insurance Services, and I’m the community manager here at LocalOn. It may seem like a lot, but compared to when I worked in the corporate world, I’m much more satisfied with my quality of life. Maybe that’s because of the increased autonomy I have, or due to the fact that I get to work with small business owners daily, personally witnessing the impact they have on their communities.

Allpointe’s total staff is less than five employees, as I’m sure is the case with many businesses in the LocalOn community, the new norm for small businesses. The Bureau of Labor released a study in March which shows that the average size of new start-ups was 4.7 employees in 2011, down from 7.6 employees in the 1990s. While President Obama’s small business tax credit and other tax plans may help some some small businesses, they do nothing for the 88% of small businesses that have fewer than 5 employees or the self employed.

Working for a small business and a small business organization like PDMA has opened my eyes to a whole new world. A world where local, independent merchants play major roles in terms of job creation and economic growth. It seems like it’s time for policy makers to start making some of the same shifts I see small business owners making every day in their thought processes to address the new norms. We need policies that will help the 88% majority of small businesses. There are a variety of programs currently in place to help small businesses, like SBA PRIME and Microloan Technical Assistance, and if these programs received adequate government attention and funding, small businesses could be an even greater asset in terms our nation’s economic recovery.

Small Business Owners Doing It for Themselves

Congratulations to the 8 newest additions to the LocalOn family. Congratulations because each one of these small business owners added their own content, selected their own theme, and worked closely with us to configure the layout of their new websites.

Check out the results for yourself:

Banana Soy: Vegan restaurant offering a casual, intimate decor. All dishes are prepared with healthy ingredients, and no animal products or MSG are used.

17 Jewels & Spa: Superior service, quality care, and a warm comfortable environment from the moment you walk through the door.

Contra Costa Black Chamber: Community organization dedicated to supporting the economic development, viability, and sustainability of businesses owned by Africans, African Americans, and peoples who are new immigrants or with ancestry from the Africa diaspora.

Streetside Records: This attractive, iconic storefront in Kansas City has great exposure along the highly traveled route between Westport and The Plaza. It is adaptable to many types of uses as evidenced by its diverse history.

Juni Hair Salon: Experience new and different hairstyling techniques with the latest cuts, colors, treatments, and perms from Japan and Korea.

Oakland Venue Management (OVM): A company dedicated to enhancing the city of Oakland by providing professional staff, high-quality venues, and production services for both artistic, cultural, and corporate events.

Toasty Town: R. Gary Branchaud’s wonderful children’s story about quiet time, creating, reading, and bonding at the end of the day.

Philip King & His Harp Universe: An album confirming that miracles do exist. Play it when you’re most stressed and let the Universe and Philip King do the rest.

Here’s to 8 locally owned merchants doing web marketing for themselves.

Yoga Fountain

Yoga can be many things to many people, for some it’s a physical workout, and for others it’s more metaphysical. But whatever the benefits, the biggest challenge for many of us is figuring out how to fit yoga into our day. It’s not surprising that making time is a top priority for Renee Sera, owner of Yoga Fountain.

Renee sits across from me as we discuss how the switch to LocalOn has impacted her business, she raves about how much extra time she has now that she doesn’t spend all day trying to figure out WordPress. This is extra time she says she’ll use to work on her business and develop her personal yoga practice.

Renee’s journey from beginner yoga practitioner to yoga teacher to yoga studio owner (and also valued LocalOn customer) has been a journey of serendipitous self discovery. She immediately fell in love with yoga, after her very first class. Shortly thereafter she enrolled in a 200 hour Yoga Teacher Training at Pretzels Yoga in Potrero Hill. Renee recalls an immediate connection to studio owner and teacher trainer Pretzel, and began teaching with her when she finished the training. Last October Renee purchased Pretzels Yoga, now Yoga Fountain.

Yoga is responsible for the Renee sitting across from me today. She explains that yoga made her feel and look better, and improved her outlook on life altogether. Reduced stress, increased energy, and a greater understanding and appreciation for life are just a few of the benefits that helped transform Renee into a savvy small business owner. It’s only been a few months since Yoga Fountain first opened its doors, and plans to increase class availability and schedule neighborhood events for children and seniors are already underway. Renee actively participates in the Potrero Hill business community, recently joining the Potrero Dogpatch Merchants Association. PDMA hosts member meetings once every month, and at the very first meeting Renee attended, David and Shahbano happened to be presenting. They were giving members an exclusive preview of PDMA’s new online marketing platform. After the meeting Renee decided she wanted to work with us, so the very next day she chose her template, and then a couple days later the LocalOn-powered www.yogafountain.com premiered.

Now Renee posts regular real-time event updates, announcements, and coupons in minutes. “Easy” she says with a thinning East Coast accent, and if she has any questions, or needs professional assistance, she knows we’re just a phone call away.

“Think Local, Be Local, Buy Local, Give Local”

This may not be the best year for skiing in Tahoe, but so far it’s been a great year for checking out some of the local businesses in the area.

On weekends during the ski season, my partner and I go up to Tahoe to ski. This year, there have been less than ideal conditions, so instead of holing up in the cabin watching Allie McBeal on Hulu, we decided to make a trek down to Truckee.

Truckee is a small town in North Tahoe, along I80, with its own burgeoning “buy-local” campaign. Every month Truckee celebrates First Friday, “Think local, Be Local, Buy Local, Give Local.” We’d already missed this month’s festivities, but the more we walked around downtown Truckee, there was no mistaking the all around pro-local atmosphere. Unique, creatively inspired shops, restaurants, and our favorite, a cool cafe that makes homemade chocolates, Dorinda’s. After enjoying the chocolates and buying some for our cabin mates, we headed over to Truckee Sports Exchange, a locally owned and operated one-stop shop for ski, snowboard, cross country, back country and snowshoe purchases and rentals. I hadn’t planned on purchasing anything when I walked in, but I walked out with a new pair of skis. Dany was very helpful and knowledgeable. We talked about the current ski season, my approach to skiing, and my skiing experience. He showed us the different ways skis are constructed and explained the pros and cons of each. He even gave me a few pointers. It felt like I was in ski school. After we decided on the best match for me, he offered an incredible discount and a guarantee: If I didn’t like them once I’d spent a couple days with them on the mountain, I could return them, and he would only charge me a rental fee. That day, Saturday February 25th, although the conditions weren’t perfect, a skier was born. I had the best, most positive experience I have ever had on the slopes.

Local businesses are what make local communities unique. They often carry a wider array of unique products because they buy for their individual markets. I’m not only going back to Tahoe to ski every weekend, I’m also going back to patronize Truckee’s vibrant local scene. I like to think that what I experienced in Truckee, could have only been experienced in Truckee. I think we could all apply some of this small town mindset to our businesses, wherever they are.

Share with us some of your favorite local shopping experiences on this blog or on our Facebook page.

Cash Mobs Help Inspire Buy-Local Efforts

We’ve all heard of flash mobs. They are spontaneous seeming events, often organized using social media, that bring people together to perform in public places. One of the best things about them is that they convey a sense of community.

Recently in Oakland, a cash mob, organized on Facebook by Alex Haider-Winnett, a paralegal and participant in the Occupy Oakland movement, saw more than 15 strangers gather with cash in hand, ready to shop at Marion & Rose’s Workshop, a local gift shop. This was a great way to boost the store’s sales and spirits. As the Wall Street Journal reports, “The first known cash mob was the brainchild of Chris Smith, an engineer for Oracle.” Chris saw the effect sites like Groupon have on small businesses and thought “Why do we need a discount to support good, solid, local businesses?” What a great idea!

The trend to promote local businesses is moving more and more into the mainstream. On this blog we’ll continue highlighting creative ways that communities are supporting their local businesses and how merchants are supporting themselves–and each other. If you’ve come across any buy local campaigns, share them with us on this blog or on Facebook. Let’s spread the word.

The “Pro-Local” Effect

Results from a new survey of independent businesses by the Institute for Local Self Reliance show that organizations with a local-centric campaign have yielded greater returns to their member businesses, due to an increase in “pro-local’ attitudes.

“Independent businesses in communities with an active “buy indie/buy local” campaign run by a local business alliance saw revenues grow 7.2% in 2011, compared to 2.6% in areas without an alliance”

LocalOn, your very own “pro-local” web marketing provider was founded with the goal of connecting people to the marketplaces in their local neighborhoods.  We provide an easy-to-use platform which will increase your potential to benefit from the emerging “pro-local” trend.