An Open Letter To Substack About Payment Systems

And It Ain't It Is Not About "Nazis"

The below article will not affect you if you are in a Stripe-supported country. But if you are not among the 46 counties Stripe supports and want to get paid for your Newsletter, or if you want to help writers worldwide, read on.

This only went out to the Web on Substack, not my subscribers. So, Like & ReStack for maximum exposure, please. Maybe we can get Substack to at least pay attention.

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Dear Substack:

Just today, this email from Substack arrived in my inbox.

New tools for international writers and readers

At first, I was pleasantly surprised. “Finally,” I said, “they integrated PayPal into their payment system.” No such luck. It was all about internationalizing languages and structures.

I left the following note in the discussion:

Within 5 minutes at that early hour, the note had 11 likes. In other words, those who got the Newsletter and were not living in a USA timezone and had read the email jumped in and agreed.

Let me give you some background. Medium and Substack have used Stripe exclusively as their payment system for various reasons. Medium takes their “chutzpah” a bit further. If you are familiar with Medium, you will know that you must pay $5 monthly to be a member. This, based on experimentation over the years, has many benefits for writers. But they will take your $5 via PayPal. No problem with that. But they won’t pay out unless you have Stripe. I know this on my back as I have quite a substantial following on Medium for technology articles, but I could never get paid. Why? Stripe does not operate where I live.

This is not mysterious to me as I have spent most of my career in tech. Stripe offers their systems an easier integration, a more manageable flow of accounting, and better percentages. The real reason here is the percentage. It obviously affects Substack's bottom line.

Stripe is only available in 46 countries, as seen from the Stripe website.

Now, these cover many Western countries and then some. But other countries, such as Israel, where I live, do not have Stripe. Why? Inner politics, other payment gateways, pressure from massive banking systems… take your pick. The result is that Stripe cannot get a license to run in many countries worldwide. Whereas PayPal does have the license to run.

I get it. I really do. However, a company like Substack certainly has clout with PayPal. And honestly, since I know the backend systems, integrating it does not take months or years. More like a week with 2-3 developers on Substack’s massive following and creators. (And I am being generous with a “week.”)

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I am 100% sure I am not the 10th, even 100th, or even the 1000th person to have considered this. I know writers who will not touch Substack simply because there is no way for them to get paid.

Yes, there is a way for non-Stripe country writers, website owners, etc, to get Stripe. It involves a convoluted setup that demands a Company and merchant account setup in the US or England. Which then demands you pay taxes and run a business from those countries. That is not for the weak at heart. Trust me on that one.

The other remark I have heard once or twice is that Stripe is better at fraud than PayPal. That is hogwash. Every payment system has had its problems with fraud. They all approach it by constantly tightening their systems and ensuring safety. And PayPal certainly is a system one can trust.

What is the bottom line?

I am going to put a few possibilities here—some of them I have mentioned at least 3 times in the Thursday roundups. This is coming from tech and from someone very familiar with online payment systems.

1. Adopt PayPal immediately. Work out your percentages, and warn the Author of the Newsletter that PayPal will take X percentage. You can demand “Business” PayPal accounts if you fear taxes, etc. You can also take any PayPal account, private or business. That decision is up to Substack. If you need confirmation (such as Google asks for in Adsense), that should not be a problem.

2. Deferred Payment System: If you cannot or will not adopt PayPal, create a deferred payment system. This is a lot more work for Substack regarding accounting, but some places do this very successfully (take a look at AdSense and YouTube.) Here is how it works:

   1. Joe cannot accept Stripe as he does not live in a Stripe-supported country. But there still appears to be a Stripe payment for him.

   2. A customer comes in and pays with Stripe for Joe’s Newsletter.

   3. Substack puts that payment (minus their take) into a kitty for Joe. Joe does not get paid immediately.

   4. When that “pot” reaches X money or when Joe decides to take out his money, then it is transferred via EFT to Joe’s bank account. Joe is responsible to the authorities for his taxes, VAT, etc.

   5. Substack requires a receipt from Joe. If Joe has given all his info to Substack previously, this should not have been a problem.

   6. As I said, this is a lot more work and headache for Substack than just accepting PayPal. But it is doable and has been done with great success.

3. Substack can come up with any other hybrid plan, of which there are many so that almost all authors can be paid.

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This is not rocket science. Nor is it so challenging to implement PayPal profitably for Substack and the authors, at least not from a Technology standpoint. I am sure your developers know how to handle webhooks. Obviously, I am not privy to Substack’s internal decisions. But this is a no-brainer from any point of view. So how about it, Substack?

Please implement PayPal immediately, or at least be open and honest with an email to the community about why you refuse to do so.

Sincerely,

Ted Gross