[jjallen]

Sounds like they could be using your cash as funding.

If they hold a bunch of cash from people it is effectively theirs for that period of time. This could prevent them from needing to raise a funding round if done enough.

Some businesses are literally customer funded like these.

If you want to read more search for "negative cash operating cycle".

[edwinwee]

We don’t touch reserved funds (and don’t earn interest off them either). The funds are saved for individual Stripe accounts and are only used to cover refunds and disputes from their customers.

[JumpCrisscross]

> don’t earn interest off them either

Why not? You could use it to lower the cost of your services. (Someone is obviously earning interest on it. Better you than your bank.)

[bombcar]

Probably trying to avoid a conflict of interest. The magnanimous thing to do would earn interest and track it and refund that interest minus taxes to the final fund recipients- either the business or the customer. Might even be tax free if setup right.

Even the IRS does it.

[JumpCrisscross]

> hold a bunch of cash from people it is effectively theirs

In the U.S., I don’t think money transmitters are allowed to do this. (They can keep the interest earned on it.)

Financing from deposits is more a crypto thing.

[jjallen]

They can make stuff up, right? They are allowed to say "we are keeping your money for 120 days because of some security ...". Who is ever going to know this is valid/true or not, unless it goes to trial somehow and there is a lot of discovery done.

They are literally funding themselves out of deposits, in a small way if they keep any persons money for any period of time. If they start doing it to lots of people for months at a time then they are at least partially funding themselves from their customers.

Lots of businesses do this incidentally. A good one is businesses selling gift cards. It's not the same; but this set of conditions is not super uncommon.

[JumpCrisscross]

> are literally funding themselves out of deposits

No, they probably are not. It’s illegal and money transmitters are regulated.

What they are doing is collecting interest. One tends to see less scrupulous transmitters hold funds longer when rates rise. I didn’t think Stripe fell in this category, but it’s becoming difficult to say.

> good one is business selling gift cards

You’re right. (Also customer deposits.) This doesn’t apply to money transmitters, however.

[inetknght]

> It’s illegal and money transmitters are regulated.

It's only illegal if the regulator enforces action. Good luck getting regulators to enforce action on something like this.