19 ms·

Getting Fucked by Stripe

184 points by edoceo 11y ago

austenallred 11y ago
> Why were were booted from Stripe? Is it because we are in the marijuana industry? yup
- smhenderson 11y ago
  Agreed. The article is a bit rant-y so I had a hard time figuring out what his actual issue is but the whole time I could only think, of course it's because you're associated with the marijuana industry. IMO it will take all fifty states, DC and the federal government legalizing marijuana before industries like banking and insurance are comfortable with doing business with anyone associated with the marijuana industry.
  - codeduck 11y ago
    In the USA. Then there's still the minefield of European and Asian governments - some of which view the trafficking of narcotics as a capital crime. And then there's the fact that many financial regulatory bodies are INCREDIBLY conservative.
  - adevine 11y ago
    In addition, while I understand his protesting that "we just sell software", pretty much by definition he sells software to businesses (i.e. people who will be paying with Stripe) whose legality is a gray area, especially in the banking sector.
  - bitcrusher 11y ago
    Maybe you're right; But something feels a bit out of focus for me, only because they're only 'involved' from the standpoint that they're selling software. If their software was called 'seed' tracker and they didn't mention Marijuana overtly, would it still be an issue? I get that Stripe can (and should) do business with whomever they choose. This guy's rant aside, I think the fringe business issues surrounding emerging industries are really interesting. Here's another example: Technically Uber has been operating in a legal grey area for a while (not unlike this software). What if companies like Stripe refused to do business with them because of their quasi-legal business? AirBnB?
    - smhenderson 11y ago
      If their software was called 'seed' tracker and they didn't mention Marijuana overtly, would it still be an issue? I think so... As others have pointed out (including the Stripe CEO apparently) the banking industry is very paranoid about the legal marijuana industry right now. There is just too much grey area, even in states where it's legal. https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point As for Uber and ABB, although there has been a lot of press around them and some setbacks for them here and there I just don't think people get nearly as excited about them as they are about the recent relaxation of marijuana laws. People get very hyped about marijuana (and drugs in general) being legal; it seems like one of those issues that people are pretty passionate about, whether for or against.
    - dragonwriter 11y ago
      > If their software was called 'seed' tracker and they didn't mention Marijuana overtly, would it still be an issue? Probably. There's often a significant legal difference between selling something intended as a general use tool that happens to have utility in illegal enterprises and selling something that is specifically designed and marketed as a tool for a specific class of criminal enterprise.
  - at-fates-hands 11y ago
    Its really aligning the Federal Laws with the state laws so that people in states where its legal don't constantly have to look over their shoulders. We've all seen and heard how abusive the Feds can be when they want to make a point - this is what keeps a lot of these businesses weary of getting involved in this industry.
- Alupis 11y ago
  This is probably the real reason behind it. Regardless of your own personal feeling on the subject, you have to recognize it's a Felony, and banking/payment service providers have to follow the current laws and regulations. Federal law is always supreme to state/local laws.
  - hullo 11y ago
    What's a felony? Writing software that helps manage compliance with the law? That doesn't sound quite right.
    - Alupis 11y ago
      > What's a felony? Frankly, it's a felony to support the drug trade (including marijuana) in any capacity. I didn't make the laws... just pointing it out. A lot of people think that since their state supports marijuana, then everyone should... but in reality businesses not in your state, especially banking institutions, have a lot of incentive to not participate. It's unreasonable to get mad at your banking institution (Stripe in this case) because they pulled the plug on a very risky customer who might have gotten them put under the Fed spotlight.
      - jacquesm 11y ago
        > Frankly, it's a felony to support the drug trade (including marijuana) in any capacity. Fertilizer? Grow lamps? Water? You're going to have to draw a line somewhere, 'support' is such a wide term you could technically shut down the power company for supporting the drug trade. I think the description should at least contain a 'knowingly' and 'primarily' otherwise any garden center is at risk of being shut down.
        Alupis 11y ago
        From the article: > A few months ago we started using Stripe as they payment gateway for our marijuana regulatory compliance software It's pretty painfully obvious this company was "knowingly" and "primarily" supporting drug trade.
- probdist 11y ago
  If I was involved in payment processing, I would not want to even distantly be associated with that industry. The federal regulatory authorities have not been kind to banking efforts in the space.
- igorgue 11y ago
  Right now, most financial institutions are scared to do anything with the marijuana industry. Here's an article about that: http://www.vice.com/read/colorado-bankers-are-still-scared-of-weed-money-725 http://www.vice.com/read/colorado-bankers-are-still-scared-o...
- makeitsuckless 11y ago
  Besides that being a debatable reason, why doesn't Stripe not just come out and say that? These are Paypal levels of communication, and from stories linked elsewhere in this thread, not an incident.
- ProAm 11y ago
  > Stripe can only support users with a low risk of customer disputes–after reviewing your submitted information and website, it does seem like your site presents a higher level of risk than we can currently support. They sure worded that poorly.
rubbingalcohol 11y ago
I issue refunds on Stripe all the time and they haven't shut me down. Although I'm sympathetic to the author, it really is Stripe's prerogative to do business (or not do business) with anyone they want. It doesn't sound like they've frozen his account or taken his funds, they just don't want him as a customer anymore.
- roflc0ptic 11y ago
  And it's his prerogative to complain about it. As a person selling services it's very important that payment processors be reliable, and seeing posts like this is very useful information. I wrote donation processing code for a super PAC against stripe's API. If stripe doesn't like your politics (which arguably is what is happening here), will they exercise their prerogative? It's a right "more honored in the breach than in the observance."
- lorddoig 11y ago
  > Although I'm sympathetic to the author, it really is Stripe's prerogative to do business (or not do business) with anyone they want. While of course this is true, it's not really a defence in the grander scheme of things. Stripe's business model is not only propped up by the oligopolistic/cartel-like nature of international payment processing, it's a product of it. These guys may find another processor, but as long as a tiny, tiny group of banks/payment processors call the shots on what kind of transactions are allowable legitimate businesses like this will always be looking over their shoulder. Fundamentally all this comes out of banking regulation. I find the whole industry woefully unacceptable.
- mod 11y ago
  I agree. And in that light, I can't really see where they "fucked" him, not in the least.
polysaturate 11y ago
While it isn't necessarily the business of HN readers, I feel there may be a gap on communication between Stripe and the author. Either, it is being left out of the article, or the author just immediately threw their hands up.
- edoceo 11y ago
  I've put the full copy of the message from Stripe in the post. It makes no mention of weed.
hansy 11y ago
Can I request a title change, maybe to "Stripe just booted us with 5 days notice". I'm not normally phased by the f-bomb but it's so distracting on the HN front page.
- lnanek2 11y ago
  Seems appropriate. If the merchant wants to refund their customer Stripe should help them, not tell them to f-off. Stripe really did something no one civilized would expect and left the company and company's customers in the lurch on this one.
  - lisper 11y ago
    What you say is true. One can nevertheless choose to communicate it without resorting to profanity.
- Alupis 11y ago
  An even better title change would be "We just got booted from Stripe for violating their terms and likely a few federal laws". It's crazy to me that someone running a business in the marijuana industry would not be aware of, and accept the risk that their business is not favored by banking services nor the Fed. You knew you were breaking, at the very least, Stripes ToS when you processed payments for drugs... Regardless of your feeling about marijuana and the law... reality stands.
  - lisper 11y ago
    What federal laws did they violate? As noted in the post, they sell software, not marijuana.
  - flatline 11y ago
    FTA: > We don’t sell pot, we sell software.
  - edoceo 11y ago
    We don't process any payments for any drugs. It's software for reporting data to the State of Washington. No different than software for managing inventory for alcohol or pharma.
jacobolus 11y ago
Blame Stripe’s back-end banking partners. Stripe (and similar companies) have to err on the side of caution, because if they get shut off from processing credit cards, they’re hosed themselves. Since as you mentioned your company does a very small transaction volume, servicing your business or anything else with a hint of being drug related is high risk for Stripe with essentially zero reward.
- noir_lord 11y ago
  If that is the case then I might as well consider dealing with the banks directly. Lots of stuff on here recently is making me rethink using Stripe for payments which I would have been doing in the next month or two.
  - toomuchtodo 11y ago
    > If that is the case then I might as well consider dealing with the banks directly. Which you can do, if you have enough charge volume. Are you charging $1 million/month yet? If not, you probably don't have enough volume to carry any weight. I keep seeing these "whine" stories on HN about "Fuck stripe! 5 days notice?! How dare they!". 5 days is pretty reasonable for someone taking an inordinate amount of risk on you. I can count on one hand the number of HN posters I'd provide upfront financing for in the 5-6 figure range. If you don't like it, find a provider more to you're liking. You can tear Stripe from my cold, dead hands before I'd go to another processor, 5 day notices be damned. They are leaps and bounds better than the alternatives, and it should be recognized that they face the same hurdles as businesses with funding risk do.
    - noir_lord 11y ago
      > Which you can do, if you have enough charge volume. Are you charging $1 million/month yet? No and I will never charge a million dollars a month through anything as I'm in the UK and over here card processing doesn't require anything remotely like that volume and we have a healthy local market for card processors if I choose to go elsewhere.
  - 11y ago
dguaraglia 11y ago
What Stripe did is in line with the industry you are in, not the amount of refunds you might have emitted so far. I'm sure you'd get the same email if you were running a dating site, even if you had never had to refund anyone yet. Does it suck? Yes. But ultimately Stripe is just trying to run their business and a big reason why they get discounted transactions from credit card issuers is because they keep a portfolio of clients with low refund rates.
dangrossman 11y ago
Storing your customer billing data with your processor can kill your cash flow when something like this happens. You not only need a new payment processor, you need to get every customer to put their credit card numbers in again. If you're in a high-risk business, or simply want to be safe, check out https://spreedly.com https://spreedly.com. You code once against their API and can switch between 80+ different processors with no code changes, and take your customers with you. I recommend them whenever I can, as I've gone through that pain before, but never worry about it now.
- vcarl 11y ago
  This is really interesting, thanks for posting. I've been idly concerned about tying customer data in with the payment processor, but I accepted it as a given.
- edoceo 11y ago
  This is awesome! I'll buy you a beer.
- jacobolus 11y ago
  The people I’ve known who tried to transfer customer billing information into or out of Stripe all had pretty good experience. The process might take a week or two, but Stripe should be able to coordinate with your new payment processor to securely transfer that information. (Most of the new-ish trendy payment companies are similarly customer friendly; some older payment companies will refuse to transfer data or will demand outrageous fees for it.)
- moey 11y ago
  The issue I see with Spreedly is it would be a good thing to use from the beginning of the project, but it's not affordable when your first starting out. Maybe a free package with the ability to store 20 cards? I don't want to pay $99 a month to basically hook up to your API and test it with my first few customers.
  - corobo 11y ago
    It looks like they'd work with a startup. I'm not sure on what as I can only see what they've got on their site. From their Pricing page: "We're an early stage startup wanting to support multiple gateway types out of the gate. Can you help? Contact [sales addr] to discuss our startup package which is focused on pre-funded startups needing to work with multiple payment gateways."
merpnderp 11y ago
I wonder if this is related to Operation Chokepoint, a DOJ program started in 2013 which leans heavily on payment processors and banks to cease doing business with businesses the DOJ finds questionable? https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point
larrik 11y ago
I can't get into details, but I've had a similar situation with Stripe abruptly refusing to provide service to a wine distributor solely due to their industry.
morisy 11y ago
FWIW, I've been running our business on Stripe for four years, and we've been hit with all sorts of legal threats by the government, individuals, and other companies (we're also currently suing the CIA). I couldn't recommend them more highly, based on our own experience and talking to others in the space. We've done full refunds, partial refunds, and had one unfortunate chargeback with zero problems. Their customer service has always been incredibly fantastic, and the money is in our bank two days after it gets charged. The one issue we've had is that they given super vague answers when our users trip their fraud detection algorithm, simply stating the "charge was declined" and telling us to check with the user's bank, when it was actually the fact that the user had been using the card via a Tor proxy in Nigeria. I think the security opacity is understandable, and each time they helped us work through the issues. tl;dr: I'm sympathetic to the poster, but Stripe seems to do whatever they can to get the money to you quickly, and their customer support has been great despite running a business with customers that regularly use Tor, fake names, etc.
orthoganol 11y ago
Ah, thank you so much for sharing this. We have just been working on a Stripe integration in addition to PayPal, but we're going to find someone else now. It doesn't appear worth the risk.
- louden 11y ago
  To be fair to Stripe, this will be an issue regardless of the provider you use. They share the same back-end partners. As long as a business appears to be high risk, the risk of shut down by payment provider will exist.
  - orthoganol 11y ago
    Except this post has given the impression that they are being over zealous in who they deem 'risky,' for whatever reason. If others could share similar 'over zealous' stories from other financial providers I might reconsider.
tezza 11y ago
Can he not switch to a Pr0n CC payment channel ?? They've had problems forever with mainstream channels. CCBill perhaps.
- jacquesm 11y ago
  It's VISA and MC that are the problem, not Stripe, they are simply operating under terms dictated to them by the card companies and the feds. If you want to make money with something legally grey don't point the finger at companies who are in a tight spot when it comes to dependencies on such entities. Credit card processing is not an in-alienable right.
  - tezza 11y ago
    Well Visa and MC have problems with pr0n too... Hence the existence of fringe CCBill / Epoch etc. Visa and MC don't mind so much if some other party is taking the risk.
JimmyL 11y ago
From the Stripe list of prohibited businesses [1]: Marijuana dispensaries and related businesses Some of these rules come from Stripe itself, some come from the networks they work with. [1] https://stripe.com/us/prohibited-businesses https://stripe.com/us/prohibited-businesses
Asparagirl 11y ago
It's worth checking out their SaaS, WeedTraqr (https://weedtraqr.com https://weedtraqr.com) -- "Marijuana tracability, seed to sale, from your phone". They are located in Seattle, where marijuana is legal, and their app is a way for dispensaries and retailers to ensure compliance with the law. In other words, they are doing the opposite of breaking drug laws. Also of interest is their pricing page; their price tiers give you some hint of how much money is sitting untapped in this industry, and how generally underserved by software solutions it is, too.
- furyofantares 11y ago
  Compliance with state law, yes. Unfortunately the federal law persists.
- scott_karana 11y ago
  Federal drug laws are at odds with state drug laws, and I suspect all banks are beholden to the fed, so... :-(
- mod 11y ago
  > In other words, they are doing the opposite of breaking drug laws. Unless you consider federal laws.
  - Asparagirl 11y ago
    It is not illegal, even under Federal law, to build an app to help dispensaries in Washington/Oregon/Colorado/DC manage their local regulatory compliance. Marijuana is illegal under Federal law, but this software, as a tangential service, is not. If it were, no one online could sell grow tents or grow lights or high-nitrogen fertilizer etc., even though it's obvious what market those items are intended for.
    - greendata 11y ago
      I don't think you can advertise that those grow lights or fertilizer are to be used for specifically illegal activities. One can use grow lights for many different plants. This company is simply poorly named and the marketing is aimed specifically at marijuana which is unfortunately illegal on a federal level.
pc 11y ago
Stripe CEO here: In general, selling anything related to illegal drugs is strictly prohibited by our banking partners. I wish we could be more permissive here, particularly as marijuana legalization gathers pace. That said, it's still illegal at the federal level, and the government doesn't mess around on this stuff.[1] Software is an interesting case; I'm going to go talk to our compliance team to see what we can do. In general, we try to make our prohibitions clear[2], and we try to give a grace period (the five days referenced) in order to minimize disruption. If anyone has suggestions for how we could do this better in a world where stringent prohibitions exist, we're all ears. (I'm patrick@stripe.com) We don't like imposing others' rules, but that's part of the reality in operating in the US and on Visa's/MasterCard's/etc. networks. [1] https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point [2] https://stripe.com/us/prohibited-businesses https://stripe.com/us/prohibited-businesses
- Alupis 11y ago
  You did right by your business and other customers. The risk of supporting a single company who chose to participate in the illegal drug market (yes, Marijuana is illegal still under the Fed folks) far exceeds any potential benefits they could of brought. Frankly, the article and title are written by someone who is upset they didn't understand the reality... It's rather unreasonable to blame Stripe here for their own ignorance.
  - wfunction 11y ago
    It seems to me that they didn't participate in the drug market, they participated in the software market. [EDIT: redacting the second part of my comment as further information in other comments seems to imply it was probably incorrect.]
    - Alupis 11y ago
      > A few months ago we started using Stripe as they payment gateway for our marijuana regulatory compliance software As far as the Fed is concerned, any support of the illegal drug trade industry is a Felony. Selling software that is targeted at helping manage, distribute, and facilitate the marijuana industry (which is illegal federally) is against the law. As far as Stripe is concerned, they are regulated by the Fed and cannot afford to knowingly have illegal drug market customers sending money through their network.
Justin_K 11y ago
I just love how this is written... it's as if the author's business is completely dependent upon Stripe and Stripe is shutting him down. If your business is so great, I'm sure there's hundreds of other CC processors who will take it. At least Stripe did their due diligence early on before you actually do have customers.
- edoceo 11y ago
  We have scores of customers, it was very embarassing to send them a notification about this hiccup. We have already identified a new on-line payment gateway which has internal underwriting and answers their phone when we call. I spoke at length to the staff, have a follow-up meeting with underwriting so they can be sure we're not breaking any laws. The BigCo bank we work with doesn't mind.
sv123 11y ago
Everybody knows if you want to be in the drug business and still have a good banking relationship, you should be selling coke. http://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs http://www.theguardian.com/world/2011/apr/03/us-bank-mexico-...
poulsbohemian 11y ago
I met these guys at an entrepreneurs meetup in Seattle about a year ago. They were completely on the level and the very definition of brave entrepreneurs.Their business is producing record keeping software and their customers are licensed by the state government - they are not a grow operation. In this state, the activities of their customers are completely legal and it certainly isn't illegal to produce software. It's disappointing to see them run into this challenge given all the hoops they've had to go through to get their business to this point. Regardless of where you stand on marijuana (I am not a partaker) they have a fascinating story working to legitimize a once illegal market.
- discardorama 11y ago
  Why are people giving Strip a hard time, when banks themselves refuse to deal with MJ dealers? http://www.forbes.com/sites/jacobsullum/2014/09/18/local-banks-terrified-by-friendly-neighborhood-marijuana-merchants/ http://www.forbes.com/sites/jacobsullum/2014/09/18/local-ban...
  - deleted 11y ago
    [deleted]
- unoti 11y ago
  Perhaps the gravitas of their business would have been better served with a product name like Medical Compliance Systems rather than WEEDTrackr.
- dragonwriter 11y ago
  > In this state, the activities of their customers are completely legal No, they aren't. Federal law is applicable in every state, and activities illegal under federal law are illegal in every state. It may not be prohibited by state law in that state, but then neither is, probably, espionage (of, e.g., US defense information) prohibited by the law of that state. That doesn't make espionage legal in that state, and doesn't mean that someone advertising software specifically designed and marketed for the purpose of supporting such espionage wouldn't have significant legal risks. > Regardless of where you stand on marijuana (I am not a partaker) they have a fascinating story working to legitimize a once illegal market. Its not "a once illegal market" anywhere in the US. Everywhere in the US, its a still illegal market, its just the number of separate authorities prohibiting it is one fewer in some jurisdictions than it used to be in some places.
eggbrain 11y ago
There were a few articles months back talking about how marijuana shops in Colorado were having trouble managing money, mostly because it ended up having to be an all cash operation, and banks would not let them deposit it. Private security companies dedicated to managing and transporting that money ended up being created to help relieve that issue. What the private security companies ended up finding out, however, was that banks started preventing them from depositing _their_ money as well, if only by association. I think you'll find this isn't only a stripe issue -- it's going to be an issue with many payment processors when you're dealing with federal laws that directly conflict with state laws. When you create businesses on the knife's edge of a burgeoning new market, you have to prepare yourselves to get cut a few times. It's not easy to build an industry.
- cvanlaw 11y ago
  Several stores in Colorado have started accepting debit cards in the past month or so - maybe this is becoming less of an issue. Source: I live in Colorado
dataker 11y ago
Another lesson to avoid becoming completely dependent on any product. Always good to have a backup plan.
joedavison 11y ago
If they are giving you five days to switch and will pay out all of your processed transactions in a timely manner, then how is that "getting fucked"? It's not. The credit card processing industry is rife with horrible companies that will freeze your funds for months on end and shut down your account without notice at the drop of a hat. Stripe stands head and shoulders above the rest of the industry in this regard. In fact, I am impressed by how generous they are being, given that this business is obviously operating in a grey area of federal law.

184 points by edoceo 11y ago

austenallred 11y ago

> Why were were booted from Stripe? Is it because we are in the marijuana industry? yup

smhenderson 11y ago
Agreed. The article is a bit rant-y so I had a hard time figuring out what his actual issue is but the whole time I could only think, of course it's because you're associated with the marijuana industry. IMO it will take all fifty states, DC and the federal government legalizing marijuana before industries like banking and insurance are comfortable with doing business with anyone associated with the marijuana industry.
- codeduck 11y ago
  In the USA. Then there's still the minefield of European and Asian governments - some of which view the trafficking of narcotics as a capital crime. And then there's the fact that many financial regulatory bodies are INCREDIBLY conservative.
- adevine 11y ago
  In addition, while I understand his protesting that "we just sell software", pretty much by definition he sells software to businesses (i.e. people who will be paying with Stripe) whose legality is a gray area, especially in the banking sector.
- bitcrusher 11y ago
  Maybe you're right; But something feels a bit out of focus for me, only because they're only 'involved' from the standpoint that they're selling software. If their software was called 'seed' tracker and they didn't mention Marijuana overtly, would it still be an issue? I get that Stripe can (and should) do business with whomever they choose. This guy's rant aside, I think the fringe business issues surrounding emerging industries are really interesting. Here's another example: Technically Uber has been operating in a legal grey area for a while (not unlike this software). What if companies like Stripe refused to do business with them because of their quasi-legal business? AirBnB?
  - smhenderson 11y ago
    If their software was called 'seed' tracker and they didn't mention Marijuana overtly, would it still be an issue? I think so... As others have pointed out (including the Stripe CEO apparently) the banking industry is very paranoid about the legal marijuana industry right now. There is just too much grey area, even in states where it's legal. https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point As for Uber and ABB, although there has been a lot of press around them and some setbacks for them here and there I just don't think people get nearly as excited about them as they are about the recent relaxation of marijuana laws. People get very hyped about marijuana (and drugs in general) being legal; it seems like one of those issues that people are pretty passionate about, whether for or against.
  - dragonwriter 11y ago
    > If their software was called 'seed' tracker and they didn't mention Marijuana overtly, would it still be an issue? Probably. There's often a significant legal difference between selling something intended as a general use tool that happens to have utility in illegal enterprises and selling something that is specifically designed and marketed as a tool for a specific class of criminal enterprise.
- at-fates-hands 11y ago
  Its really aligning the Federal Laws with the state laws so that people in states where its legal don't constantly have to look over their shoulders. We've all seen and heard how abusive the Feds can be when they want to make a point - this is what keeps a lot of these businesses weary of getting involved in this industry.
Alupis 11y ago
This is probably the real reason behind it. Regardless of your own personal feeling on the subject, you have to recognize it's a Felony, and banking/payment service providers have to follow the current laws and regulations. Federal law is always supreme to state/local laws.
- hullo 11y ago
  What's a felony? Writing software that helps manage compliance with the law? That doesn't sound quite right.
  - Alupis 11y ago
    > What's a felony? Frankly, it's a felony to support the drug trade (including marijuana) in any capacity. I didn't make the laws... just pointing it out. A lot of people think that since their state supports marijuana, then everyone should... but in reality businesses not in your state, especially banking institutions, have a lot of incentive to not participate. It's unreasonable to get mad at your banking institution (Stripe in this case) because they pulled the plug on a very risky customer who might have gotten them put under the Fed spotlight.
    - jacquesm 11y ago
      > Frankly, it's a felony to support the drug trade (including marijuana) in any capacity. Fertilizer? Grow lamps? Water? You're going to have to draw a line somewhere, 'support' is such a wide term you could technically shut down the power company for supporting the drug trade. I think the description should at least contain a 'knowingly' and 'primarily' otherwise any garden center is at risk of being shut down.
      - Alupis 11y ago
        From the article: > A few months ago we started using Stripe as they payment gateway for our marijuana regulatory compliance software It's pretty painfully obvious this company was "knowingly" and "primarily" supporting drug trade.
probdist 11y ago
If I was involved in payment processing, I would not want to even distantly be associated with that industry. The federal regulatory authorities have not been kind to banking efforts in the space.
igorgue 11y ago
Right now, most financial institutions are scared to do anything with the marijuana industry. Here's an article about that: http://www.vice.com/read/colorado-bankers-are-still-scared-of-weed-money-725 http://www.vice.com/read/colorado-bankers-are-still-scared-o...
makeitsuckless 11y ago
Besides that being a debatable reason, why doesn't Stripe not just come out and say that? These are Paypal levels of communication, and from stories linked elsewhere in this thread, not an incident.
ProAm 11y ago
> Stripe can only support users with a low risk of customer disputes–after reviewing your submitted information and website, it does seem like your site presents a higher level of risk than we can currently support. They sure worded that poorly.

rubbingalcohol 11y ago

I issue refunds on Stripe all the time and they haven't shut me down. Although I'm sympathetic to the author, it really is Stripe's prerogative to do business (or not do business) with anyone they want. It doesn't sound like they've frozen his account or taken his funds, they just don't want him as a customer anymore.

roflc0ptic 11y ago
And it's his prerogative to complain about it. As a person selling services it's very important that payment processors be reliable, and seeing posts like this is very useful information. I wrote donation processing code for a super PAC against stripe's API. If stripe doesn't like your politics (which arguably is what is happening here), will they exercise their prerogative? It's a right "more honored in the breach than in the observance."
lorddoig 11y ago
> Although I'm sympathetic to the author, it really is Stripe's prerogative to do business (or not do business) with anyone they want. While of course this is true, it's not really a defence in the grander scheme of things. Stripe's business model is not only propped up by the oligopolistic/cartel-like nature of international payment processing, it's a product of it. These guys may find another processor, but as long as a tiny, tiny group of banks/payment processors call the shots on what kind of transactions are allowable legitimate businesses like this will always be looking over their shoulder. Fundamentally all this comes out of banking regulation. I find the whole industry woefully unacceptable.
mod 11y ago
I agree. And in that light, I can't really see where they "fucked" him, not in the least.

polysaturate 11y ago

While it isn't necessarily the business of HN readers, I feel there may be a gap on communication between Stripe and the author. Either, it is being left out of the article, or the author just immediately threw their hands up.

edoceo 11y ago
I've put the full copy of the message from Stripe in the post. It makes no mention of weed.

hansy 11y ago

Can I request a title change, maybe to "Stripe just booted us with 5 days notice". I'm not normally phased by the f-bomb but it's so distracting on the HN front page.

lnanek2 11y ago
Seems appropriate. If the merchant wants to refund their customer Stripe should help them, not tell them to f-off. Stripe really did something no one civilized would expect and left the company and company's customers in the lurch on this one.
- lisper 11y ago
  What you say is true. One can nevertheless choose to communicate it without resorting to profanity.
Alupis 11y ago
An even better title change would be "We just got booted from Stripe for violating their terms and likely a few federal laws". It's crazy to me that someone running a business in the marijuana industry would not be aware of, and accept the risk that their business is not favored by banking services nor the Fed. You knew you were breaking, at the very least, Stripes ToS when you processed payments for drugs... Regardless of your feeling about marijuana and the law... reality stands.
- lisper 11y ago
  What federal laws did they violate? As noted in the post, they sell software, not marijuana.
- flatline 11y ago
  FTA: > We don’t sell pot, we sell software.
- edoceo 11y ago
  We don't process any payments for any drugs. It's software for reporting data to the State of Washington. No different than software for managing inventory for alcohol or pharma.

jacobolus 11y ago

Blame Stripe’s back-end banking partners. Stripe (and similar companies) have to err on the side of caution, because if they get shut off from processing credit cards, they’re hosed themselves. Since as you mentioned your company does a very small transaction volume, servicing your business or anything else with a hint of being drug related is high risk for Stripe with essentially zero reward.

noir_lord 11y ago
If that is the case then I might as well consider dealing with the banks directly. Lots of stuff on here recently is making me rethink using Stripe for payments which I would have been doing in the next month or two.
- toomuchtodo 11y ago
  > If that is the case then I might as well consider dealing with the banks directly. Which you can do, if you have enough charge volume. Are you charging $1 million/month yet? If not, you probably don't have enough volume to carry any weight. I keep seeing these "whine" stories on HN about "Fuck stripe! 5 days notice?! How dare they!". 5 days is pretty reasonable for someone taking an inordinate amount of risk on you. I can count on one hand the number of HN posters I'd provide upfront financing for in the 5-6 figure range. If you don't like it, find a provider more to you're liking. You can tear Stripe from my cold, dead hands before I'd go to another processor, 5 day notices be damned. They are leaps and bounds better than the alternatives, and it should be recognized that they face the same hurdles as businesses with funding risk do.
  - noir_lord 11y ago
    > Which you can do, if you have enough charge volume. Are you charging $1 million/month yet? No and I will never charge a million dollars a month through anything as I'm in the UK and over here card processing doesn't require anything remotely like that volume and we have a healthy local market for card processors if I choose to go elsewhere.
- 11y ago

dguaraglia 11y ago

What Stripe did is in line with the industry you are in, not the amount of refunds you might have emitted so far. I'm sure you'd get the same email if you were running a dating site, even if you had never had to refund anyone yet. Does it suck? Yes. But ultimately Stripe is just trying to run their business and a big reason why they get discounted transactions from credit card issuers is because they keep a portfolio of clients with low refund rates.

dangrossman 11y ago

Storing your customer billing data with your processor can kill your cash flow when something like this happens. You not only need a new payment processor, you need to get every customer to put their credit card numbers in again. If you're in a high-risk business, or simply want to be safe, check out https://spreedly.com https://spreedly.com. You code once against their API and can switch between 80+ different processors with no code changes, and take your customers with you. I recommend them whenever I can, as I've gone through that pain before, but never worry about it now.

vcarl 11y ago
This is really interesting, thanks for posting. I've been idly concerned about tying customer data in with the payment processor, but I accepted it as a given.
edoceo 11y ago
This is awesome! I'll buy you a beer.
jacobolus 11y ago
The people I’ve known who tried to transfer customer billing information into or out of Stripe all had pretty good experience. The process might take a week or two, but Stripe should be able to coordinate with your new payment processor to securely transfer that information. (Most of the new-ish trendy payment companies are similarly customer friendly; some older payment companies will refuse to transfer data or will demand outrageous fees for it.)
moey 11y ago
The issue I see with Spreedly is it would be a good thing to use from the beginning of the project, but it's not affordable when your first starting out. Maybe a free package with the ability to store 20 cards? I don't want to pay $99 a month to basically hook up to your API and test it with my first few customers.
- corobo 11y ago
  It looks like they'd work with a startup. I'm not sure on what as I can only see what they've got on their site. From their Pricing page: "We're an early stage startup wanting to support multiple gateway types out of the gate. Can you help? Contact [sales addr] to discuss our startup package which is focused on pre-funded startups needing to work with multiple payment gateways."

merpnderp 11y ago

I wonder if this is related to Operation Chokepoint, a DOJ program started in 2013 which leans heavily on payment processors and banks to cease doing business with businesses the DOJ finds questionable? https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point

larrik 11y ago

I can't get into details, but I've had a similar situation with Stripe abruptly refusing to provide service to a wine distributor solely due to their industry.

morisy 11y ago

FWIW, I've been running our business on Stripe for four years, and we've been hit with all sorts of legal threats by the government, individuals, and other companies (we're also currently suing the CIA). I couldn't recommend them more highly, based on our own experience and talking to others in the space. We've done full refunds, partial refunds, and had one unfortunate chargeback with zero problems. Their customer service has always been incredibly fantastic, and the money is in our bank two days after it gets charged. The one issue we've had is that they given super vague answers when our users trip their fraud detection algorithm, simply stating the "charge was declined" and telling us to check with the user's bank, when it was actually the fact that the user had been using the card via a Tor proxy in Nigeria. I think the security opacity is understandable, and each time they helped us work through the issues. tl;dr: I'm sympathetic to the poster, but Stripe seems to do whatever they can to get the money to you quickly, and their customer support has been great despite running a business with customers that regularly use Tor, fake names, etc.

orthoganol 11y ago

Ah, thank you so much for sharing this. We have just been working on a Stripe integration in addition to PayPal, but we're going to find someone else now. It doesn't appear worth the risk.

louden 11y ago
To be fair to Stripe, this will be an issue regardless of the provider you use. They share the same back-end partners. As long as a business appears to be high risk, the risk of shut down by payment provider will exist.
- orthoganol 11y ago
  Except this post has given the impression that they are being over zealous in who they deem 'risky,' for whatever reason. If others could share similar 'over zealous' stories from other financial providers I might reconsider.

tezza 11y ago

Can he not switch to a Pr0n CC payment channel ?? They've had problems forever with mainstream channels. CCBill perhaps.

jacquesm 11y ago
It's VISA and MC that are the problem, not Stripe, they are simply operating under terms dictated to them by the card companies and the feds. If you want to make money with something legally grey don't point the finger at companies who are in a tight spot when it comes to dependencies on such entities. Credit card processing is not an in-alienable right.
- tezza 11y ago
  Well Visa and MC have problems with pr0n too... Hence the existence of fringe CCBill / Epoch etc. Visa and MC don't mind so much if some other party is taking the risk.

JimmyL 11y ago

From the Stripe list of prohibited businesses [1]: Marijuana dispensaries and related businesses Some of these rules come from Stripe itself, some come from the networks they work with. [1] https://stripe.com/us/prohibited-businesses https://stripe.com/us/prohibited-businesses

Asparagirl 11y ago

It's worth checking out their SaaS, WeedTraqr (https://weedtraqr.com https://weedtraqr.com) -- "Marijuana tracability, seed to sale, from your phone". They are located in Seattle, where marijuana is legal, and their app is a way for dispensaries and retailers to ensure compliance with the law. In other words, they are doing the opposite of breaking drug laws. Also of interest is their pricing page; their price tiers give you some hint of how much money is sitting untapped in this industry, and how generally underserved by software solutions it is, too.

furyofantares 11y ago
Compliance with state law, yes. Unfortunately the federal law persists.
scott_karana 11y ago
Federal drug laws are at odds with state drug laws, and I suspect all banks are beholden to the fed, so... :-(
mod 11y ago
> In other words, they are doing the opposite of breaking drug laws. Unless you consider federal laws.
- Asparagirl 11y ago
  It is not illegal, even under Federal law, to build an app to help dispensaries in Washington/Oregon/Colorado/DC manage their local regulatory compliance. Marijuana is illegal under Federal law, but this software, as a tangential service, is not. If it were, no one online could sell grow tents or grow lights or high-nitrogen fertilizer etc., even though it's obvious what market those items are intended for.
  - greendata 11y ago
    I don't think you can advertise that those grow lights or fertilizer are to be used for specifically illegal activities. One can use grow lights for many different plants. This company is simply poorly named and the marketing is aimed specifically at marijuana which is unfortunately illegal on a federal level.

pc 11y ago

Stripe CEO here: In general, selling anything related to illegal drugs is strictly prohibited by our banking partners. I wish we could be more permissive here, particularly as marijuana legalization gathers pace. That said, it's still illegal at the federal level, and the government doesn't mess around on this stuff.[1] Software is an interesting case; I'm going to go talk to our compliance team to see what we can do. In general, we try to make our prohibitions clear[2], and we try to give a grace period (the five days referenced) in order to minimize disruption. If anyone has suggestions for how we could do this better in a world where stringent prohibitions exist, we're all ears. (I'm patrick@stripe.com) We don't like imposing others' rules, but that's part of the reality in operating in the US and on Visa's/MasterCard's/etc. networks. [1] https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point [2] https://stripe.com/us/prohibited-businesses https://stripe.com/us/prohibited-businesses

Alupis 11y ago
You did right by your business and other customers. The risk of supporting a single company who chose to participate in the illegal drug market (yes, Marijuana is illegal still under the Fed folks) far exceeds any potential benefits they could of brought. Frankly, the article and title are written by someone who is upset they didn't understand the reality... It's rather unreasonable to blame Stripe here for their own ignorance.
- wfunction 11y ago
  It seems to me that they didn't participate in the drug market, they participated in the software market. [EDIT: redacting the second part of my comment as further information in other comments seems to imply it was probably incorrect.]
  - Alupis 11y ago
    > A few months ago we started using Stripe as they payment gateway for our marijuana regulatory compliance software As far as the Fed is concerned, any support of the illegal drug trade industry is a Felony. Selling software that is targeted at helping manage, distribute, and facilitate the marijuana industry (which is illegal federally) is against the law. As far as Stripe is concerned, they are regulated by the Fed and cannot afford to knowingly have illegal drug market customers sending money through their network.

Justin_K 11y ago

I just love how this is written... it's as if the author's business is completely dependent upon Stripe and Stripe is shutting him down. If your business is so great, I'm sure there's hundreds of other CC processors who will take it. At least Stripe did their due diligence early on before you actually do have customers.

edoceo 11y ago
We have scores of customers, it was very embarassing to send them a notification about this hiccup. We have already identified a new on-line payment gateway which has internal underwriting and answers their phone when we call. I spoke at length to the staff, have a follow-up meeting with underwriting so they can be sure we're not breaking any laws. The BigCo bank we work with doesn't mind.

sv123 11y ago

Everybody knows if you want to be in the drug business and still have a good banking relationship, you should be selling coke. http://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs http://www.theguardian.com/world/2011/apr/03/us-bank-mexico-...

poulsbohemian 11y ago

I met these guys at an entrepreneurs meetup in Seattle about a year ago. They were completely on the level and the very definition of brave entrepreneurs.Their business is producing record keeping software and their customers are licensed by the state government - they are not a grow operation. In this state, the activities of their customers are completely legal and it certainly isn't illegal to produce software. It's disappointing to see them run into this challenge given all the hoops they've had to go through to get their business to this point. Regardless of where you stand on marijuana (I am not a partaker) they have a fascinating story working to legitimize a once illegal market.

discardorama 11y ago
Why are people giving Strip a hard time, when banks themselves refuse to deal with MJ dealers? http://www.forbes.com/sites/jacobsullum/2014/09/18/local-banks-terrified-by-friendly-neighborhood-marijuana-merchants/ http://www.forbes.com/sites/jacobsullum/2014/09/18/local-ban...
- deleted 11y ago
  [deleted]
unoti 11y ago
Perhaps the gravitas of their business would have been better served with a product name like Medical Compliance Systems rather than WEEDTrackr.
dragonwriter 11y ago
> In this state, the activities of their customers are completely legal No, they aren't. Federal law is applicable in every state, and activities illegal under federal law are illegal in every state. It may not be prohibited by state law in that state, but then neither is, probably, espionage (of, e.g., US defense information) prohibited by the law of that state. That doesn't make espionage legal in that state, and doesn't mean that someone advertising software specifically designed and marketed for the purpose of supporting such espionage wouldn't have significant legal risks. > Regardless of where you stand on marijuana (I am not a partaker) they have a fascinating story working to legitimize a once illegal market. Its not "a once illegal market" anywhere in the US. Everywhere in the US, its a still illegal market, its just the number of separate authorities prohibiting it is one fewer in some jurisdictions than it used to be in some places.

eggbrain 11y ago

There were a few articles months back talking about how marijuana shops in Colorado were having trouble managing money, mostly because it ended up having to be an all cash operation, and banks would not let them deposit it. Private security companies dedicated to managing and transporting that money ended up being created to help relieve that issue. What the private security companies ended up finding out, however, was that banks started preventing them from depositing _their_ money as well, if only by association. I think you'll find this isn't only a stripe issue -- it's going to be an issue with many payment processors when you're dealing with federal laws that directly conflict with state laws. When you create businesses on the knife's edge of a burgeoning new market, you have to prepare yourselves to get cut a few times. It's not easy to build an industry.

cvanlaw 11y ago
Several stores in Colorado have started accepting debit cards in the past month or so - maybe this is becoming less of an issue. Source: I live in Colorado

dataker 11y ago

Another lesson to avoid becoming completely dependent on any product. Always good to have a backup plan.

joedavison 11y ago

If they are giving you five days to switch and will pay out all of your processed transactions in a timely manner, then how is that "getting fucked"? It's not. The credit card processing industry is rife with horrible companies that will freeze your funds for months on end and shut down your account without notice at the drop of a hat. Stripe stands head and shoulders above the rest of the industry in this regard. In fact, I am impressed by how generous they are being, given that this business is obviously operating in a grey area of federal law.