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Ask HN: Stripe holding funds for 120 days for no reason

• edwinwee 4y ago
  Sorry about this. Could you email me at edwin@stripe.com and I can dig in?
  • WheatMillington 4y ago
    The meme continues.
  • interesting_att 4y ago
    Thank you, I will email you now
  • CharlesW 4y ago
    Hey Edwin, you're a champion! But I have to say, as someone who used to hold Stripe on a pedestal, it's disconcerting to see regular HN posts from customers who feel ghosted. I hope you're getting the support you need from the COO's office.
  • pdimitar 4y ago
    Even though we here on HN are not many, a good chunk of the users can and will affect the choice of a payment processor in the next startup. Maybe even in their current company. The trend of people only getting support if they post on HN is very concerning and is damaging to Stripe's reputation. Word of mouth spreads easily and quickly. If I were you, I would have a very stern chat with the support and finance departments. Clearly, there are people in there that only look out for the company and not the customers.
  • Komodai 4y ago
    The fact that the only way to get help with these cases is to make a post on HN and wait for you to reply, is a joke.
• nodesocket 4y ago
  HN is not the forum to file customer support tickets. Stripe has great customer support and even live chat support.
  • OhNoNotAnother1 4y ago
    Unfortunately it is. Looks like someone from Stripe just replied with a person email address for the guy, not something he would be able to find anywhere else on the web but this site.
  • xwowsersx 4y ago
    The fact that OP (and many others) have felt they need to post on HN in order to escalate is a reflection of the fact that, however good Stripe support may be (and I've no doubt they are swamped, trying their best, etc.), it is clearly not "great." This is the third or fourth time just this month I've seen people at their wit's end, reaching out on HN because they have nowhere else to turn. As in the other posts, Edwin usually responds. I agree HN isn't a support forum, but let's not pretend Stripe customer support is great or that people aren't feeling they have to come here as a last resort after having exhausted conventional support channels.
    • smoldesu 4y ago
      I don't have to pretend Stripe Customer Support is great to know that Hacker News is the wrong place to whine about it. At least, it severely dilutes the intellectually gratifying content with banal, emotional diatribes. Every company experiences this, regardless of the quality of their customer support.
      • xwowsersx 4y ago
        This wasn't mere whining and characterizing it as such is uncharitable at best. > What do you do in this scenario? I have tried contacting support at Stripe but seems to be of no help. OP is clearly asking for advice, not just idly whining. The fact that Stripe is a YC company (no, I'm not saying that this means HN becomes the de facto support channel for any YC company) and the fact that many developers in the HN crowd use Stripe means HN is as reasonable a place as any to ask for advice on how to proceed. (Let's also have a bit of empathy towards someone whose funds, which could quite possibly be the livelihood they depend on, is locked up by an unresponsive, faceless company.)
• juanse 4y ago
  This should be illegal. It is literally a loan with no interest.
  • consultutah 4y ago
    That would be an interesting way to solve this type of problem: make the payment processor pay interest on money withheld. Even at a low interest rate, it would hopefully incentivize them to figure out better ways of handling the risk. Are there any US legislators on HN?
    • gruez 4y ago
      I doubt that 1.01%[1] of the balance frozen by stripe plays a major factor in their calculus. If the situation has gotten to the point where stripe is freezing a customer's account for 120 days, they've probably already written them off as a customer. After all, who in their right mind would still stick with stripe after that? The biggest cost would be lost future revenues from the customer. Some napkin math: Assuming that a customer gets paid monthly by stripe, that would mean the amount frozen by stripe would be 1/12 of a customer's ARR. Applying the federal funds rate to that over 120 days works out to a cost 0.0843% of customer's ARR. Meanwhile, stripe charges 2.9% in fees. Not all of that goes to stripe, some goes to banks in the form of interchange. If we assume stripe gets 0.5% after interchange, that would mean the losses from losing the customer for one year alone would be 0.5%, an order of magnitude higher than whatever interest they'd be forced to pay. [1] current federal funds rate is 3.08%. if it's applied over 120 days, it works out to around 1.01%
• etaioinshrdlu 4y ago
  Sounds exactly like PayPal. Is there a law of nature that forces payment processors to act like this?
  • arglebargle123 4y ago
    That depends, are short term loan interest rates a law of nature?
  • colechristensen 4y ago
    The business of payment processing is actually the business of managing fraud, and everybody tries to lower costs as they grow and age. Unless there’s specific external regulation, there’s a regression towards being awful.
    • kylecordes 4y ago
      I wonder if providers like this could offer an option to pay some chunk of money that would cover the cost of a thorough background check and human review of all aspects of your business. They would then be able to trust you enough to not freeze anything without future human intervention.
      • colechristensen 4y ago
        Heh, maybe a regulation saying you couldn’t hold money hostage like this if the business is SOC 2 compliant
    • KptMarchewa 4y ago
      I would guess AML, not fraud.
      • maxbond 4y ago
        I think they're saying there's an inherent ponzenomics to payment processing, wherein the might use AML as an excuse to paper over a lack of liquidity by stalling withdrawals. Lots of cryptoasset exchanges will freeze withdrawals over fictitious security or AML concerns when they're going under, for instance.
• unsupp0rted 4y ago
  Welcome to HN Stripe Support. How may we direct your call to Edwin @ Stripe?
  • joshxyz 4y ago
    what a classic, haha
• c7b 4y ago
  Sue them for lost interest. You should have a strong case in principle, however, in practice, it's most likely not worth it for you (which is the real reason why this is happening). But if you have a lawyer friend who can give a first opinion for free, you could give 'em a call.
  • shaburn 4y ago
    Sadly, because you are incorporated, I do not think you can go the small claims court route. Maybe hit up the legalist for funding and or check with an attorney who does financial class action in San Francisco. You are probably not alone and considering the nature of your business being small, you may have a claim that it destroyed your operations and ability to earn(which they probably did in reality). *Not a lawyer and not legal advice.
  • gruez 4y ago
    Their ToS probably gives them wide latitude to arbitrarily freeze funds without having to compensate you. Not to mention, any lost interest pales in comparison to any legal fees. The federal funds rate is currently 3.08%. Apply that over 120 days and it's only 1.01%. If a lawsuit cost $10k (very conservative estimate), you'd need to have 990k frozen by stripe for it to be worth it. Even if all it took was a sternly worded letter from a lawyer (estimated cost: $300), you'd to have $30k frozen for it to break even.
    • c7b 4y ago
      ToS aren't law, what matters in court is what the judge decides, and they can decide that certain ToS terms were never valid. But the question is whether it makes financial sense to do so, where for most accounts the answer will be no (hence why providers can get away with it for a long time). There are also some small chances that the company will try to reach a settlement to avoid a ruling that would give a lot of customers a strong lever before they can update their ToS (which could mean a much larger payout in return for signing some NDAs), that you are awarded additional punitive damages (pretty unlikely here though, I'd guess), or that you find a consumer rights organization that is willing to cover your legal fees. And of course, some people are willing to fight for their rights even if it doesn't make sense financially (this guy [0] fought and won a 22-year legal battle against Indian Railways over something like 20c). [0] https://www.bbc.com/news/world-asia-india-62501688 https://www.bbc.com/news/world-asia-india-62501688
• alberth 4y ago
  Is there an equivalent to Stripe, from a DX perspective, that allows you to create an actual merchant account instead of being a sub account of Stripe? Having an actual merchant account, and going through KYB, seems like it’d solve a lot of these problems.
  • ev1 4y ago
    > that allows you to create an actual merchant account Plenty! An API? Something that isn't SOAP XML over a private tunnel? Developer experience similar to having faeces thrown at you? Not really.
• Zebfross 4y ago
  We switched to Authorize.net because the business risk at Stripe was just too high. The api isn't near as good, but it works, and we don't worry about random account freezes.
  • TAForObvReasons 4y ago
    How hard / how long did it take to switch?
    • Zebfross 4y ago
      It all depends on your setup. The technical work was only a week for us. Getting approval and setup with a merchant account takes more time though, and they even came to do a physical inspection of our place.
  • ShivShankaran 4y ago
    Is it cheaper than stripe ? And won't they suspend you for any reason? I have been on stripe for years but stories like this makes me panic
    • nickphx 4y ago
      If you've been processing for years, you've passed their underwriting process and have nothing to fear as long as you don't have a sudden increase in chargebacks or a wild shift in payment volume / average sale.
  • hobo_mark 4y ago
    Looks like it's U.S. only?
  • nickphx 4y ago
    authorize.net is only a payment processing gateway, you still need a payment processing bank.
    • jasonlotito 4y ago
• Tomte 4y ago
  You're fine with having payments refunded for (presumably) services rendered? Either it's not a business, but a mere hobby, or there is something to it you're keeping from us. Probably the former, but it makes me immediately suspicious, even with the recurring and well-documented "situation" with Stripe.
  • awillen 4y ago
    If Stripe refunds the payments, he can have the clients pay again via a different method. If I were a client, I would wait until receiving the funds before paying again. Thus he's probably stuck in a situation where he now needs to deliver work he hasn't been paid for plus absorb the risk that he won't eventually get paid what he normally would have been paid up front.
  • Komodai 4y ago
• jjallen 4y ago
  Sounds like they could be using your cash as funding. If they hold a bunch of cash from people it is effectively theirs for that period of time. This could prevent them from needing to raise a funding round if done enough. Some businesses are literally customer funded like these. If you want to read more search for "negative cash operating cycle".
  • JumpCrisscross 4y ago
    > hold a bunch of cash from people it is effectively theirs In the U.S., I don’t think money transmitters are allowed to do this. (They can keep the interest earned on it.) Financing from deposits is more a crypto thing.
    • jjallen 4y ago
      They can make stuff up, right? They are allowed to say "we are keeping your money for 120 days because of some security ...". Who is ever going to know this is valid/true or not, unless it goes to trial somehow and there is a lot of discovery done. They are literally funding themselves out of deposits, in a small way if they keep any persons money for any period of time. If they start doing it to lots of people for months at a time then they are at least partially funding themselves from their customers. Lots of businesses do this incidentally. A good one is businesses selling gift cards. It's not the same; but this set of conditions is not super uncommon.
      • JumpCrisscross 4y ago
        > are literally funding themselves out of deposits No, they probably are not. It’s illegal and money transmitters are regulated. What they are doing is collecting interest. One tends to see less scrupulous transmitters hold funds longer when rates rise. I didn’t think Stripe fell in this category, but it’s becoming difficult to say. > good one is business selling gift cards You’re right. (Also customer deposits.) This doesn’t apply to money transmitters, however.
        • 4y ago
• yieldcrv 4y ago
  Next time, transfer hundreds of thousands of drug money when you first open the account and then your normal sized payments will be well within the expectations of size and volume so the payment processor won't flag your account
• johnhaddock 4y ago
  I’m the person leading the project to make sure that people have fewer bad experiences with Stripe. I’m not sure what is driving the uptick in posts on the subject to HN in particular (obviously we pay attention to broader online discussion in addition to monitoring our support systems, though we know it creates an incentive for people to publicize their situation). On the topic of Stripe and these kinds of incidents more broadly, there’s a lot to say, but here are a few pieces of context that are probably relevant: - We are a giant distributed bounty system for people to find interesting and scalable ways to defraud us. - We’ve seen significant upticks in certain kinds of fraud over the past couple of months. When businesses default, Stripe takes on the loss. It’s worth noting that certain kinds of fraud, like card testing, can also have significant collateral costs for legitimate Stripe businesses, and our systems and processes are not only to protect Stripe itself. - We are far from oblivious to the harm that mistakes in our systems can cause. (I interact with a lot of these cases personally.) One of my highest priorities is creating better appeals flows for when we’re wrong. - We’ve shipped 7 substantial improvements just in the last 10 days that should meaningfully reduce the occurrence of false positives. - Publicly-described facts of specific cases don’t always match the actual facts. Stripe is sometimes just wrong. (We made some mistakes that I feel bad about in one recent case and we ended up bringing the company’s founders to an all hands last week to make sure we learned as much as possible.) But users do also sometimes publicly misrepresent what’s going on. We’re also restricted by privacy rules to not share specifics in those cases. - Stripe works with millions of businesses and we see all kinds of “rare” failure modes fairly frequently. (Disputes between staff at a business, business impersonation, businesses that start legitimate and go bad, and so on.) - I’m working on a post to share some of our broader philosophy + policy changes that I hope to publish before the end of this year. In that, I’m also hoping we can share some relevant metrics. If HNers have any suggestions for things that might be useful to see covered (though obviously certain things can’t be publicly disclosed), feel free to suggest them. Ultimately, we work hard to be worthy of the trust of businesses across the internet, and my personal mandate (supported by many others, from our cofounders down) is to find effective new ways of making mistakes less likely. “Uniformly good support at scale, in a highly adversarial environment, with very financially-motivated actors” is not easy, but I’m pretty confident that we can make a lot of progress. It goes without saying we're working on a review of OP situation. I’m happy to take general questions as well. You can also always reach me directly at jhaddock@stripe.com.
• remote_phone 4y ago
  Companies like Stripe can’t deal with the P999 problems and are ignoring them. They think their P99 customer service is great but 0.1% of their customers are experiencing a catastrophic level of experience and they simply don’t care. They are ignoring it because it doesn’t show up on any of their metrics or dashboards but it has a catastrophic effect on a small number of customers. Companies like Stripe need a swat team that deals with these P999 catastrophes, but given their scale it’s probably cost prohibitive, so they just say “Fuck it.”
• twstdzppr 4y ago
  Well, this is one way to reach support.
• JumpCrisscross 4y ago
  Contact your state’s money transmitter regulator [1]. If you suspect bad faith, looping in FinCEN may not be a bad idea [2]. [1] https://www.mtraweb.org/wp-content/uploads/2022/10/Contact-list-for-General-Public-as-of-10.4.2002.pdf https://www.mtraweb.org/wp-content/uploads/2022/10/Contact-l... [2] https://www.fincen.gov/contact https://www.fincen.gov/contact
  • aliqot 4y ago
    Given how buddy-buddy payment industry is, I'd advise against this unless a lawyer is willing to take it pro-bono on the basis that your case is so strong it'd be a layup.
    • dymk 4y ago
      That's really not how regulation in the payments industry works
      • aliqot 4y ago
        The same way insurance companies and casinos collude against those who lose them money, so do payment industry companies. You might beat the case but you won't beat the ride.
        • dymk 4y ago
          What entity in your analogy is the regulatory body?
    • deleted 4y ago
      [deleted]
• lloydatkinson 4y ago
  Sounds like the typical Stripe thing people write about here. Hopefully one of the staff will read this and help you. Seriously stripe would it kill you to not have these incompetent processes in place?
• zxcvbn4038 4y ago
  This is pretty standard, if a card processor thinks there is high probability of chargebacks then they will hold your funds for 3-4 months to make sure they can cover those chargebacks. After the deadline for cardholders to make disputes passes then they release the funds. It might not be anything you did personally, it might be based on location or business type. Talking to them is probably the best course of action though the front-line people won't be able to make a decision. I'd lookup their CEO's e-mail and send a short "I'm a small business and my funds are being held 120 days, please help" and that will usually get routed to someone who can make a decision.
  • aliqot 4y ago
    This person's giving solid advice. In traditional payment networks, like swipers in a retail location, 30-90 days is standard, this varies by risk profile and SIC code, like comparing a deli to an ATM in an adult club. There's a lot of settlement and reconciliation and things that happen in the background.
  • CaptJax 4y ago
    Square started doing that with my business. Without warning or cause, they began withholding 20-percent of all incoming transactions in case of chargebacks. Makes me wonder if a regulatory change has occurred.
    • abnercoimbre 4y ago
      This pattern is so pervasive with all the payment processors: * Your funds are suddenly frozen. No easy recourse (if any) * The percentage they withhold is suddenly higher. Tough luck * Your business is deemed high risk and they cut ties. Their reasoning is a black box Why is there never advance warning? It's the lack of courtesy that gets to me.
      • jasonlotito 4y ago
        > Why is there never advance warning? It's the lack of courtesy that gets to me. They give you advanced warning in the T&C. If they gave more warning, this could assist people who commit fraud. Fraud is not some imaginary issue. It's very real and very problematic. I'll say it again, get your own merchant account if you don't like this.
• throwawayacc2 4y ago
  OP, the Stripe guy said this > We’ve been investigating this case for the past 24 hours, and it's not straightforward. I can’t share more publicly here, but we’re in touch directly with OP. Can you lay out your version of the events please and give written permission for the Strip guy to lay out his version as well? Curious to see how the two line up.
  • gear54rus 4y ago
• nickphx 4y ago
  That's standard operating procedure for these fintech payment processing companies. To increase the amount of new users and lower 'friction' they're performing underwriting/due-diligence after accounts have processed transactions. Something with your transaction amounts or business is out of the ordinary, or outside of their underwriting terms and triggered the closure.
• interesting_att 4y ago
  Thank you all! I am incredibly grateful to the HN community, I am finally getting in touch with a real person at Stripe who can hopefully rectify this situation.
• vnjp 4y ago
  I have an SaaS service with let twitter user automate their twitter account such as send direct message to new follower, search and retweet /favorite tweets, tweet in schedule, delete all tweets at once , and so on. I use Stripe as payment method. And Stripe suspended my account 1 week ago. They said they do not allow social media business. It is a bad experience for me.