8 ms·
Payment processors generally don't refund fees on payments when the payments are refunded, this isn't new. It's remarkable mainly because (a) it's 30%, not 3% a
by chadlavi 6y ago
Payment processors generally don't refund fees on payments when the payments are refunded, this isn't new. It's remarkable mainly because (a) it's 30%, not 3% and (b) the App store doesn't position itself as a payments processor the way Stripe does, so it sounds really weird that they would act like one.
If the app store took a 3% chunk and never refunded it regardless of the ongoing status of the transaction, that would put them right in line with other payment processors. It would also still net them billions of dollars, I think!
- seancoleman 6y agoStripe does refund their fees with a transaction refund. I understand this may be novel for the payment processing industry though.
- codegeek 6y agoNo stripe doesn't. They used to but not for a while now. At least not for our SAAS business where we do close to 1M ARR. Am I missing something ? https://stripe.com/docs/refunds https://stripe.com/docs/refunds
- Cerium 6y agoSame here, they used to but stopped about a year ago.
- mattferderer 6y agoDitto. Helping some non-profits, we were really hurt by people typo-ing a $10,000 donation when they meant to only donate $100. We quickly learned from that mistake. We also learned about how credit card thieves test credit cards. We saw hundreds of donation attempts. Stripe had us refund those that went threw, which costed us money in fees. Fortunately we were able to put some quick measures in place to stop them temporarily & then better measures for long term success.
- 42droids 6y agoI am curious what measures did you put in place?
- slivanes 6y agoA common way to prevent that is to authorize only first - settle/charge that payment at a later time when you think it's not a typo.
- mattferderer 6y agoThe credit card tests had unique network patterns we could block. We lowered our online donation limit. Above a certain amount it really is more ideal for a check or some other type of transaction. Though we've had a few people offer to just pay the 3% transaction fee on top of the multiple thousand dollar donation. For those we do a bit more manual process. For a cost, Stripe also lets you put some additional rules on what type of payments you'll allow & how much info the person has to verify for the payment to be accepted.
- 42droids 6y agoThank you. It all makes sense. Did you end up using Stripe Radar to check for fraudulent payments? It is working well?
- mattferderer 6y agoYes & yes but your mileage may vary depending on your customers/donors. For example, we turned off transactions from several countries. Honestly a basic version of this should be free. I shouldn't have to pay extra to say I only accept cards with a CVC number & expiration filled out.
- 42droids 6y agoI agree with this. I am a bit frustrated with Stripe for making this a paid service given the cost of payment processing. However, I assume when the fraudulent transactions cause a loss you have to pay for Radar.
- fasicle 6y agoIs this true? From their docs [1]: "There are no fees to refund a charge, but the fees from the original charge aren’t returned." [1] https://stripe.com/docs/refunds https://stripe.com/docs/refunds
- thoraway1010 6y agoThat's awesome! However, it WILL result in stripe attracting a LOT of the crappy billers (ie, folks who mislead / make customer unhappy etc). If your business is < 1% refunds, no worry if fees stay. A fair number of business have just 1 or 2 refunds PER YEAR. Other business obviously have MUCH higher refund rates (sneaky autobill businesses etc). For these loosing 5% on the refunds matters if they have a lot of refunds, so they'll be very tempted by no costs if you autobill and get caught. They'll just autorenew everyone, autosign up and then be VERY good about refunds to avoid chargebacks. Even if just 30% of customers don't catch a few months you end up with real money. Of course, CUSTOMERS may hate these players, but stripe I guess is focused on what works for the businesses generating lots of refunds.
- ben509 6y agoHaving a disincentive for merchants to have many refunds makes a lot of sense. The reasonable thing to do is to ramp up the fees based on the number of refunds. You want to push away the crappy billers, but not hammer developers that have the occasional bad release.
- astura 6y agoNot anymore
- seancoleman 6y agoI guess it's been a long time since I've been personally responsible for the financial side of Stripe accounts. I think it was 5 years ago when I used to run a lot of test transactions and refund for net $0, but times change. Sorry to lead anyone astray.
- balls187 6y agoThat is not accurate. Stripe does not refund us the fees.
- wwwwewwww 6y agoPayPal does refund the variable portion of the fee (e.g. 2.7%) but not the fixed portion (e.g. 30 cents).
- abc126589 6y agoNot true anymore. Check their website https://www.paypal.com/us/smarthelp/article/is-there-a-fee-for-issuing-a-refund-when-using-paypal-payments-advanced-faq3108 https://www.paypal.com/us/smarthelp/article/is-there-a-fee-f...
- abc126589 6y agoPayPal also keeps the fees when a refund is issued 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...
- gamblor956 6y agoImportant difference: with Paypal, the seller decides to issue the refund, not Paypal unilaterally (except in cases of alleged fraud), and the seller can determine how much of a refund to provide.
- edoceo 6y agoHmm, when I use PP to refund to my clients, PP returns the fees - it's a line item in the ledger.
- poxrud 6y agoThat cannot be true or maybe you have a grandfathered account, as paypal absolutely does not refund the percentage fee. Same with Stripe.
- edoceo 6y agoMy account is a five year old business account. My most recent refund I issued was Aug 2019. A line item on the PayPal statement was called "Fee Reversal" for $12.46 USD However, a read of their current policy shows it's no longer the case - so I'll likely get dinged on my next refund.
- kemayo 6y agoThe normal structure for credit card processing is a few cents flat payment plus a percentage of the transaction[1]. Something like 5 cents + 1.5% would be a great deal on payment processing, generally. (Apple is a juggernaut and may have been able to negotiate something else, of course.) That does mean that for a $0.99 app, keeping the fees would still be more than that 3%, at ~$0.07... but not wildly divergent from the 30% amount. Where the 30% gets really abusive is for things like Codea, the app being talked about in the Twitter thread. It costs $14.99. So it had presumptive fees of ~$0.28, while Apple's keeping $4.50. That's outrageous. (Also, I see mixed reports on whether credit card refunds refund the processing fees. It might be contract-dependent.) [1]: https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/ https://www.fool.com/the-ascent/research/average-credit-card...
- deleted 6y ago[deleted]
- hboon 6y agoApple doesn’t charge the user immediately. Instead it consolidates over a few days. So, often, the card processing fees are lower for Apple.
- IshKebab 6y agoTo be fair, Apple and Google do a fair bit more than a payment processor does (basically nothing). Not 30pp more, but it wouldn't be reasonable to expect 3% fees. I'd guess 10-15% is what is actually reasonable. Microsoft has settled for 15% in their store (because nobody was using it so charging 30% is ridiculous).
- lukeramsden 6y agoApple and Google actually take 15% for subscriptions after the first year of consecutive subscription.
- norswap 6y agoFor that low low price they'll also reject your app for random reasons and make it impossible to find in their store.
- AnthonyMouse 6y ago> For that low low price they'll also reject your app for random reasons and make it impossible to find in their store. So much the same as the other stores then. But the store feature I want to see from Apple is that if you provide the customer referral to your app yourself, Microsoft only takes 5%.
- kshacker 6y agoMicrosoft is not in the business of making money from apps, right now they need growth, it might even be a question of hey so we need to keep the store running. I say only partly in jest but see them change colors if they ever get a dominant share.
- AnthonyMouse 6y agoSo you're saying that companies who have to compete charge less whereas companies with a dominant market position can extract monopoly rents because they lack competition? But people keep telling me that isn't the case for Apple. Shouldn't they be doing the same thing to try to get store market share from Google?
- gamblor956 6y agoCredit card companies (i.e., Visa, Mastercard) absolutely do refund fees on payments when the retailer processes a refund. This is why retailers generally require you to use the same method of payment to get your refund. It's uniquely online processors that do not refund fees.
- stu2b50 6y agoThat's because they're not the same class of processor. The chain is like Your bank account -> visa/mastercard/discover -> PayPal's merchant bank account -> the person you're paying bank account PayPal only replaces the ccs when you pay with their wallet. Otherwise they're just orchestrating the money flow (because integrating with the CC companies is a gigantic PITA)
- syshum 6y agoPayPal is not a credit card processor, it is Money transmitter, different legally Stripe on the other hand is a credit card processor, and as a merchant you get a Merchant account, the same like Authorize.net who used to be the largest online processor before Stripe. Back in the day (and I have been out of that market for over a decade) Authorize.net absolutely refunded processing fees on refunds
- oneplane 6y agoDidn't PayPal get a bank license which also caused them to close a lot of accounts that were created decades ago by users that weren't old enough for back accounts back then?
- buildawesome 6y agoJust to add, PayPal is also most likely a credit card processor, serving as a Payment Facilitator (PayFac), which enables others to become CC Processors. It happens that PayPal and Stripe are money transmitters, which may come with being a PayFac. Auth.net is a gateway/portal that facilitates CC transactions, and while you may be refunded on processing fees for the use of the gateway, someone, somewhere is likely eating the interchange and most likely occurring at the merchant level.
- chrischen 6y ago> Payment processors generally don't refund fees on payments when the payments are refunded, this isn't new. This is new, and in fact PayPal and Stripe enacted this policy only this (or last year if I recall correctly). Some payment processors like Affirm or Amazon Pay have not changed their policy on this yet.
- tdeck 6y agoSquare used to refund the fees, they changed that policy when I was there and the reason was just to lose less money on refunds. I'm not sure whether they had to pay interchange on refunds or not.
- grawprog 6y agoPayment processors also don't typically sell their own hardware, then lock said hardware down so that the payment processor's store is the only way to purchase things for the hardware. Payment processors typically allow you to buy a variety of goods from a range of storefronts. Comparing the Apple store to something like stripe or PayPal seems pretty apple and orangy to me.
- dathinab 6y agoThe 30% cut is not a payment process cut or else this would fall under: usury, profiteering, rip-off.
- ac29 6y agoFor reference for folks who aren't familiar - in the US,even 3% would be an above market rate for credit card processing. The big companies like square and stripe are usually 2.9% for $0/year accounts, and rates go down from there. Smaller processors can do lower rates, and if you do over a few $100k/year, you can do lower with the bigger players as well.
- davidgh 6y agoFor online processing, 3% is by no means above market. For example, the default price on Stripe (and many others) is 2.9% plus $0.30. For a business with an average order value of $30, that $0.30 adds a full percent, bringing your fees to nearly 4%. If you do high enough volume, yes, you can negotiate lower prices.
- fma 6y agoSmall business owner here...I use Wave for accounting. They absolutely do refund the fee. Shame on the processors who don't refund it, and shame on those who hasn't been doing that since the beginning (Strip, Paypal...) because they are knowingly sticking it to small business owners. I've used Wave for 4.5+ years and this is how I've known it. "Regardless of the type of payment you received, the full amount that the client paid will be refunded to the client by clicking on the refund button at the bottom right-hand corner of the transaction details." https://support.waveapps.com/hc/en-us/articles/115004056523-How-do-I-issue-a-refund- https://support.waveapps.com/hc/en-us/articles/115004056523-...
- quelltext 6y ago> Regardless of the type of payment you received, the full amount that the client paid will be refunded to the client by clicking on the refund button at the bottom right-hand corner of the transaction details. That doesn't say anything about what the merchant gets charged. Stripe and PayPal also send the full amount to the card holder, so that blurb would apply to them too. The question is whether the merchant ends up with zero or minus the original processing fees after the refund.