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Stripe refunds: fees from the original charge are not returned
- chmaynard 7y agoSee https://stripe.com/docs/refunds https://stripe.com/docs/refunds
- ValentineC 7y agoThis has been the case since early 2018. Accounts created before that were grandfathered in for fee refunds, but I don't have a grandfathered account, and therefore can't verify if that's still the case.
- edwinwee 7y agoSome more context: this has been around for a couple years (for only new Stripe users). Payments are costing more to process. Card network fees have been gradually increasing over the years. Stripe has kept this at bay for its longtime users for as long as we could, even as it's been getting more expensive. But with the water rising across the whole pond, we sadly have to start charging for some of these things.
- sergiotapia 7y agoWhy are payments costing more? Isn't technology lowering costs more and more for these companies? Is this just execs needing another summer home so they raise the prices to whatever they like?
- ceejayoz 7y agoRewards cards that offer all sorts of perks. Cash back, travel bonuses, $500-$1k signup bonuses, etc.
- crazygringo 7y agoI'm wondering if it has something to do with the increasing prevalence of rewards, which is driven by competition between issuers? I mean, I get somewhere between 2% and 5% back on virtually everything I buy. On top of signup bonuses. Whereas when I think back to 10 or 15 years ago, it seems like I usually got 1% back, and I still had cards that didn't offer any rewards back at all -- which is unthinkable to me today. Just my anecdote, and I don't know if it's the main driver, but it certianly seems like rewards have become a much bigger thing.
- jariel 7y ago" I get somewhere between 2% and 5% back on virtually everything I buy." This is more a function of the extreme power that VISA etc. have over the transactions. They are locked into their fees and make it impossible to do things like 'pay this other way and save 2% etc.' i.e. trying to do anything to obfuscate to the consumer that they are in fact responsible for 3% of every purchase you make. So various entities find ways around those controls by giving you money back in another direction. Basically, there's immense 'market pressure' on those 3% fees, but the oligarchy has control over it, so those fees will nature be eaten away by any and all other angles. If there was no oligarchy, those '2% back' programs would be less likely to happen and what we would see is material margin erosion for such fees.
- intopieces 7y agoSeems reasonable to me. The payment was successful, which is the service Stripe provides. Is this out of step with the industry at large?
- vonseel 7y agoI think it makes sense too, although from a slightly different perspective - that some work was done, and it’s additional work on Stripe (or Stripe’s systems) to refund or reverse a payment. Maybe a small fixed fee makes more sense than a percentage in this case, but either way, refunding a transaction still requires some effort.
- privateSFacct 7y agoThis is 100% common - the cost to network is often both in forward and reverse side, though most card providers zero out benefits to users so I'm convinced have higher than appropriate margins here (not stripe)
- Marsymars 7y agoIt's standard from the consumer side that I see. If you return an item purchased with a foreign currency on a credit card with a forex fee, the forex fee isn't refunded.
- zaroth 7y agoIt’s not reasonable because the cost which the fee is covering is not the cost to process the transaction. It’s three things, in order of their share of the total cost; 1) Rewards programs 2) Fraud risk 3) Interest expense The rewards are negated, because a refunded transaction earns no points. The fraud risk is zero, because the merchant has returned the funds. This leaves only a portion of the interest expense, assuming the transaction balance was even paid into the merchant account at that point, but then the refund acts to reduce the card balance so that might even cancel out too. Basically it’s justifiable to hold into the flat fee (e.g. $0.20) but to hold onto the 3% is an absolute scam.
- intopieces 7y ago
- vfclists 7y agoThey are doing a Paypal. How long have they been doing this? Louis Rossmann won't be happy - https://www.youtube.com/watch?v=c1WPDVjXDj0 https://www.youtube.com/watch?v=c1WPDVjXDj0
- Meekro 7y agoI'm a long-time Stripe user who processes ~$40k per month, and I think you're being too harsh. From a business owner's perspective, PayPal is the kind of company that would shut down your account and steal the balance for 6 months if their shitty algorithm detects anything "suspicious." Your attempts to contact them can be ignored or given generic responses that tell you nothing. PayPal just doesn't care, and it shows. That's what "doing a PayPal" means to me. But this fee increase? I'm actually grandfathered in so it doesn't apply to me, but if it did, it would amount to a 0.6% price increase in my typical monthly Stripe fees. So for example, if I paid $1000/mo in Stripe fees before this change, it would be $1006/mo now.
- ValentineC 7y ago> From a business owner's perspective, PayPal is the kind of company that would shut down your account and steal the balance for 6 months if their shitty algorithm detects anything "suspicious." Your attempts to contact them can be ignored or given generic responses that tell you nothing. Heh, PayPal just this month asked me to provide charity information for my personal account, and subsequently limited my receiving/sending privileges. Phone calls to them trying to sort this out have always ended up at some call centre in the Philippines, where the agents can only tell their users that the account limitation is "for their safety". They've also limited the personal account of a friend of mine (who's interestingly enough ex-PayPal) before, also asking for charity information.
- slenk 7y agoWhat do you mean by charity information? What charities he likes to give to? I have never heard that phrase before.
- ikeboy 7y agoRecently got hit with this with QuickBooks. They actually charged me a fee to refund that was higher than the original fee charged. They think they deserve 3.5% on top of the initial 2.9% to send money back.
- frank086 7y agoMy expectation has long been for Stripe to bring in more and higher fees. They offer a lot of top shelf free tooling that either brings their models into your code or moves the bookkeeping up to their system entirely, ex subscriptions. Smart companies have their own bookkeeping system in house and thus can potentially negotiate better terms with Stripe, assuming they are big enough Stripe cares to retain them. Plenty of other places are looking at massive costs to move off Stripe and I am sure someone at Stripe is aware of that. The first hit is always free.
- droopyEyelids 7y agoYou're right about everything, but I disagree with your characterization of 'the first hit is always free'. The lock-in features you describe are Stripe doing development work for your business. With an addictive substance, the addiction gains control orthogonally to the 'benefit' it provides. When Stripe writes your recurring billing and bookkeeping system, they're straight up doing your work for you. Thats the desired effect– not a side-effect!
- Trias11 7y agoWith more competition coming into marketplace the costs of transactions inevitably goes down. Charging more for transactions (in either direction) has nothing to do with "payments are costing more to process" lie. This has everything to do with hook-and-charge business approach relying on majority of customers swallowing the arbitrary higher costs because it's more hassles to switch provider, especially for non-technical business owners.
- brunoTbear 7y agoI think you don’t understand the card ecosystem particularly well. My impression (ex Stripe with no inside knowledge) is that Visa has been raising rates. Stripe are doing their best to avoid passing it on. This is one place where it surely became egregious not to. I’ve never seen a company as averse to squeezing users as I had when I was there. The finance guy I worked with produced analysis for the team showing ways to reduce pricing more often than ways to increase it. Your skepticism is warranted against most businesses. From my experience as a PM at Stripe, it is unwarranted in this case. Disclosure: ex Stripe, own stock. No inside knowledge.
- commoner 7y ago> Stripe are doing their best to avoid passing it on. This is one place where it surely became egregious not to. According to the rest of the discussion on this page, Visa and other payment networks refund the interchange fee to payment processors (including Stripe) on refunded transactions. There is no evidence that Stripe is any more charitable to their users than other payment processors. Stripe offers a commodity service, and increased the cost of using their service. Perhaps Stripe is "doing their best", but their competitors (e.g. Square and Amazon Pay) are doing even better by refunding the processing fee for refunded transactions.
- quelltext 7y ago> According to the rest of the discussion on this page, Visa and other payment networks refund the interchange fee to payment processors (including Stripe) on refunded transactions. So far said that the refund fees on the brand side specifically increased or came into existence. I don't know if they did or not. I imagine though that transaction fees rising (which people do mention in the discussion) has an effect here. If you were able to make a given margin before while still allowing refund fees to be returned. Now transaction fees increase. As a PSP you can either choose to increase your processing fees or find other ways to make even. If you can achieve that by not returning fees on refunds (and make a bit more money along the way) that makes sense to me. My main point is that rising fees in general can be a reason here even if the card brands didn't specifically add a new cost to refunds per se.
- chrishynes 7y agoThis is pretty standard for flat pricing nowadays, but hits certain types of merchants really hard. It's a double whammy when you have a cancellation and have to refund and then lose 3% on top of that. Stripe should keep the fixed fee, sure, but keeping interchange doesn't seem right. Why doesn't Stripe offer the option to do simple interchange+ pricing to all instead of restricting that option to 6 figure volume accounts with negotiated agreements? That would cleanly solve the issue and be fair on both sides.
- mchusma 7y agoNote: this is different than Braintree and Amazon payments, which either refund in full or simply charge only the $0.30 fee. Stripe is now at or near the most expensive here relative to the competition. The idea that they have been doing customers a favor is not accurate. I have used stripe for years, but they are a company that has continued to make things worse with every update, versus AWS which has my trust they won't increase rates. If AWS ever offered a true competitor, we would switch. They invest in publishing books, but they still miss basic features like a way to test credit cards in the production system for QA purposes. It's an easily solved problem (let you generate one time fake card numbers programmatically that stripe "pretends" to charge). I have been trying to test checkout flows with them for years and their official stance is "don't test production checkout flows", which is insane. I hope stripe changes it's ways here, but they have been a large disappointment over the last 4 years or so after a solid start.
- polemic 7y ago> ..don't test production checkout flows.. That's good advice. Payment providers have test gateways and cards for you to test your code against. While it might be a minor convenience for you to have 'fake' cards in their production system, the only thing they have to gain is a potentially serious fraud loophole (at best), or an expensive footgun for you. Don't "test" checkout flows in production unless you're using real credit cards :D
- rblatz 7y agoAgreed, test environments exist for a reason, if you don’t trust your test environment to accurately replicate prod then you need to clean that up.
- edwinwee 7y agoYes, testing in production can be dangerous and Stripe purposefully designed as many testing scenarios we could think of to avoid that (https://stripe.com/docs/testing https://stripe.com/docs/testing).
- btown 7y agoThere's a vast payments ecosystem beyond Stripe that lets you avoid this. With companies like Spreedly to provide almost-Stripe-quality APIs and PCI-compliant card vaulting at only a flat cost, and a massive amount of "merchant account providers" a quick Google away that can hook into Authorize.net and then into Spreedly, you can end up at 1.75% or less depending on your industry, and the flexibility to dynamically route transactions to merchant accounts (including Stripe itself) based on anything from geography to your own notion of fraud/return risk. Stripe has far and away the best developer and administrator experience in the industry - it surprises and delights. But this doesn't make it the right solution for all businesses. Its genius was that it entered the zeitgeist as such.
- dangrossman 7y agoLast I read, Authorize.net is never going to be updated to provide for PSD2/SCA authentication flows, which means it will not be suitable for charging customers in Europe in the future. Whether Spreedly will really be able to wrap those flows up in their API is an iffy question to me still.
- longtermd 7y agoI agree. I would love Stripe 10X more if they'd offer much lower prices. Their fees become really huge as your business grows beyond 50k MRR
- deleted 7y ago[deleted]
- leesalminen 7y agoIdk, we’re at 5x that and the stripe fees are such a small part of our overall costs that it hasn’t been worth it to optimize there yet. We’ve found so many other places to optimize over time with bigger cost savings. We just revamped our hosting on AWS and saved $6k/mo or so. Totally worth it.
- GeneralTspoon 7y ago
- deleted 7y ago[deleted]
- robbyt 7y agoStripe has the ability to negotiate with their upstream processors that we end users do not. Instead of trying to reduce their costs by pressuring their providers, they're passing along the fees to their customers.
- ValentineC 7y agoSome of the other comments in this very post [1][2][3] suggest that Stripe isn't being charged the full fee by other parts of the network. If they're intent on working with the customer to keep prices down, they should only charge a fixed fee for refunds (to pay for overheads), and not the interchange fee. [1] https://news.ycombinator.com/item?id=22371571 https://news.ycombinator.com/item?id=22371571 [2] https://news.ycombinator.com/item?id=22371746 https://news.ycombinator.com/item?id=22371746 [3] https://news.ycombinator.com/item?id=22371626 https://news.ycombinator.com/item?id=22371626
- m3kw9 7y agoThe power of lock in. They know this from analytics.
- jv22222 7y agoJust clarifying. If I refund a $2,000 charge it costs me the seller approx. $58?
- mc3 7y agoPut that way it's ridiculous enough if you are not refunding. Someone should do a points-free card with decent security (2fa on each purchase?) to minimise fraud that just gives say $50 cash of that to the consumer. They can then knock off 2.5% of whatever price they see in the store when thinking about what to buy. Such a card would be popular for expense accounts!
- teruakohatu 7y agoIf so it probably means the cost will be passed to consumers via higher prices and inflexible return policies.
- danpalmer 7y agoNot an extra $58. By the time you refund you’ve already paid the fee, stripe just don’t refund your fee to you.
- hackin247 7y agoThe struggle is real. Small fees add up for smaller startups and that used to be their bread and butter--it was so much easier to get payments up and running. We eventually switched to paypal and never looked back.
- stevedwell 7y agoCan we get a clarification? Are they keeping the 2.9% and the 30 cents or what?
- deleted 7y ago[deleted]
- asdfq1234 7y agoJust a price increase. Time for some competition for these people.
- rush86999 7y agoI have one really annoying complaint with stripe connect. Its authentication work flow using oauth is conflicting with aws amplify authentication for social providers. Both of these are pretty much essential nowadays. I hope someone picks up on this comment and considers finding a solution
- nickjj 7y agoHasn't this been the case for 4-5 months? I remember getting an email from Stripe about this back in September or October 2019, or was that PayPal? The only thing that really bugs me a lot about Stripe (to the point where I've considered moving to Braintree for my next project) is how they handle fraud detection. Stripe has all the power to prevent many forms of fraud and provides this as a service as long as you pay a premium for it in the form of Radar. You have to pay extra on top of the 2.9% + 30c per transaction to get this protection. But instead of providing Radar as a base service to all customers for the standard rates, they would rather you have fraudulent transactions against your account because they profit from "dispute fees", which is usually $17 or so per dispute that the merchant has to pay out of pocket, where Stripe takes some cut of that and the bank takes the rest of the cut. It just feels super scammy of Stripe to not offer Radar as a thing you get by default, since it's so beneficial to have and business owners are powerless in preventing fraud on their own because they don't have hundreds of millions of transactions of data to lean against and a way to perform analysis on the transaction before it happens since merchants aren't directly in contact with credit card vendors (that's why we use Stripe). I actually talked to support about this once in an email a few weeks ago, and the email began with them saying it's the merchant's responsibility to deal with fraud but by the end of the email discussion, support completely switched their position and said Stripe has the power to prevent it and they will pass my feedback to their product team. Which of course really means "ok, you win, Stripe is really responsible for fraud detection and we can totally do it, but we're never going to give it to customers out of the box because we profit from fraud regardless of you paying for Radar".
- pc 7y ago> Stripe has all the power to prevent many forms of fraud and provides this as a service as long as you pay a premium for it in the form of Radar. You have to pay extra on top of the 2.9% + 30c per transaction to get this protection. Radar's ML-based shield is free for all accounts on standard pricing. See https://stripe.com/pricing#radar-pricing https://stripe.com/pricing#radar-pricing. (We only charge if you want to set custom rules etc.)
- nickjj 7y ago
- icelancer 7y agoI honestly didn't understand why they did in the first place. Doesn't really bother me.
- elijahparker 7y agoThere are multiple little things that make me feel less trusting of stripe and that it’s shifting away to be more profit focused instead of customer oriented. One change that was unannounced (to my knowledge — maybe I missed something) was the payout schedule. It’s still two days technically, but at some point last year they started delaying the payout in their end if it was a weekend or holiday. It used to be like this: income from Thursday, Friday and Saturday all arrived Monday, so Monday was a big payout day and this was good since it was often a higher expense day as well due to weekend charges being delayed to Monday. Now, Thursday‘s sales arrive Monday (same), Friday’s Tuesday (a day later), and Saturday’s arrive on Wednesday (two days later), and any holidays further delay it. This could be ok, but the unexpected change from what I had come to expect, and noting that it seems to be intentional design change on their end make it feel like they’re trying to delay the payout schedule while still claiming the same rolling 2-day, and in the end not really putting the customer first.
- pc 7y agoWe're actually working on speeding up payouts, for free. They're currently faster than they've ever been and will continue to get faster.
- elijahparker 7y agoThat sounds great! But they’re currently faster than they’ve ever been? I don’t see how that reconciles with my experience I just described...
- quelltext 7y agoFWIW they do mention it's 2 business days on their docs and have been for quite some time if I remember correctly. https://stripe.com/docs/payouts#2-day https://stripe.com/docs/payouts#2-day Not sure if that was the case in the past though or when it would have changed. I don't have any reason to doubt your story, so it's possible. What you describe would be a calendar days setup I guess and I agree that changing that silently (on the same account) would piss me off. There might be good reasons for them to change it but not without reaching out to affected users. Or did you only see this new behavior on a different/newer account? I'd say you should raise that with their support team! It should be fairly easy to find evidence of that change for Stripe, right? And you should also be able to find evidence of the old behavior (a bit of search work in the balance history but doable). EDIT: I tried to go back on the wayback machine and it said business days for quite some time before last year (https://web.archive.org/web/20170905023631/https://stripe.com/docs/payouts#2-day-rolling https://web.archive.org/web/20170905023631/https://stripe.co...). Still possible that your account is much older and you were grandfathered and then finally moved over to the new behavior long after this was standard for everyone. I'd really just check with them.
- anonsivalley652 7y agoMakes me pine for FeeFighter's card processor comparator that GroupOn bought and killed. But in reality, even with their high charges, Stripe makes it easy to get started, but startups can and should change vendors when the need arises. If other processors with lower fees for the particular volume a startup is doing and better APIs, it's worth considering them too.
- brianwawok 7y agoWhat is the least expensive payment gateway these days for a SaaS business? My stripe costs keep going up, happy to write the code to switch... what’s the lowest rate processor?
- jijji 7y agoi dont really see the value in stripe compared to any other payment processor... they still do all the dirty tricks that everyone else does, like hold your money, cancel your account, hold your money.
- PerfectElement 7y agoWe are doing 200k+ in MRR and looking to move from Stripe because the cost is starting to hurt, and this change feels unfair. Our use-case is pretty simple (capture card and manage subscriptions) and we don't need all the features they have built in the last 5 years or are planing to build. We are looking into Spreedly. Does anyone have other suggestions of Stripe alternatives that are not so expensive?
- jherdman 7y agoI'm busy writing a Spreedly integration for my employer. It's not in production yet, but I can tell you that their iFrame API is a bit clumbsy and gives you less out of the box than Stripe Elements.
- danpalmer 7y agoHave you negotiated with Stripe? Pretty much all of their pricing is negotiable. Particularly if most of your customers are in the EU where interchange fees are capped at something like 0.3%, so their cost base is much lower.
- deleted 7y ago[deleted]
- kundiis 7y agoLooks similar? https://www.theverge.com/2019/9/20/20876570/paypal-refund-fee-policy-change-sellers-controversy https://www.theverge.com/2019/9/20/20876570/paypal-refund-fe...
- jklepatch 7y agoIn an industry where costs have been amortized for a long time, fees should normally decrease... DeFi (Decentralized Finance) is coming for you guys. It might take some time, but we’ll get there.
- kuon 7y agoA few companies do charge fees on the end user now. I did a refund on a plane ticket within the 24h grace period (basically refunded no question asked) but I had to pay the credit cards fee anyway. I don't do refund often, but it might become more common.
- NightlyDev 7y agoI haven't actively used stripe more than half a year, and I've really enjoyed it so far, except for some translation issues on stripe's checkout page. This change makes me somewhat uncomfortable using stripe. Nordic countries has really good consumer protection laws and users can ask to cancel the purchase for any or no reason. Its also not allowed to charge the customer the fee, so this can become a issue. It also sucks that the pricing for Norway is 1 % higher than our neighbours.
- 0xdead 7y agoClassic bait and switch.
- ryuukk_ 7y agoi removed them from my shop the day i received a giant fee because one customer used a stolen card how am i responsible of this? fuck Stripe
- poxrud 7y agoThis is a disaster. Simply put, this change makes Stripe a nonviable option as an e-commerce payment processor. The modern consumer expects easy, no questions asked refunds. How many people buy a few shirts/shoes of different sizes knowing that they will return the ones that do not fit? How can a retailer provide that when there is now a 2.9% (in our case 3.5%) charge added on every item refunded? This change directly hurts smaller retailers/e-commerce sites who are not big enough to negotiate smaller processing fees with Stripe. I run a niche e-commerce site in Canada where the majority of my customers are located in the US. This puts my processing rate at 3.5%. My products are priced anywhere from $1k to $6k. So now with this change, I could pay up to $210 for when a customer simply changes their mind. I guess I could enact a strict NO REFUNDS policy but that will put me at a severe disadvantage vs the bigger retailers. As things stand I would only recommend Stripe for recurring subscription billing.
- whynotnowha 7y agoHere is our response to this ruthless and disrespectful decision by Stripe: Hello, We have just read your price changes to the grandfathered accounts and wanted to pass our discontent with Stripe's decision. Currently, we are weighing our options to move our business to other partners; however, as a small business that mainly operates in non-US currencies, the changes to your refund policies AND the non-US bank policies will effectively kill our partnership with Stripe. We do not have tens of thousands of dollars per month worth of processing capabilities; however, we are a growing company as can be seen from our all time graphs on Stripe. We have used Stripe since the beginning and never considered alternatives. Your support team have always been helpful and your capabilities satisfied our needs. Until now. The price hike to a grandfathered account is utterly unacceptable and looks/smells like a cheap attempt to make more money for the company. Stripe is also a rapidly growing company and grandfathered accounts could not have been hurting its business model. "Grandfathering" has an implied meaning that these people/companies/parties have been together since the beginning and a one-sided breach of this understanding is deeply damaging and distasteful. In any way, unless Stripe can take steps to show sincerity towards our partnership from early on and rescind the changes to its fee policies, we will move our business out of Stripe before March 15th, 2020. Thanks for the ride and have a great day.