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Stripe is charged every time a user faces a dispute. These fees have been increasing in recent years. Managing disputes is also a costly and manual process for

by smca 4y ago

Stripe is charged every time a user faces a dispute. These fees have been increasing in recent years. Managing disputes is also a costly and manual process for our users. So we’ve invested heavily in ways to help mitigate disputes from occurring in the first place with Stripe Radar (incl. by default), or by using Chargeback Protection (where we cover the disputed amount and waive any fees without needing to submit any evidence).

capableweb 4y ago
> Stripe is charged every time a user faces a dispute. Is this charge returned to Stripe if the bank rules in the favor of the Stripe user? Or did that change recently as well, as now Stripe won't hand back the fee in case the dispute is overturned. Thanks a lot for jumping into the thread with some more facts.
- smca 4y ago
  That's right. Stripe is charged regardless of the dispute outcome (the networks don't refund the fee). So our focus is twofold: prevent disputes from happening in the first place and help users manage them if/when they occur.
  - codegeek 4y ago
    Yes but doesn't Stripe pass that fee on to the merchant ? If a dispute is lost, the fees are not returned back to the merchant so I assume Stripe uses that to pay the network.
    - smca 4y ago
      That's not quite right. To simplify things, think of Stripe as an facilitator in the dispute process. Stripe has no influence over the outcome—it's at the sole discretion of the cardholder's bank. Stripe deducts a dispute fee to cover the cost charged to us for dispute submission. In the past, we returned this fee even though the card networks don't reimburse us. This is no longer the case (we now pass through the fee).
      - gamblor956 4y ago
        So basically, you're saying that your dispute fee costs have increased...but you pass along all those charges to the merchant anyways...so it boils down to: you're just increasing fees because you can under the guise of expenses that aren't your own.
        smca 4y ago
        I'm happy to explain this in depth if you'd like clarity (my username at stripe.com) but no, that's incorrect. We're now charged more for dispute submissions. These costs are set solely by the card networks and we'll no longer bear those costs (bringing us inline with the market).
        thereisnotry 4y ago
        Hi smca - this helps, I was under the impression that Stripe is refunded the fees in scenarios where disputes are won. That seems to have been a misundertanding. Having said that - I think there was a lot of room for nuance in this rollout, which kinda got shoved up into a one-size-fits-all policy. I'll give my own business as a reference - I have a 100% chargeback "win" rate; including in cases where Stripe estimated low win success odds. Chargebacks have (so far) come exclusively from bad faith actors. With this latest iteration - fledgling businesses like mine are massively exposed to competitors making bad-faith bookings and issuing chargebacks against us; which even if we were to successfully defend - would entirely bankrupt us. Has Stripe explored a mitigation of a scenario such as this? Following through on the same line of thought - has Stripe considered a more balanced approach where if merchants have a success rate of more than a certain threshold (which by all means can be high) - then they are more "protected" on chargebacks they win? It could be a much better balance in filtering out good vs bad actors on the merchant side. Potentially also something to pitch to card networks - they will certainly not listen to individual merchants, but if I had to guess - they wouldn't ignore this sort of pitch from Stripe? And if you were to do so - you would be building loyalty from your "good merchants" by providing a value offering beyond the market; the ones whom are less likely to encounter chargebacks to begin with (and win those they do encounter); since you'll then have a value prop ahead/better than the market. Which just seems like a sound long-game bet. One person's thoughts etc etc - but the current version of the chargeback fee rollout - while well rationalized, also feels heavy handed and not with the usual finesse/nuance with which I've seen Stripe's usual policy modifications. Thought I'd throw my 2c into the mix.
GordonS 4y ago
But hasn't 3DSecure resulted in a lot less fraud, and therefore a lot fewer disputes?
Aeolun 4y ago
Note that you are already incurring extra fees for those services, so saying you need to increase the price of chargebacks to cover development fees doesn’t ring very true to me.

by smca 4y ago

capableweb 4y ago

> Stripe is charged every time a user faces a dispute. Is this charge returned to Stripe if the bank rules in the favor of the Stripe user? Or did that change recently as well, as now Stripe won't hand back the fee in case the dispute is overturned. Thanks a lot for jumping into the thread with some more facts.

smca 4y ago
That's right. Stripe is charged regardless of the dispute outcome (the networks don't refund the fee). So our focus is twofold: prevent disputes from happening in the first place and help users manage them if/when they occur.
- codegeek 4y ago
  Yes but doesn't Stripe pass that fee on to the merchant ? If a dispute is lost, the fees are not returned back to the merchant so I assume Stripe uses that to pay the network.
  - smca 4y ago
    That's not quite right. To simplify things, think of Stripe as an facilitator in the dispute process. Stripe has no influence over the outcome—it's at the sole discretion of the cardholder's bank. Stripe deducts a dispute fee to cover the cost charged to us for dispute submission. In the past, we returned this fee even though the card networks don't reimburse us. This is no longer the case (we now pass through the fee).
    - gamblor956 4y ago
      So basically, you're saying that your dispute fee costs have increased...but you pass along all those charges to the merchant anyways...so it boils down to: you're just increasing fees because you can under the guise of expenses that aren't your own.
      - smca 4y ago
        I'm happy to explain this in depth if you'd like clarity (my username at stripe.com) but no, that's incorrect. We're now charged more for dispute submissions. These costs are set solely by the card networks and we'll no longer bear those costs (bringing us inline with the market).
        thereisnotry 4y ago
        Hi smca - this helps, I was under the impression that Stripe is refunded the fees in scenarios where disputes are won. That seems to have been a misundertanding. Having said that - I think there was a lot of room for nuance in this rollout, which kinda got shoved up into a one-size-fits-all policy. I'll give my own business as a reference - I have a 100% chargeback "win" rate; including in cases where Stripe estimated low win success odds. Chargebacks have (so far) come exclusively from bad faith actors. With this latest iteration - fledgling businesses like mine are massively exposed to competitors making bad-faith bookings and issuing chargebacks against us; which even if we were to successfully defend - would entirely bankrupt us. Has Stripe explored a mitigation of a scenario such as this? Following through on the same line of thought - has Stripe considered a more balanced approach where if merchants have a success rate of more than a certain threshold (which by all means can be high) - then they are more "protected" on chargebacks they win? It could be a much better balance in filtering out good vs bad actors on the merchant side. Potentially also something to pitch to card networks - they will certainly not listen to individual merchants, but if I had to guess - they wouldn't ignore this sort of pitch from Stripe? And if you were to do so - you would be building loyalty from your "good merchants" by providing a value offering beyond the market; the ones whom are less likely to encounter chargebacks to begin with (and win those they do encounter); since you'll then have a value prop ahead/better than the market. Which just seems like a sound long-game bet. One person's thoughts etc etc - but the current version of the chargeback fee rollout - while well rationalized, also feels heavy handed and not with the usual finesse/nuance with which I've seen Stripe's usual policy modifications. Thought I'd throw my 2c into the mix.

GordonS 4y ago

But hasn't 3DSecure resulted in a lot less fraud, and therefore a lot fewer disputes?

Aeolun 4y ago

Note that you are already incurring extra fees for those services, so saying you need to increase the price of chargebacks to cover development fees doesn’t ring very true to me.