5 ms·

It probably has to due with the risk involved with how to handle chargebacks if the company doesn't fulfill their promise of the product, and PayPal assuming li

It probably has to due with the risk involved with how to handle chargebacks if the company doesn't fulfill their promise of the product, and PayPal assuming liability if the company doesn't have sufficient funds in that case. There are plenty of horror stories around pre-orders on PayPal. I'm not sure how Stripe handles this specifically, but they may be a good alternative: https://stripe.com/ https://stripe.com/ (we use and love them).

saurik 15y ago
I would love if someone from Stripe talked about how they handled this sort of stuff. Everyone keeps saying "I use Stripe and love them", but the process people describe of signing up seems to be begging people to scam them. There are actually good reasons why merchant accounts work the way that they do, and Stripe doesn't provide any argument for why they don't: until they do, I can't imagine trusting them for anything important at my business. I mean, they are almost sketchy when it comes to talking about "when bad things happen"; example: when chargebacks happen (and they do happen: I get one every couple days), can I easily (as in: no human interaction) tie it to an individual payment? The only mentions on their entire website about chargebacks are in the painfully informal FAQ/pricing (that it costs $15), and in their terms of service (which indicates that the $15 doesn't include mediation, which I'm pretty certain PayPal's $20 does). The first thing I think, of course, is "they charge more, duh": if you do any kind of volume at all, or are involved in small transactions, they are a /lot/ more expensive than PayPal: I'd easily be paying them hundreds of thousands of dollars a year for the privilege of not spending a few hours on the phone negotiating a merchant account. (For those not looking at their pricing, their fixed fee is PayPal's worst case fee; PayPal discounts 1-2% from that for volume, and supports a fundamentally better fee schedule for payments under $12: 5.0%+$0.05 vs. 2.9%+$0.30. Unless you are handling small numbers of transactions all over $12, Stripe is going to burn you on fees.) However, when I think through "where does the risk of credit fraud mostly occur", I'd imagine it would be reasonable sized transactions (trying to launder tons of money $1 at a time will get noticed pretty quickly), and I'd imagine the merchant fraud is mostly small volume (as if you actually have a functional business, you are able to easily able to cover the risks). So yeah: I just don't get it... is the Stripe 7 day hold enough? (PayPal doesn't have any hold for most businesses.) I certainly wouldn't touch it over PayPal if the only reason is "PayPal seems overly cautious": Stripe simply seems to be "asking for it". (And this is just looking at normal chargebacks: pre-orders are a whole different ballgame, and if Stripe doesn't have a policy forbidding them then they will probably be out of business, seemingly out of nowhere, in a few months.)
- ThaddeusQuay2 15y ago
  "I mean, they are almost sketchy when it comes to talking about "when bad things happen"; example: when chargebacks happen (and they do happen: I get one every couple days), can I easily (as in: no human interaction) tie it to an individual payment?" Said sketchiness ensued when I presented Stripe with a simple chargeback scenario, one which could result in disaster for a small startup. http://news.ycombinator.com/item?id=3058166 http://news.ycombinator.com/item?id=3058166
- michaelschade 15y ago
  You raise some valid points–although, I wonder if Stripe would provide volume discounts if one asked, perhaps just not saying they do upfront at this point in their young company. About how they handle chargebacks, I honestly can't comment on that part since I haven't had to deal with that. However, re: mediation, based solely on my past experiences with their excellent support team, I do believe they have the developers' interests at heart too and would work with that accordingly. Again, I haven't dealt with it personally though, so I can't guarantee that and comment reliably on how they truly would act in such a situation. Edit: their TOS does mention that they may help you with mediation, but also reserve the right to charge a fee for it.
- pc 15y ago
  Hi Saurik, First off, we have more detail about the chargeback procedure at https://stripe.com/help/chargebacks https://stripe.com/help/chargebacks. (The short answer to your question about whether or not you can tie a chargeback to an individual charge without human interaction is "yes".) We don't currently link to this page in the FAQ, but we should; we'll get that fixed. To your more general question as to how we (and our fraud policies) differ from standard merchant accounts: there's no simple answer. There are a couple of things probably worth pointing out, though: - First off, we should acknowledge that in this particular situation, it's extremely unlikely that Xenonauts is a scam. There are certainly valid questions around "how tractable is it to distinguish such non-scams from actual scams", but the fact remains: in this specific case, what has happened is a bad outcome for the world. Legitimate, trustworthy individuals are being prevented from getting paid. - Secondly, we're not as radically different as you might think. We use many of the same fraud screening measures that traditional merchant account providers do. We work directly with the same banks and processors. We've worked with the same consultants. It's not the case that merchant account providers use a bevy of effective fraud screening measures which we have now discarded. In reality, most of our friction-elimination is in the removal of information requirements with weak fraud signaling value, and the fixing of senselessly inefficient processes. (You don't fax forms to Stripe.) There is not much fraud screening a traditional merchant account provider does that we can't do. (And there's certainly plenty that we do that they don't do.) - While PayPal is definitely sometimes cheaper, this is the case more rarely than you might think. PayPal has a lot of fine print that has a bearing on the overall cost. We're acutely aware of the challenges of online payment processing. Stripe has actually been handling production transactions for over 18 months. Peter and Elon, two of PayPal's founders, are investors. (Trust me; they remain viscerally aware of just how bad it can get.) None of this is -- or can be -- a proof of how Stripe is invulnerable to fraud. And, of course, we're not. But I can assure you that we get it. We're not oblivious to the challenges, the mechanisms used by others, and their successes and failings. Happy to discuss more over email: I'm patrick@stripe.com.

saurik 15y ago

I would love if someone from Stripe talked about how they handled this sort of stuff. Everyone keeps saying "I use Stripe and love them", but the process people describe of signing up seems to be begging people to scam them. There are actually good reasons why merchant accounts work the way that they do, and Stripe doesn't provide any argument for why they don't: until they do, I can't imagine trusting them for anything important at my business. I mean, they are almost sketchy when it comes to talking about "when bad things happen"; example: when chargebacks happen (and they do happen: I get one every couple days), can I easily (as in: no human interaction) tie it to an individual payment? The only mentions on their entire website about chargebacks are in the painfully informal FAQ/pricing (that it costs $15), and in their terms of service (which indicates that the $15 doesn't include mediation, which I'm pretty certain PayPal's $20 does). The first thing I think, of course, is "they charge more, duh": if you do any kind of volume at all, or are involved in small transactions, they are a /lot/ more expensive than PayPal: I'd easily be paying them hundreds of thousands of dollars a year for the privilege of not spending a few hours on the phone negotiating a merchant account. (For those not looking at their pricing, their fixed fee is PayPal's worst case fee; PayPal discounts 1-2% from that for volume, and supports a fundamentally better fee schedule for payments under $12: 5.0%+$0.05 vs. 2.9%+$0.30. Unless you are handling small numbers of transactions all over $12, Stripe is going to burn you on fees.) However, when I think through "where does the risk of credit fraud mostly occur", I'd imagine it would be reasonable sized transactions (trying to launder tons of money $1 at a time will get noticed pretty quickly), and I'd imagine the merchant fraud is mostly small volume (as if you actually have a functional business, you are able to easily able to cover the risks). So yeah: I just don't get it... is the Stripe 7 day hold enough? (PayPal doesn't have any hold for most businesses.) I certainly wouldn't touch it over PayPal if the only reason is "PayPal seems overly cautious": Stripe simply seems to be "asking for it". (And this is just looking at normal chargebacks: pre-orders are a whole different ballgame, and if Stripe doesn't have a policy forbidding them then they will probably be out of business, seemingly out of nowhere, in a few months.)

ThaddeusQuay2 15y ago
"I mean, they are almost sketchy when it comes to talking about "when bad things happen"; example: when chargebacks happen (and they do happen: I get one every couple days), can I easily (as in: no human interaction) tie it to an individual payment?" Said sketchiness ensued when I presented Stripe with a simple chargeback scenario, one which could result in disaster for a small startup. http://news.ycombinator.com/item?id=3058166 http://news.ycombinator.com/item?id=3058166
michaelschade 15y ago
You raise some valid points–although, I wonder if Stripe would provide volume discounts if one asked, perhaps just not saying they do upfront at this point in their young company. About how they handle chargebacks, I honestly can't comment on that part since I haven't had to deal with that. However, re: mediation, based solely on my past experiences with their excellent support team, I do believe they have the developers' interests at heart too and would work with that accordingly. Again, I haven't dealt with it personally though, so I can't guarantee that and comment reliably on how they truly would act in such a situation. Edit: their TOS does mention that they may help you with mediation, but also reserve the right to charge a fee for it.
pc 15y ago
Hi Saurik, First off, we have more detail about the chargeback procedure at https://stripe.com/help/chargebacks https://stripe.com/help/chargebacks. (The short answer to your question about whether or not you can tie a chargeback to an individual charge without human interaction is "yes".) We don't currently link to this page in the FAQ, but we should; we'll get that fixed. To your more general question as to how we (and our fraud policies) differ from standard merchant accounts: there's no simple answer. There are a couple of things probably worth pointing out, though: - First off, we should acknowledge that in this particular situation, it's extremely unlikely that Xenonauts is a scam. There are certainly valid questions around "how tractable is it to distinguish such non-scams from actual scams", but the fact remains: in this specific case, what has happened is a bad outcome for the world. Legitimate, trustworthy individuals are being prevented from getting paid. - Secondly, we're not as radically different as you might think. We use many of the same fraud screening measures that traditional merchant account providers do. We work directly with the same banks and processors. We've worked with the same consultants. It's not the case that merchant account providers use a bevy of effective fraud screening measures which we have now discarded. In reality, most of our friction-elimination is in the removal of information requirements with weak fraud signaling value, and the fixing of senselessly inefficient processes. (You don't fax forms to Stripe.) There is not much fraud screening a traditional merchant account provider does that we can't do. (And there's certainly plenty that we do that they don't do.) - While PayPal is definitely sometimes cheaper, this is the case more rarely than you might think. PayPal has a lot of fine print that has a bearing on the overall cost. We're acutely aware of the challenges of online payment processing. Stripe has actually been handling production transactions for over 18 months. Peter and Elon, two of PayPal's founders, are investors. (Trust me; they remain viscerally aware of just how bad it can get.) None of this is -- or can be -- a proof of how Stripe is invulnerable to fraud. And, of course, we're not. But I can assure you that we get it. We're not oblivious to the challenges, the mechanisms used by others, and their successes and failings. Happy to discuss more over email: I'm patrick@stripe.com.