from Hacker News

Stripe refunds: fees from the original charge are not returned

by tumblen on 2/19/20, 11:39 PM with 255 comments

  • by mchusma on 2/20/20, 12:50 AM

    Note: this is different than Braintree and Amazon payments, which either refund in full or simply charge only the $0.30 fee. Stripe is now at or near the most expensive here relative to the competition. The idea that they have been doing customers a favor is not accurate.

    I have used stripe for years, but they are a company that has continued to make things worse with every update, versus AWS which has my trust they won't increase rates. If AWS ever offered a true competitor, we would switch.

    They invest in publishing books, but they still miss basic features like a way to test credit cards in the production system for QA purposes. It's an easily solved problem (let you generate one time fake card numbers programmatically that stripe "pretends" to charge). I have been trying to test checkout flows with them for years and their official stance is "don't test production checkout flows", which is insane.

    I hope stripe changes it's ways here, but they have been a large disappointment over the last 4 years or so after a solid start.

  • by btown on 2/20/20, 12:58 AM

    There's a vast payments ecosystem beyond Stripe that lets you avoid this.

    With companies like Spreedly to provide almost-Stripe-quality APIs and PCI-compliant card vaulting at only a flat cost, and a massive amount of "merchant account providers" a quick Google away that can hook into Authorize.net and then into Spreedly, you can end up at 1.75% or less depending on your industry, and the flexibility to dynamically route transactions to merchant accounts (including Stripe itself) based on anything from geography to your own notion of fraud/return risk.

    Stripe has far and away the best developer and administrator experience in the industry - it surprises and delights. But this doesn't make it the right solution for all businesses. Its genius was that it entered the zeitgeist as such.

  • by edwinwee on 2/20/20, 12:12 AM

    Some more context: this has been around for a couple years (for only new Stripe users). Payments are costing more to process. Card network fees have been gradually increasing over the years.

    Stripe has kept this at bay for its longtime users for as long as we could, even as it's been getting more expensive. But with the water rising across the whole pond, we sadly have to start charging for some of these things.

  • by nickjj on 2/20/20, 2:46 AM

    Hasn't this been the case for 4-5 months? I remember getting an email from Stripe about this back in September or October 2019, or was that PayPal?

    The only thing that really bugs me a lot about Stripe (to the point where I've considered moving to Braintree for my next project) is how they handle fraud detection.

    Stripe has all the power to prevent many forms of fraud and provides this as a service as long as you pay a premium for it in the form of Radar. You have to pay extra on top of the 2.9% + 30c per transaction to get this protection.

    But instead of providing Radar as a base service to all customers for the standard rates, they would rather you have fraudulent transactions against your account because they profit from "dispute fees", which is usually $17 or so per dispute that the merchant has to pay out of pocket, where Stripe takes some cut of that and the bank takes the rest of the cut.

    It just feels super scammy of Stripe to not offer Radar as a thing you get by default, since it's so beneficial to have and business owners are powerless in preventing fraud on their own because they don't have hundreds of millions of transactions of data to lean against and a way to perform analysis on the transaction before it happens since merchants aren't directly in contact with credit card vendors (that's why we use Stripe).

    I actually talked to support about this once in an email a few weeks ago, and the email began with them saying it's the merchant's responsibility to deal with fraud but by the end of the email discussion, support completely switched their position and said Stripe has the power to prevent it and they will pass my feedback to their product team. Which of course really means "ok, you win, Stripe is really responsible for fraud detection and we can totally do it, but we're never going to give it to customers out of the box because we profit from fraud regardless of you paying for Radar".

  • by Trias11 on 2/20/20, 12:38 AM

    With more competition coming into marketplace the costs of transactions inevitably goes down.

    Charging more for transactions (in either direction) has nothing to do with "payments are costing more to process" lie.

    This has everything to do with hook-and-charge business approach relying on majority of customers swallowing the arbitrary higher costs because it's more hassles to switch provider, especially for non-technical business owners.

  • by ikeboy on 2/20/20, 12:30 AM

    Recently got hit with this with QuickBooks. They actually charged me a fee to refund that was higher than the original fee charged. They think they deserve 3.5% on top of the initial 2.9% to send money back.

  • by chrishynes on 2/20/20, 12:43 AM

    This is pretty standard for flat pricing nowadays, but hits certain types of merchants really hard.

    It's a double whammy when you have a cancellation and have to refund and then lose 3% on top of that. Stripe should keep the fixed fee, sure, but keeping interchange doesn't seem right.

    Why doesn't Stripe offer the option to do simple interchange+ pricing to all instead of restricting that option to 6 figure volume accounts with negotiated agreements?

    That would cleanly solve the issue and be fair on both sides.

  • by PerfectElement on 2/20/20, 4:04 AM

    We are doing 200k+ in MRR and looking to move from Stripe because the cost is starting to hurt, and this change feels unfair. Our use-case is pretty simple (capture card and manage subscriptions) and we don't need all the features they have built in the last 5 years or are planing to build.

    We are looking into Spreedly. Does anyone have other suggestions of Stripe alternatives that are not so expensive?

  • by elijahparker on 2/20/20, 3:20 AM

    There are multiple little things that make me feel less trusting of stripe and that it’s shifting away to be more profit focused instead of customer oriented. One change that was unannounced (to my knowledge — maybe I missed something) was the payout schedule. It’s still two days technically, but at some point last year they started delaying the payout in their end if it was a weekend or holiday.

    It used to be like this: income from Thursday, Friday and Saturday all arrived Monday, so Monday was a big payout day and this was good since it was often a higher expense day as well due to weekend charges being delayed to Monday.

    Now, Thursday‘s sales arrive Monday (same), Friday’s Tuesday (a day later), and Saturday’s arrive on Wednesday (two days later), and any holidays further delay it.

    This could be ok, but the unexpected change from what I had come to expect, and noting that it seems to be intentional design change on their end make it feel like they’re trying to delay the payout schedule while still claiming the same rolling 2-day, and in the end not really putting the customer first.

  • by vfclists on 2/20/20, 12:26 AM

    They are doing a Paypal. How long have they been doing this?

    Louis Rossmann won't be happy - https://www.youtube.com/watch?v=c1WPDVjXDj0

  • by frank086 on 2/20/20, 12:34 AM

    My expectation has long been for Stripe to bring in more and higher fees. They offer a lot of top shelf free tooling that either brings their models into your code or moves the bookkeeping up to their system entirely, ex subscriptions.

    Smart companies have their own bookkeeping system in house and thus can potentially negotiate better terms with Stripe, assuming they are big enough Stripe cares to retain them. Plenty of other places are looking at massive costs to move off Stripe and I am sure someone at Stripe is aware of that.

    The first hit is always free.

  • by jv22222 on 2/20/20, 1:33 AM

    Just clarifying. If I refund a $2,000 charge it costs me the seller approx. $58?

  • by ValentineC on 2/20/20, 12:05 AM

    This has been the case since early 2018.

    Accounts created before that were grandfathered in for fee refunds, but I don't have a grandfathered account, and therefore can't verify if that's still the case.

  • by whynotnowha on 2/23/20, 6:58 PM

    Here is our response to this ruthless and disrespectful decision by Stripe:

    Hello,

    We have just read your price changes to the grandfathered accounts and wanted to pass our discontent with Stripe's decision. Currently, we are weighing our options to move our business to other partners; however, as a small business that mainly operates in non-US currencies, the changes to your refund policies AND the non-US bank policies will effectively kill our partnership with Stripe.

    We do not have tens of thousands of dollars per month worth of processing capabilities; however, we are a growing company as can be seen from our all time graphs on Stripe. We have used Stripe since the beginning and never considered alternatives. Your support team have always been helpful and your capabilities satisfied our needs. Until now.

    The price hike to a grandfathered account is utterly unacceptable and looks/smells like a cheap attempt to make more money for the company. Stripe is also a rapidly growing company and grandfathered accounts could not have been hurting its business model. "Grandfathering" has an implied meaning that these people/companies/parties have been together since the beginning and a one-sided breach of this understanding is deeply damaging and distasteful.

    In any way, unless Stripe can take steps to show sincerity towards our partnership from early on and rescind the changes to its fee policies, we will move our business out of Stripe before March 15th, 2020.

    Thanks for the ride and have a great day.

  • by brianwawok on 2/20/20, 3:35 AM

    What is the least expensive payment gateway these days for a SaaS business? My stripe costs keep going up, happy to write the code to switch... what’s the lowest rate processor?

  • by NightlyDev on 2/20/20, 1:20 PM

    I haven't actively used stripe more than half a year, and I've really enjoyed it so far, except for some translation issues on stripe's checkout page. This change makes me somewhat uncomfortable using stripe.

    Nordic countries has really good consumer protection laws and users can ask to cancel the purchase for any or no reason. Its also not allowed to charge the customer the fee, so this can become a issue.

    It also sucks that the pricing for Norway is 1 % higher than our neighbours.

  • by poxrud on 2/20/20, 6:52 PM

    This is a disaster. Simply put, this change makes Stripe a nonviable option as an e-commerce payment processor. The modern consumer expects easy, no questions asked refunds. How many people buy a few shirts/shoes of different sizes knowing that they will return the ones that do not fit? How can a retailer provide that when there is now a 2.9% (in our case 3.5%) charge added on every item refunded?

    This change directly hurts smaller retailers/e-commerce sites who are not big enough to negotiate smaller processing fees with Stripe.

    I run a niche e-commerce site in Canada where the majority of my customers are located in the US. This puts my processing rate at 3.5%. My products are priced anywhere from $1k to $6k. So now with this change, I could pay up to $210 for when a customer simply changes their mind. I guess I could enact a strict NO REFUNDS policy but that will put me at a severe disadvantage vs the bigger retailers.

    As things stand I would only recommend Stripe for recurring subscription billing.

  • by icelancer on 2/20/20, 3:01 AM

    I honestly didn't understand why they did in the first place. Doesn't really bother me.

  • by kuon on 2/20/20, 10:14 AM

    A few companies do charge fees on the end user now. I did a refund on a plane ticket within the 24h grace period (basically refunded no question asked) but I had to pay the credit cards fee anyway. I don't do refund often, but it might become more common.

  • by m3kw9 on 2/20/20, 1:22 AM

    The power of lock in. They know this from analytics.

  • by intopieces on 2/20/20, 12:21 AM

    Seems reasonable to me. The payment was successful, which is the service Stripe provides. Is this out of step with the industry at large?

  • by anonsivalley652 on 2/20/20, 3:28 AM

    Makes me pine for FeeFighter's card processor comparator that GroupOn bought and killed.

    But in reality, even with their high charges, Stripe makes it easy to get started, but startups can and should change vendors when the need arises. If other processors with lower fees for the particular volume a startup is doing and better APIs, it's worth considering them too.

  • by rush86999 on 2/20/20, 2:28 AM

    I have one really annoying complaint with stripe connect. Its authentication work flow using oauth is conflicting with aws amplify authentication for social providers. Both of these are pretty much essential nowadays. I hope someone picks up on this comment and considers finding a solution

  • by kundiis on 2/20/20, 4:37 AM

  • by robbyt on 2/20/20, 1:05 AM

    Stripe has the ability to negotiate with their upstream processors that we end users do not. Instead of trying to reduce their costs by pressuring their providers, they're passing along the fees to their customers.

  • by jijji on 2/20/20, 3:35 AM

    i dont really see the value in stripe compared to any other payment processor... they still do all the dirty tricks that everyone else does, like hold your money, cancel your account, hold your money.

  • by jklepatch on 2/20/20, 6:14 AM

    In an industry where costs have been amortized for a long time, fees should normally decrease...

    DeFi (Decentralized Finance) is coming for you guys.

    It might take some time, but we’ll get there.

  • by chmaynard on 2/19/20, 11:45 PM

  • by stevedwell on 2/20/20, 2:03 AM

    Can we get a clarification? Are they keeping the 2.9% and the 30 cents or what?

  • by asdfq1234 on 2/20/20, 2:21 AM

    Just a price increase. Time for some competition for these people.

  • by hackin247 on 2/20/20, 2:00 AM

    The struggle is real. Small fees add up for smaller startups and that used to be their bread and butter--it was so much easier to get payments up and running. We eventually switched to paypal and never looked back.