I think you underestimate the sheer amount of licenses and regulations you have to meet, and how expensive it is.
But let's suppose you're right. You make your own startup bank, you commit to free speech and not fucking over customers. You slowly grow over time until you become successful. Now pray tell, how do you stop the government or Big Finance from using every dirty trick in the book to obliterate you?
I think you underestimate the sheer amount of licenses and regulations you have to meet, and how expensive it is.
No, you just don't have the professional experience in the subject matter that I do.
Now pray tell, how do you stop the government
Because, the Treasury Dept is the rule making body. They administrate the system, not NACHA.
Which means they're subject to the fucking constitution. People have a right to conduct commerce freely. A participant in the ACH system doesn't have the right to refuse to conduct transactions with another participant, they have to go to the Treasury Dept and argue that the other participant is acting criminally and needs to be kicked off the network. They can only refuse transactions on the basis that they were unauthorized by the account holders.
Because I'm already rich from a software startup, on the back 9 of my life, and don't care to help people who get their kicks posting racist slurs like a 12 year old.
It's a lot of work, and I'm an engineer. I make what I'm paid to make.
There is an ungodly amount of paperwork to do in order to establish a bank or credit union. Paying someone else to do it, that's going to run into the hundreds of thousands or low millions.
Your typical short lifespan credit union is generally founded by the village idiot with a law degree, who has pretentions of being a big balls businessman.
The key step is to obtain a State Charter. This sounds hard, it's not. The hurdle is basically "do you have a business plan". If your business plan is "We're starting a online payment processor that will also offer traditional banking services like checking", and you sound like you can actually deliver it, then you'll get your charter. Hell, you might even get some business startup grants cuz that's the sort of new world tech business states are fighting each other for.
With a charter in hand, you open an account with the Federal Reserve (which functions much like any other bank account, you just need a bank charter to do it), and apply for FDIC insurance.
Then you're in business.
Now, there are requirements. You have to maintain certain levels (reserve requirements). But if you're not issuing any loans, just holding all deposits, paying no interest, and paying operating costs on fees... then maintaining reserves and thus solvency is not a problem. You can't be bank-runned if you have all the money in reserves. Now, why someone would WANT to bank with you under such terms is a mystery (to the fed) but it's not illegal.
What I described above is how paypal works anyway (no loans, everything paid for by fees).
Now, to actually do what we're proposing (replace paypal) you're gonna need some heavy hardware and a bunch of bespoke software. That's all separate from the cost of building a bank, and frankly the bigger problem.
But if an entity like subscribestar had established themselves as a bank first BEFORE going live, it would be almost impossible to prevent money from reaching them, at least by check/ach.
How much money do you think it takes to start up po-dunk neighborhood credit union managed by "that guy who was good in high school football".
Think about it real hard.
I think you underestimate the sheer amount of licenses and regulations you have to meet, and how expensive it is.
But let's suppose you're right. You make your own startup bank, you commit to free speech and not fucking over customers. You slowly grow over time until you become successful. Now pray tell, how do you stop the government or Big Finance from using every dirty trick in the book to obliterate you?
No, you just don't have the professional experience in the subject matter that I do.
Because, the Treasury Dept is the rule making body. They administrate the system, not NACHA.
Which means they're subject to the fucking constitution. People have a right to conduct commerce freely. A participant in the ACH system doesn't have the right to refuse to conduct transactions with another participant, they have to go to the Treasury Dept and argue that the other participant is acting criminally and needs to be kicked off the network. They can only refuse transactions on the basis that they were unauthorized by the account holders.
That's a much higher hurdle.
Cool story, bro. If it was so easy and you have the skills, why haven't you done it already?
And remember, the rule of law does not apply equally in today's world.
Because I'm already rich from a software startup, on the back 9 of my life, and don't care to help people who get their kicks posting racist slurs like a 12 year old.
It's a lot of work, and I'm an engineer. I make what I'm paid to make.
The biggest expense is legal.
There is an ungodly amount of paperwork to do in order to establish a bank or credit union. Paying someone else to do it, that's going to run into the hundreds of thousands or low millions.
Your typical short lifespan credit union is generally founded by the village idiot with a law degree, who has pretentions of being a big balls businessman.
The key step is to obtain a State Charter. This sounds hard, it's not. The hurdle is basically "do you have a business plan". If your business plan is "We're starting a online payment processor that will also offer traditional banking services like checking", and you sound like you can actually deliver it, then you'll get your charter. Hell, you might even get some business startup grants cuz that's the sort of new world tech business states are fighting each other for.
With a charter in hand, you open an account with the Federal Reserve (which functions much like any other bank account, you just need a bank charter to do it), and apply for FDIC insurance.
Then you're in business.
Now, there are requirements. You have to maintain certain levels (reserve requirements). But if you're not issuing any loans, just holding all deposits, paying no interest, and paying operating costs on fees... then maintaining reserves and thus solvency is not a problem. You can't be bank-runned if you have all the money in reserves. Now, why someone would WANT to bank with you under such terms is a mystery (to the fed) but it's not illegal.
What I described above is how paypal works anyway (no loans, everything paid for by fees).
Now, to actually do what we're proposing (replace paypal) you're gonna need some heavy hardware and a bunch of bespoke software. That's all separate from the cost of building a bank, and frankly the bigger problem.
But if an entity like subscribestar had established themselves as a bank first BEFORE going live, it would be almost impossible to prevent money from reaching them, at least by check/ach.
Around $10 million dollars.