Most CC companies have a 90 day limit on charges that can be contested. Amex is the only one that I know of that goes further back (1 year IIRC but it may be longer).
Stripe has decided to change that and will refund the $15 if you win. It's a nice change but in my experience the vendor rarely reverses chargebacks.
I think it depends on the chargeback reason code. If the chargeback was due to fraudulent reasons, merchants have very little chance of having it reversed. Now, they may be able to fight it and win based on procedural reasons relating to the chargeback dispute process. Not something worth doing though for most merchants.
Sometimes, its more costly in time to fight a chargeback than the fee that is imposed. Many merchants just let it go and eat the costs.
Quite reasonable, but the new policy is taking advantage of the fact that they have the rare ability to fix this broken interface instead of just passing it on.
Refunded fees for refunds encourage easy refunds to dissatisfied customers. Offering refunds without crazy hoops to jump through is generally just good customer service (especially for service-related businesses where you don't have to worry about lost inventory!) -- it can quickly put a problem into a realistic context (and customers can realize "well, it's not perfect... but it's actually still worth keeping"), which makes them less frustrated.
I offer a refund first to a lot of tech support questions (i.e., "this isn't working on my computer"), and hardly anyone actually wants one, but it comforts them. Knowing that my fees would be lost make it less pleasant for me to offer... this is psychological pain (the actual cost is minimal), but I always appreciated PayPal's policy for this reason.
Besides those questions I see this policy as assuring new ecommerce application builders who aren't used to the risk of chargebacks and refunds. I really appreciate it.
This change makes Stripe a total win.
Refunded fees are nice, don't want to know how much money we have lost due to half fee refunds on PayPal.
Edit: [1] Not weird as in weird on Stripe's part, but weird as from the perspective of someone who does not sell online, just seems like this one-size-fits-all approach probably makes a lot of low-margin selling really hard.
A 7% chargeback rate is huge and would likely get you shutdown by your credit card processor.
Out of ~2500 orders I've had one chargeback and it was our fault for not processing the customer's refund sooner. I'm not open to disclose what we sell but I can promise you that I have some very angry customers.
Maybe you're confusing refunds with chargebacks?
Sick of it all I finally got minFraud setup and working with Braintree as the payment processor. So now, I use Braintree to authorize the card, then do a fraud check through minFraud. If the fraud level is low enough, I submit the payment for settlement, otherwise I void it.
Since putting minFraud in place I haven't had any chargebacks.
If you read around on retail forums, you'll find that nobody would be able to get away with anything close to a 7% chargeback rate with traditional credit card processing, without getting their merchant account terminated with severe prejudice -- anything more than a percent or so raises alarm bells with the card companies.
Also, selling at $1 you're only going to make $0.67 or so per transaction (maybe less depending on how you get bilked in fees). You're going to have to do a lot of volume to make money selling at $1.
So you might trigger some flags with the card associations if you say have the following
1) 1% chargeback ratio 2) 1% of revenue result in chargeback 3) Have like 50-100 (forget exact number) of chargebacks a month for like x consecutive months.
If you don't fix the problem, then bad things happen like additional fines....etc.
So for merchants with very low volume, a higher chargeback rate is sometimes permissible. Acquiring banks have their own risk assessment so they may allow it or may not.
I'm actually setting up a store right now and I'm going with Paypal just because it's so much easier and cheaper.
With Paypal:
- After a sale I can buy and print out USPS labels and postage in 2 clicks and send the tracking and shipping info to my buyer in 1 click.
- I don't have to pay to integrate it into my site or buy a module ($27), the Paypal module is already included, and with Paypal I don't need SSL encryption (which can cost $50+ / year / domain).
1 way Stripe can remedy this is to make free Stripe Payment modules for major e-commerce stores.
I want to move to Stripe eventually because they don't try to get my users to sign up for a paypal account by hiding the credit card payment form beneath the paypal login and registration form. And I don't like Paypal's "side with the buyer even if they're a scammer" policy, not to mention the whole "your account funds have been frozen for 180 days while we investigate".
5 years from now I really hope Stripe branches out to cover a lot more than just credit card processing. Once they master that area I'd really love to see them become a small business e-commerce solutions provider. I'm sticking with Paypal until I get screwed over and have my funds frozen because in the short term, I'm saving so much more time and every dollar counts.
Hey Stripe, one day if you work on a store for small businesses I'd love to chat. The current options (WP E-commerce, shopify, magento, ebay, Amazon, etc...) are a pain in the ass (I've tried them all) and no one, ==> NO.ONE. <== , has made a proper packaging backend and USPS shipping calculator that doesn't screw either the buyer or the seller. Ebay comes close but even they fail terribly at package dimension calculation for multiple quantities ordered.
"I'm going with Paypal just because it's so much easier and cheaper."
Really?
For me, integration w/ PayPal's IPN's took DAYS and still wasn't sturdy. Stripe? 3 hours the first time, 30 minutes the second.
Admittedly, PayPal is marginally cheaper with heavy volume. I'm not at that point and, quite frankly, it would probably never be worthwhile for me to switch due to cost of said dev time.
But this $27 module? I don't know what requires that but I've never needed it.
I tried PayPal on one project and switched that site to Stripe within a week of them launching in Canada. Zero regrets.
I've never found anything easier to integrate, and I've done PP Pro, Authnet SIM, Authnet AIM, Authnet CIM, Quantum Gateway, Google, Amazon, Recurly, Spreedly, Spreedly Core...
I'm not the OP, but PayPal is not only cheaper (that .7% adds up fast), but without it I'd lose more than 10% of my customer base, and that's very significant money. Credit cards with AVS are just not readily available, or socially common, everywhere in the world. Stripe is a way to accept credit cards. PayPal is a way to accept payments from 190 countries. That's not the same thing.
There are many more products (CMSs etc.) out there which include PayPal integration (or have it readily available with free plugins) than those including Stripe -- for now, anyway.
Something to keep in mind: If you suddenly start doing volume through PayPal they will flag your account for closer inspection and that may involve them freezing your ability to do anything with existing and incoming funds. It'll likely last a few weeks and then it's over. (Though since it doesn't sound like you're selling digital goods this may be a problem for you.)
Other than having to deal with that issue -- which is usually the horror story that people love to tell or reference -- I've been perfectly happy with them. They're Johnny on the spot and I can call them any time to speak to someone. Because they keep such a close eye on things, I've come to expect their calls whenever anything out of the norm occurs. It's great.
I love PayPal.
By the way, have you tried Yahoo Merchant Solutions (formerly Yahoo Store)?
Until then we had to rely on PayPal and that was quite a pain in the ass. The only thing that was really positive with using PayPal as our CC processor is that they always reimbursed you the fees in case you wanted to refund the payment.
We have a 14 day money back guarantee - what it means is that you can request your money back if you have a valid reason and we'll refund you. Since we want to really delight our customers (much like Amazon does) we always accept refund requests and that means we had to cover the costs of the fees paid to stripe. Granted this isn't much compared to our overall gross revenues but I can see how in certain cases for certain individual (selling high value products) that could mean losses.
What I'd like to see tho and I haven't seen it yet - is the ability to get the chargeback refunded in case I decide not to fight it. I know this usually involve some work on both sides, however I think this should be automated and the chargeback lifted if I decide to make Stripe's life easier.
I also understand this could be potentially abused by potentially allowing every "fraud" attempts to pass and not fighting back the chargeback would mean you don't have some skin in the game and not motivated to stop these fraud attempts. Which is why I think these chargebacks should be refunded only if they don't exceed a certain threshold.
The biggest problem is for marketplace who are selling intangible goods, whenever we get hit with a chargeback - it doesn't really matter and I usually don't fight it even if I know the customer really paid for it since I know they're doomed to fail. So winning a chargeback is out of question anyway, however I'd love to get my chargebacks covered by Stripe in the event the chargeback was made by either a legit customer (and for some reason didn't ask for a refund) or slipped through my fraud prevention tools but I decide not to fight it back.
If a publisher would see too many of these chargebacks (and thus showing he's making no effort to prevent fraudulent charges), I think the chargeback protection should be cancelled and maybe Stripe should charge for these chargebacks retrospectively.
Anyway - great news Stripe!
This is unlikely to happen. The chargeback fee is levied on the acquiring bank (merchant processor) by the card associations which is then passed onto the merchant.
Best way to avoid chargeback fines is to have better fraud prevention process in place. Companies like Stripe are really just passing on costs that are imposed on them. Stripe offering to refund the fee if you win the case is a great gesture but only solves part of the issue with chargebacks in particular friendly fraud chargebacks.
Paypal's policy is to reverse the percentage fee, but to keep the flat fee, in the event of refunds. So generally a refunded transaction costs you about 30 cents.
Does anyone know if there is a plan for this 7 day transfer wait period to be reduced just a bit?
This is the sole reason, why I am eventually planning to integrate with another option like Braintree even though Stripe has all my use cases well covered.
Check out:
https://payments.amazon.com/sdui/sdui/helpTab/Checkout-by-Am...
Absolutely love Stripe though, makes figuring out payment stuff a no brainer.
