Something needs to change in the digital payments sector. 1.5% is ok-ish but 3.25% to accept foreign cards in the EU is a lot of money!
I understand that costs are higher when using credit cards because of the credit part that introduces risk, but in my case for example I have a debit card that runs also over Mastercard, so either I have the money or I don't. Why should a merchant be charged the same fee of using a real credit card if the risk is highly reduced?
I still don't understand why it is so hard to break the Visa/Mastercard duopoly on card payments. Why isn't there a standard for payments that banks can implement? Why are Visa/Mastercard/Amex required? SEPA in EU is already something but it is taking ages for it to become an actual payment platform in everyday's life.
It's the chicken and egg problem... If you started a new card provider today, you'd need to get consumers onboard, banks onboard, merchants onboard, and every card machine in the world replaced to accept your new card type.
The closest we get to that is loyalty cards and gift cards that only work in one shop. Some of those have managed to be compatible with a few shops, but nowhere near what would be needed for a consumer to consider it a replacement for visa.
I totally understand you and you are perfectly right IMHO. This is why I don't understand why isn't there a payment standard, we are in 2023 already, the economic burden of keeping fattening those "old-school" card networks is absurd, it is billions and billions of dollars each year.
Lobbying is the only reason I see that keeps a payment standard from being implemented.
There is no standard because there are different currencies in different empires and different rulers of those empires. Asking why there isn't a unified standard is the same as asking why there isn't a one world government.
The economic burden of the "old-school" payment networks Visa and Mastercard is very low for both merchants and customers for what these networks provide. The economic burden and other burdens of a one world government would be immense in comparison.
Please remember that most people use other methods to transact larger amounts, so the fees are mostly for the convenience of small remote transactions.
It would be nice to work on a payment standard IMHO, it is something really world changing, but it isn't something that you or I can simply create in mama's basement and then post on medium to cater some attention.
> SEPA in EU is already something but it is taking ages for it to become an actual payment platform in everyday's life.
Is there anything stopping merchants from offering different prices to people based on different payment methods?
I assume the reason merchants do not list a discount for paying via SEPA or ACH or debit card or whatever local non credit card (and non Visa/Amex/MC) option, is because merchants benefit from the higher prices that people are willing to pay when using credit cards (compared to the cost of accepting credit cards).
In the US, Target is the only big retailer I know that discounts for using ACH (debiting directly from bank account). They give 5% off.
Interesting. So foreign cards have to be accepted at the same price?
I know credit card fees are capped in EU, so this might be a reasonable policy, but if merchants and domestic customers have to eat costs due to foreign card costs via higher prices for everyone, that does not seem fair.
Which is basically the government helping an oligopoly instead of fighting it. Of course, considering how attractive the idea of all transactions being trackable must be to governments this is hardly surprising.
Here's a sticker at a large Danish supermarket showing it isn't necessarily that simple.
It says local and foreign debit cards are free, but Danish credit cards cost 0.9375% extra and foreign ones 1.75% extra. Maybe the rule only applies in the Eurozone?
In some countries it is illegal to charge different prices based on which payment method is used.
Here in Italy for example there is a lot of discussion around this topic now that most stores are legally bound to accept digital payments but cannot charge a different price if you pay with card instead of cash.
I think this indirectly happens. I live in Haarlem, Netherlands, and some popular supermarkets in my area would not accept a VISA/Mastercard. They only accept Maestro(Which I think is cheaper for them because it is a debit card that Dutch banks give out). I found it surprising because that should mean they lose out on some business from so many expats that visit/live in Netherlands, but apparently not.
This happens in the US, too. A local (western US) example is WinCo Foods, a chain of grocery stores. The only cards they take are debit (and EBT, but that is a different issue). No credit cards.
Maestro and Mastercard Debit cost more or less the same for NL-issued cards, interchange is a fixed 2ct [1]. As Mastercard is getting rid of Maestro, Dutch banks will start issuing Debit Mastercards soon.
Probably the supermarkets will switch to only accept Mastercard Debit/Visa Debit.
> Is there anything stopping merchants from offering different prices to people based on different payment methods?
Yes, it is usually not allowed in your contract with the card payment providers. If you start doing it anyway - as some do - you risk them terminating the contract.
The problem with SEPA payment, is that it's great for the merchant and a net loss for the user, especially individual consumers.
From a UX perspective today, it will always be more cumbersome to initiate a SEPA transfer to the merchant. Some integrations offer a semblance of interactivity with your banking app in an attempt to streamline it, but nothing beats the simplicity entering your cards details or just showing your face to Apple pay. Then from a consumer protection perspective, if something wrong happen with your order or the merchant goes bust, you have no recourse if you initiated a SEPA CT. Card payments on the other hand give you a nice chain of large entities exposing themselves to the merchant's credit risk in front of you.
It can probably work in specific situations (e.g. if you have a niche website with a sophisticated audience ready to overcome the hurdles to acquire your widgets), but for these reasons alone I just can't see SEPA payments going anywhere near even a ridicule fraction of the market share held by legacy card networks yet.
This. I would never do a SEPA payment vs a credit card transaction unless there's a significant advantage to me as a user to go with SEPA. And the merchant can't give me a discount for using a specific payment which is not allowed under EU rules, so there's not much the merchant can do there.
In Finland with my fairly large bank the barrier is pretty much same if the card isn't already saved. Actually SEPA is easier as I only need to log in and confirm instead of having to provide CC details and log in to confirm the transfer.
Yeah this. SEPA (e.g. what is known in the Netherlands as Ideal) is easier than entering cc numbers. Unlock phone, open app, scan qr code, enter pin on phone, click OK. Much nicer and faster than entering 16 + 3 numbers, and don't even get me started on 3DSecure or whatever it's called bullshit.
SEPA Direct Debit has pretty good UX, I find. Just enter the bank account number, accept terms, done. In theory it's a bit more complicated as for B2C you're supposed to collect a real signature (which no one does) and for B2B there are additional rules (which most merchants also ignore), but in practice it works reasonably well. B2B SEPA direct debit is also much better for the merchant as money that has been successfully transferred cannot be refunded, unlike credit card payments where you can get chargebacks for 120 days...
There are multiple types of SEPA payments, I think you're talking about SEPA Credit Transfer (essentially making the bank transfer yourself).
On the other hand, for SEPA Direct Debit, not only is the interface quite reasonable (you enter your IBAN and confirm a mandate), but consumer protection is very high. You can chargeback no questions asked for 8 weeks, it will be immediately accepted and the merchant can't do anything about it. And as a customer, besides the 8 weeks no questions asked policy, you have 13 months to ask for a refund of an unauthorised transaction, with supporting evidence. In practice, the bank will always accept such a request too.
SEPA DD is suited for recurring payments as it relies on a mandate. It doesn’t make sense to set up a mandate for every one off txn, and at which point you’ve authorized the merchant to pull money from your account at anytime. The ball goes back to your court to contest afterwards, as well as keep track of all the mandates you’ve signed.
One funny thing is that some card transactions (e.g. contactless payments without PIN entry over 100€ for at least one payment processor, needs to be enabled by the merchant) actually don't go trough Visa/Mastercard but are already done via SEPA.
India built rupay, an alternative to visa and mastercard which has 0 charge to merchants. It is expanding internationally and works in neighboring countries.
Aside from this, most local payments happen over UPI so they cost 0 as well.
Visa and mastercard usage is declining in India since a few years despite rapid increase in digital adoption. Government banned master card, diners, express, etc issuance for not complying with local data storage rules for over a year and it did not impact much.
I think the solution is to run payment infrastructure at public level like many countries have done in Asia.
This is exactly what I mean and what I would like to see in the EU. I think the digital Euro is meant to be something similar but it is still vaporware ATM.
For non-us citizens, USD's either incur a conversation fee to another currency, or an international withdrawal fee. There is no way to get money out without paying one or other fee.
Took me years to find out how they're scamming me on the conversion charges/exchange rate.
Say you want to buy product in USD, and you come from non-USA country. Paypal would "helpfully" convert USD to your local currency using their own exchange rate (worse than any other one - goes without saying), charge the linked bank account (which probably is in USD anyway, to avoid paying for conversion fees), then the local bank would charge you again by converting the payment from the local currency to say USD because the account is in USD. Those practices probably cost me thousands over the years until I've figured out what was happening.
I've turned on the option (intentionally buried and difficult to find) that tells Paypal to charge me in the currency I've was purchasing (USD), and not to do the conversion. But the fuckers had a habit of flipping that option so you're caught off guard. Needless to say, been Paypal-free for years now. One can imagine how much Paypal and banks profit from this scammy/dark-pattern behaviour on a global scale.
As far as I understand, you can payout in USD on a EEA domiciled account, and you won’t be incurring any fees.
It’s the crossborder settlement which they charge for, which I don’t think is crazy, as it just reflects the underlying costs Stripe must be incurring themselves.
As someone who ran a business in multiple countries, the bank always charged similar fees for these transfers between accounts. Stripe letting me settle directly in the account where I want the money to land, rather than me having to log in to my bank and initiating a transfer manually where fees are ~the same is definitely a better option, which I’m happy they offer.
1% is enormous for this. I think the cost of a SWIFT transfer is maybe $3 to them, regardless of amount. If you're doing $100k/month of USD sales and payout once a week, it is a huge markup.
They are clearly losing money on their (really expensive) forex fees so are trying to recoup this by this payment.
There is no intrinsic reason I see why the fees are so high for this.
Edit to add: they actually use ACH for US bank USD payouts, so even less cost than SWIFT.
Again, in my understanding is Stripe not forcing you to—-as a EEA business——settle USD in a US domiciled account; you can settle the USD in an EEA domiciled account and not incur the cost. If you then want to repatriate the money to the US with your bank, you can do so yourself.
I also just looked it up how much this costs with my bank, and it's a minimum fee of $25 + agent/intermediary bank fees on top of it, for amounts less than $5,0000.
I assume that Stripe can negotiate better rates though, but for the sake of simple pricing, and cost-averaging over different amounts (which are, given that they serve the long tail, likely heavy weighted on smaller amounts), it is not inconceivable that this 1% is closer to cost than one might imagine.
Banks do not charge a percentage of the transfer for wires or ACH. It is a set fee, usually in the range of $15-35 (stripe probably pays less than a dollar). That is a huge difference between charging 1% of the transaction.
This was previously not possible but looks like they have allowed it now. That is the reason why I had a US USD account in the first place, for Stripe USD payouts. They did not allow USD payouts to any European accounts last time I checked a few years ago, only to US accounts.
The 1% is for all non local currency payouts. Example: "The primary currency for Stripe accounts in France is EUR. All other currencies fall under alternative currencies." "1% Of the payout amount, when you choose to payout in select alternative currencies." Ref https://stripe.com/docs/payouts/alternative-currencies
So basically this will result in very expensive payouts for anyone doing USD charges outside US or EUR charges outside Europe. Like many SaaS companies are. Charging any other currency is problematic for many customers so it is not really an option. Like I don't want to be charged in pesos for a SaaS that I am using.
The alternative is to have Stripe convert USD to my local currency. For a small 2% fee.
This has also been the case in Australia since Stripe added the ability to pay out to a USD account last year.
I was excited to ditch the 2% currency conversion fee - nope, just reduced to 1%. For what? A currency conversion fee can be somewhat defended, or, at the very least, “everyone else does it”...
Now I want my funds in the same currency you accepted them, and I have to pay for the privilege?
Some European alternatives you might be able to find/negotiate better fees with:
- mollie (Netherlands)
- adyen (Netherlands)
- Klarna (Sweden)
- Paylike (Denmark)
- Mangopay (Luxembourg)
- Quickpay (Denmark) (added in edit)
The ones I've tried of those, have an OK development experience, maybe not as polished as Stripe, but much better than the alternatives that were around before Stripe (huge hassle back then). Ideally, you'll support at least two providers you can switch between, if you can afford the development of supporting two, as at one point or another, it'll save your ass or at least a bit of money as fee structures change between providers. It'll also be easier to integrate a third one in the future when you eventually find the perfect one (until they turn into the next Stripe).
> Dispute fees (also known as chargebacks) will increase from €15 to €20. Due to costs for managing dispute evidence submissions, we'll no longer refund this fee if the customer's bank resolves the dispute in your favor.
This strikes me as weird. User buys something from me, regrets it and issues a chargeback, dispute gets started and bank says I did nothing wrong, so the charge still sticks, but Stripe gets to keep the fee for handling the dispute?
A dispute is not only for transactions you didn't perform, it is also for situations like not getting the purchased product or similar. So 3DSecure will significantly decrease fraud, not other disputes.
My experience is that disputes are 100% from Americans who are encouraged by banks to "just do a dispute" anytime they are dissatisfied with anything. And in 100% of these cases it is customers who forgot to cancel or just didn't need the service as much, not really any actual dissatisfaction. Most fraud is stopped by Stripe and not really a big issue, in some cases we do a manual check and it is obvious fraud (no account activity, info not matching, fake data entry etc) and we just refund the charge before any dispute is made.
On the other hand, the existence of a consumer-leaning disputes resolution system, while pretty unfair to merchants in some situations, is probably a big accelerator for e-commerce in general.
I'm much more likely to enter my card number somewhere online knowing that I'll be made whole if something doesn't work out than knowing I'll have to fight for my money back, submit evidence I might not have etc.
Just like with fraud [1], and for similar reasons, the optimal number of successful "false disputes" in a payments and commerce system is probably non-zero: Hopefully, for every dishonest/egregious dispute, merchants see dozens of customers that would otherwise not dare to do business with an unknown/new merchant.
Paypal is able to step in BETWEEEN - bevore the customer is able to start a stupid and complicated CHARGEBACK at his bank.
Very often you loose a paypal case.
But: That means only the CHARGE(money) goes back, but the bank can not take a 35$ fee for chargeback too.
You understand?
I am selling 99 cent downloads. On Paypal I loose nothing (99 Cent goes back)
On stupid systems like stripe, where they do not handle any customer-communication - I loose 20 Euros + 99 Cent. Complete desaster.
I will add a 5 Cent extra fee to stripe payments in the future to handle that high chargeback fee. That will work into paypals hands.
They go to their bank, they say: I have not done that.
And their bank wants to have their customer with them
- so they steal the money from the merchant. Thats what they are allowed to do.
Think about it:
a) The customers bank is the ONLY judge, they can say: Merchant, you lost the dispute.
b) The bank wants to do something in the favour of THEIR customer, why should be bank decide in the favour of a NON-CUSTOMER (the unknown merchant)
This system is complete bogus, nonsense and just stupid.
There is around 0,1% customers around who are just a...holes and try to get back some money. If they know how the system works, they do it. For example: If you loose your credit card you can go to the bank and say: All payments before date XY are not mine. There might be 1 illegal payment, but they can say: Everything since November was fraud. Bank will believe them.
I have "online customers" who did that, and I did not even get their contact details to sue them.
Also, as far as I can understand https://stripe.com/docs/disputes/how-disputes-work, Stripe doesn't actually do anything manual in the process, it's all handled by the users bank or automatically by Stripe (notifications, taking fees and so on). So how it got more expensive for Stripe?
Stripe is charged every time a user faces a dispute. These fees have been increasing in recent years.
Managing disputes is also a costly and manual process for our users. So we’ve invested heavily in ways to help mitigate disputes from occurring in the first place with Stripe Radar (incl. by default), or by using Chargeback Protection (where we cover the disputed amount and waive any fees without needing to submit any evidence).
> Stripe is charged every time a user faces a dispute.
Is this charge returned to Stripe if the bank rules in the favor of the Stripe user? Or did that change recently as well, as now Stripe won't hand back the fee in case the dispute is overturned.
Thanks a lot for jumping into the thread with some more facts.
That's right. Stripe is charged regardless of the dispute outcome (the networks don't refund the fee). So our focus is twofold: prevent disputes from happening in the first place and help users manage them if/when they occur.
Yes but doesn't Stripe pass that fee on to the merchant ? If a dispute is lost, the fees are not returned back to the merchant so I assume Stripe uses that to pay the network.
To simplify things, think of Stripe as an facilitator in the dispute process. Stripe has no influence over the outcome—it's at the sole discretion of the cardholder's bank. Stripe deducts a dispute fee to cover the cost charged to us for dispute submission.
In the past, we returned this fee even though the card networks don't reimburse us. This is no longer the case (we now pass through the fee).
So basically, you're saying that your dispute fee costs have increased...but you pass along all those charges to the merchant anyways...so it boils down to: you're just increasing fees because you can under the guise of expenses that aren't your own.
I'm happy to explain this in depth if you'd like clarity (my username at stripe.com) but no, that's incorrect.
We're now charged more for dispute submissions. These costs are set solely by the card networks and we'll no longer bear those costs (bringing us inline with the market).
No, the problem isn't that you're passing along the larger fees that you're being charged for disputes, the problem is the additional fees that you're charging on top of those fees, and not refunding the fees that are refunded to you when stripe/the merchant wins a dispute, which is decidedly non-standard based on the set of payment processors we use at my current company.
Hi smca - this helps, I was under the impression that Stripe is refunded the fees in scenarios where disputes are won. That seems to have been a misundertanding.
Having said that - I think there was a lot of room for nuance in this rollout, which kinda got shoved up into a one-size-fits-all policy.
I'll give my own business as a reference - I have a 100% chargeback "win" rate; including in cases where Stripe estimated low win success odds. Chargebacks have (so far) come exclusively from bad faith actors.
With this latest iteration - fledgling businesses like mine are massively exposed to competitors making bad-faith bookings and issuing chargebacks against us; which even if we were to successfully defend - would entirely bankrupt us.
Has Stripe explored a mitigation of a scenario such as this?
Following through on the same line of thought - has Stripe considered a more balanced approach where if merchants have a success rate of more than a certain threshold (which by all means can be high) - then they are more "protected" on chargebacks they win? It could be a much better balance in filtering out good vs bad actors on the merchant side.
Potentially also something to pitch to card networks - they will certainly not listen to individual merchants, but if I had to guess - they wouldn't ignore this sort of pitch from Stripe?
And if you were to do so - you would be building loyalty from your "good merchants" by providing a value offering beyond the market; the ones whom are less likely to encounter chargebacks to begin with (and win those they do encounter); since you'll then have a value prop ahead/better than the market. Which just seems like a sound long-game bet.
One person's thoughts etc etc - but the current version of the chargeback fee rollout - while well rationalized, also feels heavy handed and not with the usual finesse/nuance with which I've seen Stripe's usual policy modifications. Thought I'd throw my 2c into the mix.
Note that you are already incurring extra fees for those services, so saying you need to increase the price of chargebacks to cover development fees doesn’t ring very true to me.
No, they have to be with to a payment processor. But you can get a better deal than Stripe if you have a business mid-size and up. You can program that connection yourself, but honestly, if you are able to pull it off you will start selling that solution for a suitable price and that's where we are at today. And I think that is good.
The processor saves you significant effort for card transactions by simplifying your merchant relationship with the card processor. Technically, you can just talk directly to them over their API: https://developer.mastercard.com/apis
I think you typically need to have a key only. You could get that key from their admin page, and hand it to the abstraction layer. Seems simple enough?
Not sure what you mean by impractical API. If their API is not practical, then nobody would use it, I suppose. If it is barely practical, then an abstraction layer would be a godsent.
If I'm going to be charged 20 euros whether I succeed or not then for small disputes I may not bother spending the time to submit evidence anymore...
Edit:
I see that they have a Chargeback Protection product with costs 0.4% per transaction in which case they "cover the disputed amount and waive any dispute fees without needing to submit any evidence" (another comment by smca)... So cynically that sounds like a commercial tactic to sell that product!
The fee gets taken regardless. Also, too many disputes (guessing overturned disputes are calculated differently than uphold ones) can lead to further fines:
> If the dispute activity for your business exceeds the thresholds set by the networks for a prolonged period of time (usually multiple months), you might be subject to fines.
> Dispute fees (also known as chargebacks) will increase from €15 to €20. Due to costs for managing dispute evidence submissions, we'll no longer refund this fee if the customer's bank resolves the dispute in your favor.
It used to be that you got the fee refunded if it got resolved in your favor, but after the changes go into effect (10 April 2023), it won't be like that anymore.
Wow! In the language version they're showing me, they write the opposite. Translated from the page:
"Changes for disputes
Fees for disputes (also known as chargeback or recrediting) will increase from €15 to €20. If the customer's bank resolves the dispute in your favour, the full fee will be refunded."
Edit: After doing some more research, it seems that it is only US customers that will lose their dispute fee. If you choose English (United Kingdom) as your language, it says you can keep the fee if you win the dispute.
In English (UK) it still says "* we'll no longer refund this fee if the customer's bank resolves the dispute in your favor.*" (so much for British English spelling, by the way)
But you're right that at least ub Spanish (Spain), French (France), Italian, Portuguese (Brazil) it says that the fee will be refunded if the dispute is resolved in your favour.
If you exceed dispute thresholds dictated by card networks, they can place you in a "dispute monitoring program".
The fines imposed can be very high if you don't take steps to mitigate disputes. We have a vested interest in ensuring businesses on Stripe aren't affected by these programs. https://stripe.com/docs/disputes/monitoring-programs
All disputes. The purpose of the card networks' monitoring programs is to encourage businesses to prevent disputes from occurring in the first place. Some more on this here: https://stripe.com/docs/disputes/monitoring-programs/faqs
Your initial point seems sensible to me. We set a policy years ago that we ignore chargebacks other than accounting for them correctly. We have a very low rate of disputes and in our experience it sucks up a silly amount of time to deal with the few we do get (far more than recovering a typical B2C transaction in our industry is worth). There is no guarantee that you'll succeed and get any money back at all even if the dispute is blatant abuse and entirely without merit. And since now you're going to get hit with the fee in any case and you're going to get the black mark with the card networks in any case it doesn't make any sense for us to spend time and effort dealing with them. We just have to take the occasional hit as a cost of doing business that obviously shouldn't exist but does because cards.
It would be nice if some services like Github Sponsor or Substack or Hashnode would allow different providers integration. Right now, Stripe dominates the market still.
Devils advocate: is dis-incentivises businesses that causes a lot of charge back requests even if those requests are ultimately unsuccessful.
There was a spate of people selling PS5 boxes on Ebay a while back. They clearly said PS5 "box" but the word box is small and surrounded by "New" "Unwanted gift" etc and priced at the RRP of a PS5. So people bought them and mistakenly thinking they were getting a PS5. Ebay ultimately banned such products (I believe). But I can see a payment provider wanting to dissuade crappy products with a lot of unhappy customers.
Adyen is relatively solid if you know what you're doing, Mangopay felt like a small hippie solution in comparison.
The upside is Mangopay was pretty reactive when we needed a human to talk to, the downside being that many requests would just end in "tough luck, we're too smal for that"
But to be approved you need to talk with them. As long as what you're doing is a real company (and you have documentation to prove it), they'll approve you. But you do need to setup a proper business before being able to go live with payments.
> Ideally, you'll support at least two providers you can switch between, if you can afford the development of supporting two
It is however not that simple if you want to remember your customers payment information, and don’t want any PCI-DSS liability or obligations. You’ll need a card vaulting solution in the middle, which comes as additional burden (and cost!) on top of the other payment provider integration. There’s big volumes you need to process to offset all of this, and probably not ROI sensible for many.
Do you have any suggestion for "card vaulting providers"? This is interesting actually, store cards without PCI-DSS obligations and use those cards with the payment provider that makes the most sense at that point in time.
Spreedly, TokenEx, Very Good Security are some that I'm aware of.
I'm surprised Stripe hasn't come with their own multi-processing router solution for enterprises at this point; whichever major payment processor who would do this, could become a de facto choice as primary or secondary payment gateway for enterprises requiring this.
Even with a card vaulting solution I think it may be difficult to support more than one provider, at least for Visa and MasterCard, due to Visa's Stored Credentials Framework (SCF). SCF was a set of requirements for using stored cards that Visa originally announced would be required starting sometime around 2017, and MasterCard said they would adopt it too.
So many payment processors were going to fail to meet the deadline to implement it they moved it back a year. The main payment processor we use met that deadline and we started using it. But many others did not and it was pushed back another year. I'm not sure when it finally actually came into effect because I didn’t pay much attention after that.
Under SCF when you charge a card and intend to store that card you have to set a flag in the transaction signaling that intent. After the transaction you need to save the Visa or MasterCard assigned transaction ID.
Later, when you use the stored card there's flag you have to set that marks this transaction as using a stored card, a flag you have to set if the charge is merchant initiated (e.g., an automatic subscription renewal) rather than customer initiated (e.g., they order something from website and elect to put it on their on file card), and you have to provide the transaction ID of the transaction that was done when you first stored the card.
It's that prior transaction ID that is the problem. With many payment processors the transaction ID they give you is one they generate, not the one that Visa or MasterCard generates.
As part of implementing SCF those processors will remember the Visa or MasterCard transaction associated with transactions that had the "we are going to store this card" flag set, and so later when you use the stored card you just have to provide the transaction ID they gave you and they look up the Visa/MasterCard transaction ID to send to the card company.
So say you charge a new Visa card through provider X, setting the "we are going to store this card" flag. X gives you an X transaction number X-1234, which you remember, and X remembers that X-1234 means Visa transaction ID V918273.
A year later it is time to auto-renew that customer, and you want to do that through provider Y. But Y's interface expects a Y transaction ID. You can't give them X-1234 and have them do anything sensible with it.
As far as I can tell for many combinations of X and Y there is simply no way to do an on file charge at Y with a card that was put on file after an X transaction, except perhaps by at the time of the X transaction also doing something like a $1 authorize with Y and hoping that the Y transaction ID for that will work with Y for later doing an actual charge.
You need some way to get the Visa/MasterCard transaction ID, and you need X and Y to allow you to provide a Visa/MasterCard transaction ID for the SCF stuff.
>This strikes me as weird. User buys something from me, regrets it and issues a chargeback, dispute gets started and bank says I did nothing wrong, so the charge still sticks, but Stripe gets to keep the fee for handling the dispute?
You should include this in your contract terms with the customer and collect the dispute fee from them.
It's not reasonable of you to expect Stripe to just absorb this cost.
In the case of card fraud, you don’t have a contract with the actual account owner. So taking that money results in THE COMPANY fraudulently charging a card. Again.
In the case of an actual dispute (non-shipment, etc) you do have an actual contract. However, this smells like extortion(?). You didn’t deliver on your end of the contract (deliver goods) but are penalizing the other side for your failure to deliver. It won’t go over well when you get the class-action suit, and all the little ones in-between.
> User buys something from me, regrets it and issues a chargeback, dispute gets started and bank says I did nothing wrong, so the charge still sticks, but Stripe gets to keep the fee for handling the dispute?
I am surprised how little Stripe charges. I processed close to 100MM since 2012 via different merchants, including Polcard, banks such as Harris, Wells, BOA, etc, and even 10 years ago typical fee was $35. And no, they never give you the fee back; if you win they give you the charge amount back, but the processing fee always remained with MSP.
On the upside, over the years credit cards vendors made it harder to file the dispute. Yes its easier to do it online with few clicks, but that's not a dispute yet. These days most people sit in banks and research into charge, including calling merchant, before they submit a CB with the card system.
If a customer has already entered its credit card through Stripe for a recurring subscription, how do you migrate to another provider without asking again credit card?
> This strikes me as weird. User buys something from me, regrets it and issues a chargeback, dispute gets started and bank says I did nothing wrong, so the charge still sticks, but Stripe gets to keep the fee for handling the dispute?
It's about risk. This requires time and effort to reconcile. Someone has to do something. The fee covers this. Does it suck? For you, sure. For the customer? No. It's peace of mind. It's why people willingly shop online. Don't like it? Negotiate your own terms with a bank for your own merchant account.
And yes the charge sticks. If you have 1000 purchases and all 1000 people dispute, that's a hassle the bank needs to deal with. Compared to someone with 1000 purchases with 1 dispute, even if that dispute is valid, it's much less work. Much less costly for the bank. So part of your responsibility as a merchant is to prevent that as much as possible.
> Stripe gets to keep the fee for handling the dispute?
No, the bank is keeping the money. Stripe had the money taken. This is passed on to you.
It is still weird and one-sided. Merchants are still being abused and in some cases that still causes them serious harm through no fault of their own. Unregulated chargebacks should still be legislated out of existence - preferably along with the whole anachronistic card payments system. It is still insane that so much everyday commerce relies on such an antiquated, dangerous, inefficient system in the 21st century.
So it's entirely reasonable for someone who isn't intimately familiar with how all of this actually works to be surprised by the situation and think it's broken. Because it is. It's not really Stripe's fault here though.
It’s very normal. It’s why a lot of services immediately ban you for life if you ever issue a chargeback (regardless of validity).
Stripe was the sole sensible service out there (that I know of) where chargebacks wouldn’t hit a small business as hard as long as they could prove they were in the right.
But it seems Stripe is becoming everything it originally railed against.
just screenshots from the server backend showing that the customer has actually used the product he has purchased as well as written confirmation that we never received a request for a refund
> saying the opposite of the complaint, and still lost.
yeah. even if its obvious that the customer made a fraudulent chargeback, you may loose. my only point was that not all chargebacks are lost, it is possible to win a good percentage.
i wish Stripe had an option to auto-block all customers who requested a chargeback from ever purchasing again...
50% seems incredibly high. Of the 500 odd chargebacks we've had over the years, we've won 2.
Each one we send detailed IP logs, a graph of the customers use of the service, and a letter on the company letterhead stating when the person signed up, what the service is, and how they've used it. Each time (barring those two), we lose.
I'm sure some are legit frauds, but I know factually from speaking to our customers that some of them are just abusing the system of carte blanche by the banks.
We were in a fairly wonky business and we won nearly all of them. Maybe due to the fact they were expected and our evidence of every step of the process was solid.
If you are a fly by night op like amazon with inventory commingling I guess you don’t stand a chance.
Bank decides what they want to give their customer back. They ignore all your facts. Why should the BANK give a stranger money, if they can give money to their customer?
None of these services is Merchant of Record (that handles taxes). Neither is Stripe.
At this day and age, I don't understand why would any small to medium business that sells online internationally use anything else but Merchant of Records. International taxes are just a PITA that it's not worth trading a few percent of payment processor fee for a full-blown team of international tax accountants.
Despite the clear advantages of the MoR model for many small and growth businesses there is still little competition in that space. Paddle is always the one that comes to mind because there are so few alternative resellers catering for the same merchants right now. The lack of a vibrant, competitive market for MoRs is a significant risk that has to be weighed against the advantages.
But in 5-10 years I won't be surprised if Paddle is the new Stripe because of that. It has the same feeling of being a disruptive upstart but solving a real and significant problem that Stripe had at the start. And with the way the political winds have been blowing in much of the world I can only see that problem becoming more significant for more businesses over the next few years.
I doubt any of those payment providers mentioned does not take the chargeback fee on a credit-card dispute.
Anyway, they might handle customer-communication with the merchant better.
Stripe offers nothing. If the customer could "contact" the seller, everyhting would work out better.
Just think - you have only 11 CHARS(!!!) to describe your service, thats what the customer sees on his monthyl CC bill. I am unable to describe it to everc customer in 11 chars, so 1 out of 1000 belives it was fraud because people do not remember what they bought online.
Did HNers here not realize that Stripe is slowly becoming like PayPal, given the customer support stories of random locked funds and accounts for months?
The alternative has always been to use multiple gateways.
Once, they were young and innovative. Now they just do bad collaborations (Amazon) and release turds. The places which once promoted them are now doing the opposite.
> payouts will be higher due to increases in network costs (in recent years, major card networks have introduced several new fees and increased existing fees), as well as increases in underlying service costs.
Can someone from the industry offer more colour on what this actually means?
It strikes me that pricing for companies like Stripe should go down, not up in the long run. They're fairly well insulated from inflation (as pricing is % of transaction value), so the only reason I can think of for price _increases_ would be increased regulatory burden or some sort of structural industry change.
The vagueness with which Stripe justifies the price increase makes me think this is not supported by actual cost increases, but by a desire to increase profits. (which, hey, if you can put prices up and customers won't leave, then great - but it would be good to know the actual reason)
Banks starting to charge more for (crossborder) transfer, Visa/MC charge more for tokenized card payments, which they mandate adoption of, and most likely more of this.
I dont know if it’s common in other countries, but Canadian banks offer USD denominated accounts. From the wording, it seems like only if you are paying USD into a US bank account you pay the fee. Presumably paying USD into a non US bank account (in USD) wouldn’t incur this fee. At least I’d hope so!
We use Wise but their USD accounts are US-domiciled. So we have 3 options:
- Continue paying out to Wise and incur an additional 1% fee (~$30k per year)
- Use Stripe for currency conversion which is additional 2% fee (~$60k per year
- Find a UK-domiciled USD account to pay out to. Might be possible - no idea really. Need to look into it.
> Find a UK-domiciled USD account to pay out to. Might be possible - no idea really. Need to look into it.
FWIW one of these was readily available from my existing bank (Barclays) last time I needed one (~10yrs ago). Bit of hoop-jumping to go through, but definitely worth it for $30k/year.
At first I thought, "well, inflation is affecting everyone." Then I realized if prices are going up due to inflation, Stripe's collected fees go up anyway. So now they're benefitting to the second degree with a higher percentage of already inflating revenues ;-) We'll put up our prices more to counteract it, and on it goes.
It's not a terrible deal even at this level. We routinely see 4-5% creamed off the top of wire transfers we receive from the US through exchange rate variations, random bank fees, etc. It's the cost of doing global business for us.
> We routinely see 4-5% creamed off the top of wire transfers we receive from the US through exchange rate variations, random bank fees, etc.
Hmm, I'm in the UK, and the variance in currerncy exchange we see is usually 2.4% in the bank's favour, usually with an additional fixed fee of £20. 5% sounds like madness!
For EU bank transfers, it's more like a 2% exchange variance, with zero fixed fee... so Stripe is now looking expensive, at least for our UK and EU payments :(
Hmm, I'm in the UK, and the variance in currerncy exchange we see is usually 2.4% in the bank's favour, usually with an additional fixed fee of £20. 5% sounds like madness!
I'm including variance from HMRC's published rates as well, so that can be a few percent on its own if the USDGBP shifted. We do find that some customers are worse than others though. I suspect some use local banks and are eating fees along the route and it all adds up. With some customers we get every single penny expected. Wire transfers seem to be quite messy and unpredictable compared to card payments.
And what's this new nonsense about increased costs for "premium" cards?
From here[0], it describes these cards as "Commercial, corporate, or business cards issued by Visa and Mastercard" - but why would Stripe charge more for the use of such cards? Surely the chargeback rate for businesses must be orders of magnitude lower than that of consumer cards?
Isn't it the case that these 'premium' cards usually require full balance settlement each month? In which case there is no opportunity for the card issuer to earn interest on outstanding balances as there is with personal credit cards so the card issuers add the 'lost' income to the transaction fee?
Possibly because the actual all-in cost including fraud set-aside is quite high and if a fixed fee were charged it would in many cases exceed the transaction value?
In other words, if it costs 10 units on average to process a transaction then the payment service isn't going to be worthwhile for any transaction less than 200 units. All transactions much higher than 200 units would see a reducing percentage of the transaction as processing costs.
Instead, everyone gets charged a percentage of the transaction value so that the large transactions subsidise those with a low value and this enables small value transactions to be seen as cost-effective by sellers.
Risk of fraud. Moving the money is not expensive, but if a $10k transaction turns out to be fraudulent then you're on the line for a big chunk of money. If you know your fraud rate is ~1%, then if you charge 1.5% on all transactions then over enough transactions you can cover the fraudulent ones and have some profit left over.
3.25% for USD card for EU business + 0.5% for stripe tax + 0.4% for invoice + 0.5% for stripe checkout. It really adds up!
MasterCard and Visa are mostly to blame here. They haven't innovated at all in the past 30 years and the fees they charge are wildly out of balance with the service they provide. They're awful, and I can't wait to see these credit card companies crash and burn when they get some real competition.
MasterCard and Visa as long as keep their moat, they don't need to innovate. Big companies like that will not innovate enough to make fees low. Yearly operating expenses of VISA as a company is nearly $10B with a net income of almost $15B. Not hard to make the math how fees just make the income and moat bigger.
This ain't as bad as international PayPal... We (EU company) have clients paying from abroad via PayPal. I can't figure out what to do with this. We're being hit with 4.7% PayPal international fee, then ~ 3.75% fee to convert USD to our local currency to withdraw to our bank account. (PayPal won't let us withdraw USD.) Then another 2-3% to convert it back to USD in our bank to pay our supplier in USD. Imagine the total.
And the number of our PayPal-paying customers keeps growing. For some mysterious reasons it is convenient for people in very remote parts of the world to use PayPal. Direct credit card payment gateway and wire transfers are significantly more difficult for them.
I think the crux of it is that in many places in the world, credit cards are seen less like "temporary float" (like they are in the US) and more like "you pay for everything with a short term loan"?
So CCs are a lot less common. Bank cards (debit) are a lot more common. But (and feel free to correct me on this) I think their fraud handling story is still not as good as the story on credit cards.
So PayPal is seen as not-debt and also provides more fraud protection. And somehow despite their absurdly bad rap elsewhere, people look favorably upon the PayPal brand. And so here we are.
Have you thought about charging customers in Euro? Anytime I (an EU citizen) buy something from a US company, I'm charged in USD and have to cover the conversion fee. So why not do the same?
The point is, we're in the Czech Republic, so charging in Crowns is not an option. And we wouldn't be able to get Euro out of PayPal anyways, only Crowns.
Paypal won't allow you to add account in different currency than main currency of country you are based at. So if you are based in Switzerland they allow you to use Swiss franc account only. And they will insist on them making the conversion - they won't pay out USD or EUR.
I do not like paypal(very shady business) but still use it as a proxy - I do not trust my CC data to some small merchant on the internet. PayPal just books directly from my bank account. I am not sure, however, if it adds some security.
In the UK at least, you can get Paypal to add a US domiciled bank account (on ACH) and pay out that way to avoid this problem; we had to go via support to get that setup. We already had a US bank account (with HSBC) to avoid Stripe's forex charges but it was complicated to setup. A decent alternative is Wise's option; although HSBC have something called HSBC Global Wallet now which would have simplified things a lot.
We're able to offer lower card pricing with Link because it has much higher conversion rates (7% for logged-in Link customers, 2% overall).
It's clear that the card networks are committed to their higher fees. As a result, we’ve invested in lower cost options. That doesn't have to be Link (although it has tangible benefits), as there are cheaper non-card payment methods:
• Bank transfers (0.5% per transaction, capped at €5.00)
• SEPA Direct Debit (€0.35 per transaction)
• Bacs Direct Debit (1% starting at 20p, capped at £2)
Some on this forum may even say it's great that the APIs provided enable someone to build this additional payment app on top of Stripe that makes it easier for you to take payment in exchange for a 180 / 4500 = 4% cut. However maybe you should look into lower cost payment methods if possible.
Looking at the definition of "premium cards"[0] they're actually business/commercial/corporate cards, not premium consumer cards. A horrendous term that's bound to cause confusion.
The scariest part of this pricing split is that Stripe seems to be determining the fee "based on the information available from card networks at point of capture", instead of being directly told what the card type is, and even allude to this determination being potentially incorrect.
This gets even more frustrating when you think that business spend is on average higher than personal/consumer spend, so charging a higher fee for this is just a triple whammy.
It's easy to crucify Stripe for this, but this is probably a product of a cost review they're undertaking as part of IPO/next round prep (if The Information is anything to go by). We need a new Visa/Mastercard.
This is not about actual premium cards. Premium cards are defined by Stripe as:
> Commercial, corporate, or business cards issued by Visa and Mastercard
The reason is that in 2015 the EU capped interbank fees to 0.2% for debit cards and 0.3% for credit cards. Visa and Mastercard (and issuing banks) managed to carve out an exemption for payment cards that are issued to businesses. These cards do have much higher fees. I'm actually surprised that Stripe has refrained so far from charging more for business cards.
It's still wrong that I would pay extra for those cards.
I understand that different networks have different fees. But I expect one type of card to cost me the same.
When you go to a store, you pay the same price, regardless of which card you have. What would be your reaction if you were charged more because you're using a specific type of card?
I can't ask my customers to foot the bill, so it's effectively 0.4% I lose.
Stripe has announced recent enterprise wins (Amazon, BMW) but these are negotiated deals with less margin. Seems like as they increase their share of enterprise they are simultaneously turning the screw on SMBs and start ups.
Stripe has the worst DISPUTE Handling on the market.
Compared to PAYPAL they simply offer "nothing".
They do not help in the communication with the buyer, so the buy has no other option than to start a dispute with the bank. In 15 years I never had one BANK-CHARGEBACK with Paypal - simply because Paypal has installed a communication system between BUYER and SELLER. Stripe not.
On Paypal I can work it out with the customer every time, or Paypal will say: "We send back that money", or tells the custome "you got the goods, you loose"
Stripe is comparable expensive (1.5% fee) compared to what big companies pay (0.1%) handling payments. Customers do believe that there is NO FEE at all for payments, they believe they just get back their money.
I am handling payments of 0.99 Euros..that has become impossible with STRIPE now, if there is a risk of paying back 20 Euros dispute fee.
Simple.
Add a 5 Cent Payment fee to every STRIPE Payment.
That is still legal. Customers do not like it of course to see different prices.
But hey, thats how you have to teach them.
Paypal is better in disputes..but its also more expensive (for me).
The good thing is: In the future I do not have to care about disputes on stripe, I can just upload a paper saying "fuck you all"..I loose my money anyway.
243 comments
[ 2.8 ms ] story [ 294 ms ] threadI understand that costs are higher when using credit cards because of the credit part that introduces risk, but in my case for example I have a debit card that runs also over Mastercard, so either I have the money or I don't. Why should a merchant be charged the same fee of using a real credit card if the risk is highly reduced?
I still don't understand why it is so hard to break the Visa/Mastercard duopoly on card payments. Why isn't there a standard for payments that banks can implement? Why are Visa/Mastercard/Amex required? SEPA in EU is already something but it is taking ages for it to become an actual payment platform in everyday's life.
The closest we get to that is loyalty cards and gift cards that only work in one shop. Some of those have managed to be compatible with a few shops, but nowhere near what would be needed for a consumer to consider it a replacement for visa.
Lobbying is the only reason I see that keeps a payment standard from being implemented.
The economic burden of the "old-school" payment networks Visa and Mastercard is very low for both merchants and customers for what these networks provide. The economic burden and other burdens of a one world government would be immense in comparison.
Please remember that most people use other methods to transact larger amounts, so the fees are mostly for the convenience of small remote transactions.
I dunno, that just sounds too soul destroying to me.
Is there anything stopping merchants from offering different prices to people based on different payment methods?
I assume the reason merchants do not list a discount for paying via SEPA or ACH or debit card or whatever local non credit card (and non Visa/Amex/MC) option, is because merchants benefit from the higher prices that people are willing to pay when using credit cards (compared to the cost of accepting credit cards).
In the US, Target is the only big retailer I know that discounts for using ACH (debiting directly from bank account). They give 5% off.
I think there's an EU rule about that. I've seen a business (justeat) charge a card-processing fee for cash-on-delivery orders.
https://europa.eu/youreurope/citizens/consumers/shopping/pri...
I know credit card fees are capped in EU, so this might be a reasonable policy, but if merchants and domestic customers have to eat costs due to foreign card costs via higher prices for everyone, that does not seem fair.
No, only regulated cards have to be accepted at that price.
So a surcharge can be charged for EU commercial cards which also cost > 2% and are not subject to the interchange regulation.
Swiss (the airline), for example does that.
It says local and foreign debit cards are free, but Danish credit cards cost 0.9375% extra and foreign ones 1.75% extra. Maybe the rule only applies in the Eurozone?
https://imgur.com/a/UDnathK
Here in Italy for example there is a lot of discussion around this topic now that most stores are legally bound to accept digital payments but cannot charge a different price if you pay with card instead of cash.
Probably the supermarkets will switch to only accept Mastercard Debit/Visa Debit.
[1]: https://www.mastercard.com/content/dam/public/mastercardcom/...
Yes, it is usually not allowed in your contract with the card payment providers. If you start doing it anyway - as some do - you risk them terminating the contract.
From a UX perspective today, it will always be more cumbersome to initiate a SEPA transfer to the merchant. Some integrations offer a semblance of interactivity with your banking app in an attempt to streamline it, but nothing beats the simplicity entering your cards details or just showing your face to Apple pay. Then from a consumer protection perspective, if something wrong happen with your order or the merchant goes bust, you have no recourse if you initiated a SEPA CT. Card payments on the other hand give you a nice chain of large entities exposing themselves to the merchant's credit risk in front of you.
It can probably work in specific situations (e.g. if you have a niche website with a sophisticated audience ready to overcome the hurdles to acquire your widgets), but for these reasons alone I just can't see SEPA payments going anywhere near even a ridicule fraction of the market share held by legacy card networks yet.
Charging a fee is not allowed, but giving discounts for specific payment methods are AFAIK.
I hate trying to remember my cc number, expiration date, and CVS... And then doing that exact same thing above.
1. Click "Pay with Mobilepay"
2. Enter phone number, or confirm it if if the merchant already knows this
3. Press notification on phone, fingerprint, and swipe right to approve.
I'm not sure how this appears to the business, but to me it looks like any other payment or transfer on my bank statement.
On the other hand, for SEPA Direct Debit, not only is the interface quite reasonable (you enter your IBAN and confirm a mandate), but consumer protection is very high. You can chargeback no questions asked for 8 weeks, it will be immediately accepted and the merchant can't do anything about it. And as a customer, besides the 8 weeks no questions asked policy, you have 13 months to ask for a refund of an unauthorised transaction, with supporting evidence. In practice, the bank will always accept such a request too.
Ethereum solves this, just use stablecoins
Aside from this, most local payments happen over UPI so they cost 0 as well.
Visa and mastercard usage is declining in India since a few years despite rapid increase in digital adoption. Government banned master card, diners, express, etc issuance for not complying with local data storage rules for over a year and it did not impact much.
I think the solution is to run payment infrastructure at public level like many countries have done in Asia.
Thanks for sharing!
https://nordicpayments.eu/
This is absurd. A 1% fee to transfer USD to a USD bank account?
The alternative is to charge in another currency - which Stripe will put a 2% currency fee on.
This is already on top of their expensive transaction costs.
Will actively look for alternatives now.
People from Stripe will probably appear in this discussion any moment now. It’ll be interesting seeing them try to explain this one.
For non-us citizens, USD's either incur a conversation fee to another currency, or an international withdrawal fee. There is no way to get money out without paying one or other fee.
Coincidentally they added the 3% withdrawal fee soon after Wise became a popular bank account option. PayPal was a great choice until then!
So you can open an USD card on wise and withdraw there?
But they probably have a limit? If yes, there's no workaround?
Maybe if I ever have to implement PayPal again I’ll test it out :)
Say you want to buy product in USD, and you come from non-USA country. Paypal would "helpfully" convert USD to your local currency using their own exchange rate (worse than any other one - goes without saying), charge the linked bank account (which probably is in USD anyway, to avoid paying for conversion fees), then the local bank would charge you again by converting the payment from the local currency to say USD because the account is in USD. Those practices probably cost me thousands over the years until I've figured out what was happening.
I've turned on the option (intentionally buried and difficult to find) that tells Paypal to charge me in the currency I've was purchasing (USD), and not to do the conversion. But the fuckers had a habit of flipping that option so you're caught off guard. Needless to say, been Paypal-free for years now. One can imagine how much Paypal and banks profit from this scammy/dark-pattern behaviour on a global scale.
It’s the crossborder settlement which they charge for, which I don’t think is crazy, as it just reflects the underlying costs Stripe must be incurring themselves.
As someone who ran a business in multiple countries, the bank always charged similar fees for these transfers between accounts. Stripe letting me settle directly in the account where I want the money to land, rather than me having to log in to my bank and initiating a transfer manually where fees are ~the same is definitely a better option, which I’m happy they offer.
They are clearly losing money on their (really expensive) forex fees so are trying to recoup this by this payment.
There is no intrinsic reason I see why the fees are so high for this.
Edit to add: they actually use ACH for US bank USD payouts, so even less cost than SWIFT.
I also just looked it up how much this costs with my bank, and it's a minimum fee of $25 + agent/intermediary bank fees on top of it, for amounts less than $5,0000.
I assume that Stripe can negotiate better rates though, but for the sake of simple pricing, and cost-averaging over different amounts (which are, given that they serve the long tail, likely heavy weighted on smaller amounts), it is not inconceivable that this 1% is closer to cost than one might imagine.
The 1% is for all non local currency payouts. Example: "The primary currency for Stripe accounts in France is EUR. All other currencies fall under alternative currencies." "1% Of the payout amount, when you choose to payout in select alternative currencies." Ref https://stripe.com/docs/payouts/alternative-currencies So basically this will result in very expensive payouts for anyone doing USD charges outside US or EUR charges outside Europe. Like many SaaS companies are. Charging any other currency is problematic for many customers so it is not really an option. Like I don't want to be charged in pesos for a SaaS that I am using.
The alternative is to have Stripe convert USD to my local currency. For a small 2% fee.
I was excited to ditch the 2% currency conversion fee - nope, just reduced to 1%. For what? A currency conversion fee can be somewhat defended, or, at the very least, “everyone else does it”...
Now I want my funds in the same currency you accepted them, and I have to pay for the privilege?
- mollie (Netherlands)
- adyen (Netherlands)
- Klarna (Sweden)
- Paylike (Denmark)
- Mangopay (Luxembourg)
- Quickpay (Denmark) (added in edit)
The ones I've tried of those, have an OK development experience, maybe not as polished as Stripe, but much better than the alternatives that were around before Stripe (huge hassle back then). Ideally, you'll support at least two providers you can switch between, if you can afford the development of supporting two, as at one point or another, it'll save your ass or at least a bit of money as fee structures change between providers. It'll also be easier to integrate a third one in the future when you eventually find the perfect one (until they turn into the next Stripe).
> Dispute fees (also known as chargebacks) will increase from €15 to €20. Due to costs for managing dispute evidence submissions, we'll no longer refund this fee if the customer's bank resolves the dispute in your favor.
This strikes me as weird. User buys something from me, regrets it and issues a chargeback, dispute gets started and bank says I did nothing wrong, so the charge still sticks, but Stripe gets to keep the fee for handling the dispute?
I'm much more likely to enter my card number somewhere online knowing that I'll be made whole if something doesn't work out than knowing I'll have to fight for my money back, submit evidence I might not have etc.
Just like with fraud [1], and for similar reasons, the optimal number of successful "false disputes" in a payments and commerce system is probably non-zero: Hopefully, for every dishonest/egregious dispute, merchants see dozens of customers that would otherwise not dare to do business with an unknown/new merchant.
[1] https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...
Paypal is able to step in BETWEEEN - bevore the customer is able to start a stupid and complicated CHARGEBACK at his bank. Very often you loose a paypal case. But: That means only the CHARGE(money) goes back, but the bank can not take a 35$ fee for chargeback too.
You understand?
I am selling 99 cent downloads. On Paypal I loose nothing (99 Cent goes back) On stupid systems like stripe, where they do not handle any customer-communication - I loose 20 Euros + 99 Cent. Complete desaster.
I will add a 5 Cent extra fee to stripe payments in the future to handle that high chargeback fee. That will work into paypals hands.
And their bank wants to have their customer with them - so they steal the money from the merchant. Thats what they are allowed to do.
Think about it: a) The customers bank is the ONLY judge, they can say: Merchant, you lost the dispute. b) The bank wants to do something in the favour of THEIR customer, why should be bank decide in the favour of a NON-CUSTOMER (the unknown merchant)
This system is complete bogus, nonsense and just stupid.
There is around 0,1% customers around who are just a...holes and try to get back some money. If they know how the system works, they do it. For example: If you loose your credit card you can go to the bank and say: All payments before date XY are not mine. There might be 1 illegal payment, but they can say: Everything since November was fraud. Bank will believe them.
I have "online customers" who did that, and I did not even get their contact details to sue them.
Managing disputes is also a costly and manual process for our users. So we’ve invested heavily in ways to help mitigate disputes from occurring in the first place with Stripe Radar (incl. by default), or by using Chargeback Protection (where we cover the disputed amount and waive any fees without needing to submit any evidence).
Is this charge returned to Stripe if the bank rules in the favor of the Stripe user? Or did that change recently as well, as now Stripe won't hand back the fee in case the dispute is overturned.
Thanks a lot for jumping into the thread with some more facts.
To simplify things, think of Stripe as an facilitator in the dispute process. Stripe has no influence over the outcome—it's at the sole discretion of the cardholder's bank. Stripe deducts a dispute fee to cover the cost charged to us for dispute submission.
In the past, we returned this fee even though the card networks don't reimburse us. This is no longer the case (we now pass through the fee).
We're now charged more for dispute submissions. These costs are set solely by the card networks and we'll no longer bear those costs (bringing us inline with the market).
Having said that - I think there was a lot of room for nuance in this rollout, which kinda got shoved up into a one-size-fits-all policy.
I'll give my own business as a reference - I have a 100% chargeback "win" rate; including in cases where Stripe estimated low win success odds. Chargebacks have (so far) come exclusively from bad faith actors.
With this latest iteration - fledgling businesses like mine are massively exposed to competitors making bad-faith bookings and issuing chargebacks against us; which even if we were to successfully defend - would entirely bankrupt us.
Has Stripe explored a mitigation of a scenario such as this?
Following through on the same line of thought - has Stripe considered a more balanced approach where if merchants have a success rate of more than a certain threshold (which by all means can be high) - then they are more "protected" on chargebacks they win? It could be a much better balance in filtering out good vs bad actors on the merchant side.
Potentially also something to pitch to card networks - they will certainly not listen to individual merchants, but if I had to guess - they wouldn't ignore this sort of pitch from Stripe?
And if you were to do so - you would be building loyalty from your "good merchants" by providing a value offering beyond the market; the ones whom are less likely to encounter chargebacks to begin with (and win those they do encounter); since you'll then have a value prop ahead/better than the market. Which just seems like a sound long-game bet.
One person's thoughts etc etc - but the current version of the chargeback fee rollout - while well rationalized, also feels heavy handed and not with the usual finesse/nuance with which I've seen Stripe's usual policy modifications. Thought I'd throw my 2c into the mix.
From memory they have legal obligation to open an API and give access, but no real penalty if it doesn't work or is utterly garbage or impractical.
Not sure what you mean by impractical API. If their API is not practical, then nobody would use it, I suppose. If it is barely practical, then an abstraction layer would be a godsent.
If I'm going to be charged 20 euros whether I succeed or not then for small disputes I may not bother spending the time to submit evidence anymore...
Edit: I see that they have a Chargeback Protection product with costs 0.4% per transaction in which case they "cover the disputed amount and waive any dispute fees without needing to submit any evidence" (another comment by smca)... So cynically that sounds like a commercial tactic to sell that product!
> If the dispute activity for your business exceeds the thresholds set by the networks for a prolonged period of time (usually multiple months), you might be subject to fines.
https://stripe.com/docs/disputes/measuring
Yes, that's my point.
The fee gets paid back in full to you by Stripe if you win the dispute.
https://support.stripe.com/questions/pricing-updates-for-bus...
> Dispute fees (also known as chargebacks) will increase from €15 to €20. Due to costs for managing dispute evidence submissions, we'll no longer refund this fee if the customer's bank resolves the dispute in your favor.
It used to be that you got the fee refunded if it got resolved in your favor, but after the changes go into effect (10 April 2023), it won't be like that anymore.
"Changes for disputes Fees for disputes (also known as chargeback or recrediting) will increase from €15 to €20. If the customer's bank resolves the dispute in your favour, the full fee will be refunded."
Edit: After doing some more research, it seems that it is only US customers that will lose their dispute fee. If you choose English (United Kingdom) as your language, it says you can keep the fee if you win the dispute.
But you're right that at least ub Spanish (Spain), French (France), Italian, Portuguese (Brazil) it says that the fee will be refunded if the dispute is resolved in your favour.
Oops.
It will be interesting to see exactly who is going to have this change imposed on them.
The fines imposed can be very high if you don't take steps to mitigate disputes. We have a vested interest in ensuring businesses on Stripe aren't affected by these programs. https://stripe.com/docs/disputes/monitoring-programs
There was a spate of people selling PS5 boxes on Ebay a while back. They clearly said PS5 "box" but the word box is small and surrounded by "New" "Unwanted gift" etc and priced at the RRP of a PS5. So people bought them and mistakenly thinking they were getting a PS5. Ebay ultimately banned such products (I believe). But I can see a payment provider wanting to dissuade crappy products with a lot of unhappy customers.
The upside is Mangopay was pretty reactive when we needed a human to talk to, the downside being that many requests would just end in "tough luck, we're too smal for that"
We ended up moving to Adyen for that reason.
But to be approved you need to talk with them. As long as what you're doing is a real company (and you have documentation to prove it), they'll approve you. But you do need to setup a proper business before being able to go live with payments.
It is however not that simple if you want to remember your customers payment information, and don’t want any PCI-DSS liability or obligations. You’ll need a card vaulting solution in the middle, which comes as additional burden (and cost!) on top of the other payment provider integration. There’s big volumes you need to process to offset all of this, and probably not ROI sensible for many.
I'm surprised Stripe hasn't come with their own multi-processing router solution for enterprises at this point; whichever major payment processor who would do this, could become a de facto choice as primary or secondary payment gateway for enterprises requiring this.
1. https://github.com/juspay/hyperswitch
So many payment processors were going to fail to meet the deadline to implement it they moved it back a year. The main payment processor we use met that deadline and we started using it. But many others did not and it was pushed back another year. I'm not sure when it finally actually came into effect because I didn’t pay much attention after that.
Under SCF when you charge a card and intend to store that card you have to set a flag in the transaction signaling that intent. After the transaction you need to save the Visa or MasterCard assigned transaction ID.
Later, when you use the stored card there's flag you have to set that marks this transaction as using a stored card, a flag you have to set if the charge is merchant initiated (e.g., an automatic subscription renewal) rather than customer initiated (e.g., they order something from website and elect to put it on their on file card), and you have to provide the transaction ID of the transaction that was done when you first stored the card.
It's that prior transaction ID that is the problem. With many payment processors the transaction ID they give you is one they generate, not the one that Visa or MasterCard generates.
As part of implementing SCF those processors will remember the Visa or MasterCard transaction associated with transactions that had the "we are going to store this card" flag set, and so later when you use the stored card you just have to provide the transaction ID they gave you and they look up the Visa/MasterCard transaction ID to send to the card company.
So say you charge a new Visa card through provider X, setting the "we are going to store this card" flag. X gives you an X transaction number X-1234, which you remember, and X remembers that X-1234 means Visa transaction ID V918273.
A year later it is time to auto-renew that customer, and you want to do that through provider Y. But Y's interface expects a Y transaction ID. You can't give them X-1234 and have them do anything sensible with it.
As far as I can tell for many combinations of X and Y there is simply no way to do an on file charge at Y with a card that was put on file after an X transaction, except perhaps by at the time of the X transaction also doing something like a $1 authorize with Y and hoping that the Y transaction ID for that will work with Y for later doing an actual charge.
You need some way to get the Visa/MasterCard transaction ID, and you need X and Y to allow you to provide a Visa/MasterCard transaction ID for the SCF stuff.
You should include this in your contract terms with the customer and collect the dispute fee from them.
It's not reasonable of you to expect Stripe to just absorb this cost.
What are you going to do, sue over 20 euro?
In the case of an actual dispute (non-shipment, etc) you do have an actual contract. However, this smells like extortion(?). You didn’t deliver on your end of the contract (deliver goods) but are penalizing the other side for your failure to deliver. It won’t go over well when you get the class-action suit, and all the little ones in-between.
Especially online, the law says: Customer gets back ALL of his money, every cent.
You will be sued by customer protections in a minute if you act like that. Do you seriously run a business???
I am surprised how little Stripe charges. I processed close to 100MM since 2012 via different merchants, including Polcard, banks such as Harris, Wells, BOA, etc, and even 10 years ago typical fee was $35. And no, they never give you the fee back; if you win they give you the charge amount back, but the processing fee always remained with MSP.
On the upside, over the years credit cards vendors made it harder to file the dispute. Yes its easier to do it online with few clicks, but that's not a dispute yet. These days most people sit in banks and research into charge, including calling merchant, before they submit a CB with the card system.
Erm, isn't Klarna a BNPL company ?
Important not to conflate BNPL with merchant services (card payments).
Actually, I can find several emails that say something along the lines of "Klarna - Card payment" or "Klarna Checkout". Never done BNPL.
e.g. Sofort is run by Klarna for some reason - https://www.klarna.com/pay-now/business/merchant-support/wha...
So it seems conceivable that they have options to process regular card payments too
Stripe locked us in.
You're not locked in. People migrate off Stripe all the time.
> If you decide to leave Stripe for another payment processor, we’ll work with your new processor’s team to securely transfer your credit card data.
PAN Migrations.
https://stripe.com/docs/account/data-migrations/pan-export
Different payment providers also can help you with the import, here is an example on how to import data from Stripe to Adyen:
https://docs.adyen.com/development-resources/migrating-payme...
It's about risk. This requires time and effort to reconcile. Someone has to do something. The fee covers this. Does it suck? For you, sure. For the customer? No. It's peace of mind. It's why people willingly shop online. Don't like it? Negotiate your own terms with a bank for your own merchant account.
And yes the charge sticks. If you have 1000 purchases and all 1000 people dispute, that's a hassle the bank needs to deal with. Compared to someone with 1000 purchases with 1 dispute, even if that dispute is valid, it's much less work. Much less costly for the bank. So part of your responsibility as a merchant is to prevent that as much as possible.
> Stripe gets to keep the fee for handling the dispute?
No, the bank is keeping the money. Stripe had the money taken. This is passed on to you.
Seriously, this is payment processing 101.
It is still weird and one-sided. Merchants are still being abused and in some cases that still causes them serious harm through no fault of their own. Unregulated chargebacks should still be legislated out of existence - preferably along with the whole anachronistic card payments system. It is still insane that so much everyday commerce relies on such an antiquated, dangerous, inefficient system in the 21st century.
So it's entirely reasonable for someone who isn't intimately familiar with how all of this actually works to be surprised by the situation and think it's broken. Because it is. It's not really Stripe's fault here though.
It’s very normal. It’s why a lot of services immediately ban you for life if you ever issue a chargeback (regardless of validity).
Stripe was the sole sensible service out there (that I know of) where chargebacks wouldn’t hit a small business as hard as long as they could prove they were in the right.
But it seems Stripe is becoming everything it originally railed against.
Easier to just lifeban every customer that does a chargeback vs spend 10 hours dealing with stripe + bank, and still losing, no matter the reason.
we were winning at least 50% of our chargebacks by providing evidence.
> Easier to just lifeban every customer
true. funny how an instrument that is supposed to combat fraud (by companies), is now mostly used to commit fraud (by consumers)
I have literal screenshots of a customer saying the opposite of the complaint, and still lost.
> saying the opposite of the complaint, and still lost.
yeah. even if its obvious that the customer made a fraudulent chargeback, you may loose. my only point was that not all chargebacks are lost, it is possible to win a good percentage.
i wish Stripe had an option to auto-block all customers who requested a chargeback from ever purchasing again...
Each one we send detailed IP logs, a graph of the customers use of the service, and a letter on the company letterhead stating when the person signed up, what the service is, and how they've used it. Each time (barring those two), we lose.
I'm sure some are legit frauds, but I know factually from speaking to our customers that some of them are just abusing the system of carte blanche by the banks.
If you are a fly by night op like amazon with inventory commingling I guess you don’t stand a chance.
Bank decides what they want to give their customer back. They ignore all your facts. Why should the BANK give a stranger money, if they can give money to their customer?
At this day and age, I don't understand why would any small to medium business that sells online internationally use anything else but Merchant of Records. International taxes are just a PITA that it's not worth trading a few percent of payment processor fee for a full-blown team of international tax accountants.
But in 5-10 years I won't be surprised if Paddle is the new Stripe because of that. It has the same feeling of being a disruptive upstart but solving a real and significant problem that Stripe had at the start. And with the way the political winds have been blowing in much of the world I can only see that problem becoming more significant for more businesses over the next few years.
Anyway, they might handle customer-communication with the merchant better.
Stripe offers nothing. If the customer could "contact" the seller, everyhting would work out better.
Just think - you have only 11 CHARS(!!!) to describe your service, thats what the customer sees on his monthyl CC bill. I am unable to describe it to everc customer in 11 chars, so 1 out of 1000 belives it was fraud because people do not remember what they bought online.
Gets grouped with EU decisions anyway.
The alternative has always been to use multiple gateways.
Once, they were young and innovative. Now they just do bad collaborations (Amazon) and release turds. The places which once promoted them are now doing the opposite.
A lot of people will still go to see Coldplay.
One should have at least 3 alternatives and load-balance evenly (or using another strategy depending on fee structures).
Can someone from the industry offer more colour on what this actually means?
It strikes me that pricing for companies like Stripe should go down, not up in the long run. They're fairly well insulated from inflation (as pricing is % of transaction value), so the only reason I can think of for price _increases_ would be increased regulatory burden or some sort of structural industry change.
The vagueness with which Stripe justifies the price increase makes me think this is not supported by actual cost increases, but by a desire to increase profits. (which, hey, if you can put prices up and customers won't leave, then great - but it would be good to know the actual reason)
So if we get paid out a USD payment, into a USD account. We get charged just because we're registered in the UK? That's a huge impact on our business.
If you have a bank account in another currency, you’ll be charged a 2% currency conversion fee from USD to your currency.
https://stripe.com/docs/payouts/alternative-currencies
Here in Australia we’re charged the 1% fee for USD payouts even though the account is with a local bank.
FWIW one of these was readily available from my existing bank (Barclays) last time I needed one (~10yrs ago). Bit of hoop-jumping to go through, but definitely worth it for $30k/year.
It's not a terrible deal even at this level. We routinely see 4-5% creamed off the top of wire transfers we receive from the US through exchange rate variations, random bank fees, etc. It's the cost of doing global business for us.
Hmm, I'm in the UK, and the variance in currerncy exchange we see is usually 2.4% in the bank's favour, usually with an additional fixed fee of £20. 5% sounds like madness!
For EU bank transfers, it's more like a 2% exchange variance, with zero fixed fee... so Stripe is now looking expensive, at least for our UK and EU payments :(
I'm including variance from HMRC's published rates as well, so that can be a few percent on its own if the USDGBP shifted. We do find that some customers are worse than others though. I suspect some use local banks and are eating fees along the route and it all adds up. With some customers we get every single penny expected. Wire transfers seem to be quite messy and unpredictable compared to card payments.
Make something good. Dominate the market. Increase economic pressure.
Only 1 way for to counter: Leave and let others know what you're using instead, and why.
And what's this new nonsense about increased costs for "premium" cards?
From here[0], it describes these cards as "Commercial, corporate, or business cards issued by Visa and Mastercard" - but why would Stripe charge more for the use of such cards? Surely the chargeback rate for businesses must be orders of magnitude lower than that of consumer cards?
https://support.stripe.com/questions/what-s-the-difference-b...
Processing a "Visa Infinite Business Credit" @ 1.5% would lose them money.
Commercial card fees are not capped and are more around 1.5% to 2.0%
If anything, now that they have split consumer and commercial cards in their fees, it's the consumer card fees that are shockingly high.
In other words, if it costs 10 units on average to process a transaction then the payment service isn't going to be worthwhile for any transaction less than 200 units. All transactions much higher than 200 units would see a reducing percentage of the transaction as processing costs.
Instead, everyone gets charged a percentage of the transaction value so that the large transactions subsidise those with a low value and this enables small value transactions to be seen as cost-effective by sellers.
MasterCard and Visa are mostly to blame here. They haven't innovated at all in the past 30 years and the fees they charge are wildly out of balance with the service they provide. They're awful, and I can't wait to see these credit card companies crash and burn when they get some real competition.
I recently saw someone mention this on reddit asking for legal advice but didn’t find anyone here talking about it and the original post seems to be gone but they linked to this post https://support.stripe.com/questions/argentina-s-new-inbound...
And the number of our PayPal-paying customers keeps growing. For some mysterious reasons it is convenient for people in very remote parts of the world to use PayPal. Direct credit card payment gateway and wire transfers are significantly more difficult for them.
So CCs are a lot less common. Bank cards (debit) are a lot more common. But (and feel free to correct me on this) I think their fraud handling story is still not as good as the story on credit cards.
So PayPal is seen as not-debt and also provides more fraud protection. And somehow despite their absurdly bad rap elsewhere, people look favorably upon the PayPal brand. And so here we are.
Note: I have no affiliation with any PSP.
This is probably the most annoying change. Raising the fees to push their card-storing solution.
It's clear that the card networks are committed to their higher fees. As a result, we’ve invested in lower cost options. That doesn't have to be Link (although it has tangible benefits), as there are cheaper non-card payment methods:
• Bank transfers (0.5% per transaction, capped at €5.00)
• SEPA Direct Debit (€0.35 per transaction)
• Bacs Direct Debit (1% starting at 20p, capped at £2)
Fee $310.80
> Application fees: $180.00
> Stripe processing fees:$130.80
Some on this forum may even say it's great that the APIs provided enable someone to build this additional payment app on top of Stripe that makes it easier for you to take payment in exchange for a 180 / 4500 = 4% cut. However maybe you should look into lower cost payment methods if possible.
> Standard EU cards: 1.5% + €0.25 per transaction > Premium EU card: 1.9% + €0.25 per transaction
That sounds completely backwards. They chose to have premium cards, not me.
The scariest part of this pricing split is that Stripe seems to be determining the fee "based on the information available from card networks at point of capture", instead of being directly told what the card type is, and even allude to this determination being potentially incorrect.
This gets even more frustrating when you think that business spend is on average higher than personal/consumer spend, so charging a higher fee for this is just a triple whammy.
It's easy to crucify Stripe for this, but this is probably a product of a cost review they're undertaking as part of IPO/next round prep (if The Information is anything to go by). We need a new Visa/Mastercard.
[0] https://support.stripe.com/questions/what-s-the-difference-b...
> Commercial, corporate, or business cards issued by Visa and Mastercard
The reason is that in 2015 the EU capped interbank fees to 0.2% for debit cards and 0.3% for credit cards. Visa and Mastercard (and issuing banks) managed to carve out an exemption for payment cards that are issued to businesses. These cards do have much higher fees. I'm actually surprised that Stripe has refrained so far from charging more for business cards.
I understand that different networks have different fees. But I expect one type of card to cost me the same.
When you go to a store, you pay the same price, regardless of which card you have. What would be your reaction if you were charged more because you're using a specific type of card?
I can't ask my customers to foot the bill, so it's effectively 0.4% I lose.
Stripe is comparable expensive (1.5% fee) compared to what big companies pay (0.1%) handling payments. Customers do believe that there is NO FEE at all for payments, they believe they just get back their money. I am handling payments of 0.99 Euros..that has become impossible with STRIPE now, if there is a risk of paying back 20 Euros dispute fee.
That is still legal. Customers do not like it of course to see different prices. But hey, thats how you have to teach them.
Paypal is better in disputes..but its also more expensive (for me).
The good thing is: In the future I do not have to care about disputes on stripe, I can just upload a paper saying "fuck you all"..I loose my money anyway.