Stripe Chargeback Fees and Practices – A Big Mistake for Stripe!
Stripe has a large client base for payment processing, for individual small businesses as well as Independent Software Vendors. They offer a flat rate and flat transaction fee. It is rather high, but makes things seem simple. But what about the other hidden costs of using Stripe?
Let’s compare Stripe to merchant processors who provide each merchant with their own merchant account.
Let’s talk about how Stripe handles chargebacks. Unlike processors who give each merchant a separate merchant account, Stripe piles all merchants together into one merchant account. Customer service is not individualized and merchants simply lose their chargebacks. Merchant lose the product and the income received from selling the product.
Stripe has instigated a major change to address chargebacks. It is called a Smart Disputes. It is an AI driven program. The tool is not cheap for merchants. Stripe keeps 30% of all chargebacks recovered. Stripe also charges the merchant an extra fee of $15 whenever a merchant receives a chargeback. It matters not the reason or legitimacy of the chargeback.
It used to be that merchants simply lost their chargebacks. Stripe never tried to win it back for the merchants. So the improvement is that now they are willing to fight for you to win it back. If they win it back, the fee is waived, but they keep 30% of the chargeback for their efforts.
Most other processors charge a fee, but the full amount of the chargeback is returned to the customer.
Another drawback of Smart Disputes is that Stripe only relies on its internal data in trying to win back the merchant’s money. This limits the evidence they can gather to fight a chargeback. For example, they cannot utilize copies of invoices, copies of signed receipts and contracts, or merchant communications with the customers to fight to win the money back. This is crippling to merchants trying to get their money back.
So is it worth it for merchants using Stripe to continue using Stripe?
- A true processor who provides each merchant with their own merchant account can offer lower rates than Stripe.
- They offer a tried and true guidance system for more secure payment practices to prevent merchant chargebacks. Delayed shipping, address verification before shipping, lack of collection of CV2 codes, lack of clear purchasing description, and lack of signed purchasing contracts for high valued products, will all lead to higher than normal chargeback situations.
- They have departments of trained people to help merchants fight for and win any chargebacks with evidence based documentation, such as invoices, signed receipts, signed delivery receipts, and signed contracts.
In addition to Stripe’s higher rates, I suggest you consider these higher costs of chargeback losses and fraudulent transactions with Stripe. Electronic Money Company stands ready to assist our merchants with chargebacks. We can beat the rates and fees of Stripe always.
Try us! You’ll like us! Call 505-296-2847. You deserve to keep your money when you sell your products.
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Other topics you might be interested in: Avoid Costly Mistakes: Download our free report, 5 Mistakes to Avoid When Choosing a Credit Card Processor
